Indian Market Places- Where to Sell?

6-Apr-2015

With the growing internet penetration and large number of consumers purchasing goods online, there is no doubt that idea to sell online is part of every retailer’s strategic plan which they can’t avoid.

Ways to sell online

A retailer can start with its own exclusive store but in order to understand the demands of its category online selling on marketplaces can be a good bet.

In case one choose to create own website, one can get higher margins, larger control, customized e-commerce experience, brand loyalty, higher scalability, but it might be costly as setting and promoting a niche portal requires high investments. Whereas if one choose to sell by e-retail website, one can still sell online via sourcing model to e-commerce players. Still going for this option, provides lesser control on brands and products, provides low margin and provide less probability of sales as other competitors are also selling along. But if one chooses to sell by a Marketplace, one can experiment their products online with certain control and by leveraging the reach of the marketplace and its value added services.

Marketplace is a quick way to go online and is independent of other channels; let’s understand why selling on a marketplace can be a good strategy:

Quick go to market: As everything is well settled, one doesn’t need to do anything, other than to setup and upload the catalog.

Testing of your brands e-commerce viability: By selling on a marketplace we actually can get data of how customer will respond to our brand if we get online; before one actually build own store.

Pricing strategy: Marketplace provides an opportunity for us to test prices; we can easily test prices as our products will be sold with products of different brands.

Marketing and branding medium: Marketplaces provides brands and sellers a platform to take their offerings across geographies and generate a wider demand. Also special promotions on the marketplace can perform as a good marketing spend.

Get rid of customer acquisition cost: To generate traffic on a website is the biggest challenge for any e-commerce venture, to get users on the website is also not a simple task as huge customer acquisition costs is involved. But when  you are selling on a marketplace, you don’t need to worry about generating customer traffic or getting visitors on their website as the marketplace has own growing customer base; it gives opportunity to sellers to directly engage with a ready base of consumers. Thus it’s a cost effective way of getting customers.

Low start-up cost: Minimal cost is involved in selling on a marketplace in comparison to cost involved in setting up a new website; as one has to pay for web hosting, technology, advertising, team, logistics etc.

How to make most out of your marketplace

  • Sign-up on all possible marketplaces.
  • Be open to experimentation, offer schemes, discounts, sales, etc.
  • Learn everything that you want to know about selling online.
  • Request marketplace to provide us analytics of our products, how customer is responding to our products.
  • Encourage customer feedback on our products.
  • Use your own marketing channels make aware your offline customers about your online presence.

Challenges involved for a Marketplace & Seller

Though there are various reasons which shows marketplace as a good model for the marketplace as well as the sellers, there are less risks involved for the seller while selling through the mode of marketplace but for a marketplace to set up and work is extremely a difficult business. In terms of execution marketplace is tougher than traditional E-Commerce or retail model and requires highly sophisticated technology platform and distributed approach towards services. This also requires the items to be procured and checked for quality in real time i.e. after the customer has placed the order or relies on the different quality standards followed by different vendors/suppliers. This many a times results in diluted customer experience. To solve this is operationally complex and requires system integration with the vendors, inventory syncing efficient inbound logistics. Even after seamless integration marketplace service cannot be as prompt as own inventory.

In case of a big or established seller there are less challenges as it may have a big team for customer service, operations, technical team, etc to manage issues; but for a small retailer it becomes difficult to manage all this due to small team size.

Choosing a right Marketplace

Every marketplace has its own kind of processes, requirement, and offering which they make to the sellers on their website. With so many marketplaces available for the sellers where they have to just sign in and start selling, but it’s important for the sellers to pick up the right marketplace. And this selection depends on what you are selling and to whom, as each kind of marketplace has its own niche of prices, products and even customers.

We must understand what is the product we want to sell; which website will provide us right target and positioning, we also need to decide where our product will sit right keeping in mind our USP and the USP of the marketplace as well. One of the main things which we should keep in mind while choosing a marketplace is number of orders we will get, so we must make a check of traffic on the website.

Do check about the marketplace

  • Stability
  • Reputation
  • Reviews and feedback
  • Policies
  • Must make quick payments
  • Immediate results

Most importantly we must make a check that the marketplace we are choosing must be seller friendly; at times seller face issue in case the product is returned; there are chances that the marketplace may be biased towards the buyer, for example in case a buyer rejects the product many a times it happens that the marketplace accepts the product without even questioning the buyer, thus this may incur loss for the seller.

Before taking the first step…

In order to start selling on an online marketplace, it is very crucial to have a little backdrop on how different marketplaces operate. In general there are two types of marketplaces — traditional marketplaces who work on dump and sell model and those who host flash sales.

Traditional marketplaces allow each brand to maintain its own shop and control the inventory. These kind of marketplaces generally take low commission — around 10% to 12% per sale. Moreover, they allow merchants to directly interact with the customer, address concerns and redress returns accordingly.

The second type of marketplaces who host flash sales work on the basis of purchase-order. That is, when a customer buys a product, the marketplace raises a purchase order for the same to the brand owner and processes the order. The downside to such a model is that the store owner is never in touch with the end customer and has to rely completely on the marketplace to act as a mediator. These marketplaces operate on somewhere around 30% to 60% commission per sale.

So we need to decide on which model to work on with the market places

Comparative Charts on Market Places.

Market place review

 

By Boney Moshahary

Solveda Software India Pvt. Ltd

www.solveda.com

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