Jay Patel
It all started with selling books online and a company registered in a 2BHK flat of Koramangala and reached a gigantic climax with getting acquired by global retail giant Walmart. On another note the Amazon INC, an organization from which Flipkart is inspired, has made a grand entry in Indian market.
According to a new report by EY titled ‘India vs BRICs: a comparison of the ecommerce ecosystem’, India lags behind Brazil, Russia and China in online retail, despite having 243 million internet users, which is the second highest number of internet users in comparison with the other three countries.
The current situation is Indian e-commerce looks a bit polarized. But for a developing economy and with availability of cost-friendly internet, the existing players are just the tip of the iceberg compared to the potential of India buyers. The set of problems faced by big sharks is different from the new fish but they are catering the same audience.
Here we are noting down a few reasons about why entrepreneurs are still going to be successful in their own digital selling venture.
- The Second Mover Advantage: The second-mover advantage occurs when a firm
following the lead of the first-mover is actually able to capture greater market share,
despite having entered late. In the last 15 years the earlier entrants have removed most
of the go-to-market barriers for the next players. So, experimenting with digital selling is
a bit easier and not as time investing a task for offline merchants. - The Rise of Specialised E-commerce Entities: Network effects in industries with
marketplaces create the-winners-take-it-all dynamics, which means only two platforms
will naturally dominate their industry. Specialized marketplaces experience the same
the-winner-takes-it-all dynamics within their niche of e-commerce while being in a
constant battle with the large generalized marketplaces like Amazon and Flipkart.
On other hand, vertical specific e-commerce stores are on the rise. There are few
categories which the general marketplace doesn’t cater to due to various regulations and logistical issues. For such category-specific industries, having their own store is the only solution. There are few stores dedicated to building materials as well as medicines. - Price as a Differential Factor: Shradha from Kolkata is a new vendor who sells Jewelry
and Indian Ethnic wears online using her Instagram handle When talking to us, she told
us that earlier she tried using Amazon and Flipkart but their commission was in the
range of 30-35%, and with that share of the earnings gone, her own margin was very
less. So, instead of going with them she resorted to Instagram and made that sales
channel work. On asking if by any chance she would like to open her own store, she said
that it was definitely her plan in the coming year.
The same story is with every new vendor on the market. Some of them are using
Facebook and Twitter as a place to gain buyers. In another talk, a handmade soap
maker Dr. Khushboo Kadri who runs K’s Bath Brewery along with her practice as
dermatologist said that she got an amazing response on social media like Twitter.
“Because I’m still working on my product packaging and labelling. I realise to sell on Amazon one needs not only the product to be good but the packaging should also be pretty and attractive as there are hundreds of products listed there with similar compositions. I need to work out a packaging which stands out and thus once it’s achieved i would surely love to put my product out there.” said Dr Khusboo in a chat with “Blank and White”
This wave of Social Commerce will make sure that everyone with good quality to offer
will get a buyer irrespective of investment in the technical stack. - Tech Infrastructure at Lesser Costs in Minimal Time: Earlier, setting up an
e-commerce store involved a host of technicalities a full-time in-house programming
team, but with advancement of cloud technologies and Platform as a Service (PaaS) and
Software as a Service (SaaS) models, setting up the store is just a matter of minutes.
You select your domain and with a cost as low as 2200 INR/month, a premium store
would be ready to serve you. In fact, if you have a little exposure to programming, you
can use an open source system like Magento and set up your store at almost no cost,
and still you will be having full control over your store. - Delivery as a Service: Earlier, setting up delivery was a complex task for an e-commerce startup. Now, there are dozens of services across India who provide seamless service to all sizes of business to deliver the product at the doorstep of the buyer. Not only do they cover a majority of pincodes, but also provide add-on services as reverse-exchange pickup as well as cash on delivery.
Most of them provide API (application programming interface) to integrate the delivery
mechanism with the existing tech infrastructure of the store. Also, they give sophisticated
tracking systems to sellers as well buyers. Choosing the right delivery partner depends
on what you sell, how much you sell and where do you want to ship. - Seller-Specific Reason to Move away from Big Marketplaces: While talking with few
sellers, we came across a unique set of problems they had faced with the generic
marketplace. Sometimes, the third-party delivery would result in product breakage and
ultimately returns to the seller. Because the delivery service doesn’t differentiate on the
packing standards specific to sellers. This ends up costing the seller the return charges
and the cost of product loss.
Also, there is no gatekeeping or brand authorisation in place before listing and selling
any fake products. Sellers are allowed to list products of brands registered to other
sellers and for this they do not have seller’s brand authorisation. Some of the non-tech
savvy sellers find the user interaction with portals a little messy, and hence they want
their own solution with a clean user interface.
Last week, HER MARKET, an online marketplace for individual women entrepreneurs was
launched. It is an initiative to support women entrepreneurs by WE AIM (Womenergy
Association of Incubators in Manufacturing).
In a talk with “Blank and White”, Deepthy from HerMarket.in told us that, all the vendors they are listing have Amazon account as well but that first, women vendors need separate branding and that is major reason why they created their own marketplace; and secondly, as per their experience, big marketplaces don’t give much focus to individual sellers.
As per Deepthy’s experience, introducing technology to certain categories of vendors, for example, women sellers who are not tech-savvy, is another challenge, and for that the unique marketplace which caters to this need is much needed.
Earlier she had hired many contractors for creating the tech infrastructure but none were able to deliver that customized experience. Finally, she was able to get expected results when she took interest in the actual technology part.
Bottomline: Amazon and Walmart/Flipkart are dominating headlines for their e-commerce growth. This focus is understandable given Walmart’s major acquisitions and that Amazon receives an estimated 43% of all digital sales. But is there room for other marketplaces? The answer is, most definitely, Yes!
