SELLERS’ CARNIVAL

If last year was about showering largesse on customers, 2015 is proving to be the year of sellers for online retail companies in a rush to grow. Evelyn Fok and Biswarup Gooptu take a look at the competing methods and models India’s largest ecommerce companies are employing to woo merchants to sell on their marketplaces
With relative newcomers Paytm and Shopclues posing serious competition to the established order of Flipkart, Amazon, and Snapdeal, the current ecommerce race is not only about acquiring customers, but also chasing sellers to list on their platforms.The stated goals are ambitious–Flipkart and Amazon aim to more than double their merchant numbers to 1 lakh sellers by the end of the year.Snapdeal is hungry to onboard 10 lakh sellers in three years–a target Paytm’s five-month-old marketplace aims to reach in two years.

“The game is evolving from just being about acquiring merchants to staying relevant and meaningful continually for these sellers,“ said Vishal Chadha, senior vice president, market development at Snapdeal. “It is not difficult to get new sellers on board as of now as long as your brand proposition and promise is absolutely clear.“

Just as customers are not loyal to specific ecommerce sites, nor are sellers who are hungry to garner as much business as possible, and hence list on multiple platforms at once.

This only antes up the competition between ecommerce platforms to vie for sellers’ attention. To lure them, online marketplaces are running a variety of initiatives, such as Shopclues’ recent Innovatech business plan competition and Amazon’s Chai Cart programme that seeks to spread awareness among local small entrepreneurs and sellers in small cities and towns.

Amazon, Flipkart, and Snapdeal are also offering heavy promotional rates for commissions per order and delivery charges they levy on sellers, as well as temporarily waiving fees pertaining to subscription, packaging, and inventory storage.

Shopclues levies only a service fee and delivery charge per order, and Paytm is promoting itself as a zero-commission platform, although it charges marketing fees on each sale.

Sreelata Jonnalagedda, an assistant professor at IIM-Bangalore specialising in marketing and pricing channels, said lower commissions do not necessarily mean winning sellers. “When it costs less to sign up for a marketplace, then obviously every seller will register on all platforms. However, this is rarely the case,“ she said.

Rather, digital marketplaces have to provide indepth assistance to onboard merchants who have only known the offline world, said Venkat Potluri, a former Flipkart employee who cofounded Sellerworx last year to help merchants manage their businesses on multiple ecommerce websites.

“I was responsible for onboarding quality merchants and saw they did not have the capability to market their products and ride the ecommerce wave,“ he said. “Now ecommerce sites are providing support, reflecting they want different types of sellers to list and succeed.“

According to Potluri, merchants new to ecommerce often start by signing with three or four platforms at most. Many make use of platforms such as Sellerworx, Snapdeal-acquired Unicommerce, and Zepo to start and manage businesses online across marketplaces. When sales kick in, basic business pillars such as branding, pricing, logistics, and the allimportant sales volumes come back into focus. For Sonu Mulchandani, the owner of a fashion store in Bengaluru that started selling online two years ago, how her products are marketed is the biggest factor.

“There is no consistency in how they market and sell products online. I would have to tell customers about the products myself,“ she said about her experience selling on an online marketplace during its early days. As for delivery of products, merchants tend to prefer seamless, cost-efficient options. “Logistics is key to ecommerce. If you dispatch late, people tend to cancel orders and try out from somewhere else,“ said Archita Gupta, who runs Delhi-based Healthvala, an online merchant selling health devices on seven marketplaces.

“Sellers prefer third-party logistics partners that are tied up with ecommerce companies because it makes the process more integrated, simple, cost-effective, and predictable,“ said Potluri of Sellerworx.“The only instance where they would want their own courier is when they are operating on their own site.“

Amazon, Snapdeal, and Shopclues give multiple delivery options to sellers, including the choice to ship on their own, while Paytm’s logistics network is entirely outsourced to third-party providers.

Yet a lot of nitty-gritty information relevant to merchants’ livelihoods are difficult to access publicly, especially when it comes to order charges. Besides on Amazon and Shopclues, who list their terms freely on their websites, merchants often have little idea what they are getting into until they are actually signed on to specific platforms.

This also means that many merchants these sites claim to be partnered with may not have actually listed any products. And in the end, when all is said and done, “from a sellers’ point of view, they would like to be signed on to the platform that will give them the highest traction,“ said Jonnalagedda. “They would want to be present on a marketplace that has a very high likelihood of surviving and succeeding in the long run, so they have incentive to stay on and build their reputation.“

Although Paytm only launched its ecommerce platform in February, it already contributes to around 20% of seller Gupta’s sales. “It is about the trust and credibility of the platform,“ she said. “I need to know that the user base is strong, my products are present, payments are on time, and that the company is performing well.“

(With inputs from Harsimran Julka in New Delhi)

Source: The Economic Times

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Author:

Neeraj; an entrepreneur & a visionary in the field of Railway, Defense & Automobiles, is a graduate in commerce and a Harvard Business School Alumni. He’s an expert in govt. liasoning & contracting and has an exceptional network & connections at both local as well as global level. He’s an expert in Market Strategy & Planning and has served number of overseas companies as an advisor/consultant. He takes a profound interest in upcoming startups & is very receptive towards ground-breaking ideas & innovations. He likes to brainstorm those ideas and if the values & philosophies matches; he is even ready to invest his resources, serve as a mentor or act as an incubator to futuristic businesses.

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