Awarded the
“RodinStar” Post
of the week!!
Well I am writing this separate blog inspired by the recent story by Gurudatt Nadiger. This is in answer to all the points he has raised. I will try to give solutions to each problem he has mentioned and will also add this in the comments on his post.
One of my businesses vertical sells perfumes on most of the market places ever since they started in India. Here is my take based on my experience of selling on these marketplaces.
There is famous quote by Ron White “I believe that if life gives you lemons, you should make lemonade… And try to find somebody whose life has given them vodka, and have a party”
Image Source.organicfacts.net
In my opinion these marketplaces are a great opportunity for SME’s. It’s a 24 hour mall with huge amount of traffic from pan India. You get a shop here for ZERO, yes zero with big Z upfront cost like huge rentals and interiors. And on top of it, these high traffic malls will ask you for your profile and if you are not a big brand they will REJECT you. These market places are evolving and I see them making great efforts to solve these issues.
What Gurudatt has shared is true; in fact every word is true. But entreprenuership is about finding solutions. We all face obstacles. The world outside is full of dangers. Eastman Kodak a 130 years old company is not around anymore. Lehman Brothers is another similar story.
Coming to the points raised by Gurudatt; here are some practical solutions applied by us:
On an average the marketplaces charge…
It’s perfectly alright if they charge 10-15% commission and shipping charges. There is nothing wrong with it. Your marketing cost is zero, rental is zero. We are doing crores worth of business from these marketplaces with just 3 employees and negligible rental. And you pay when you sell, nothing upfront.
COD Returns And Used items Returns
Well this is a huge problem with Indian eCommerce. You are saying your returns are 30%. In our case it’s 10%, max 15% rarely. To solve this problem we have transferred our inventory to their warehouse. Amazon calls it “Fulfilled by Amazon”, Flipkart Calls it “Flipkart advantage” and on Snapdeal it’s “VOI”. All the returns are their headache. We save on manpower, wastage of packaging, space and employee cost. Another thing you have mentioned used items returns this is negligible and Flipkart and Amazon are very quick to settle those claims SD takes little time but they settle these claims too. We don’t lose any money on account of this.
Image Source- Google Amazom.co.uk
Logistics Issues:
Yes sometimes there are issues but not much. It doesn’t hurt our business at all and mostly are routine in nature. May be you faced some major problems but with us we do not have any issues here.
Payments:
Don’t deal with ShopClues if the payment terms don’t work for you. We only deal with Flipkart, Amazon and Snapdeal and we get paid max in 10 to 15 days. In fact I love this part of the business. You don’t have to call anybody in accounts section or follow up. Money gets transferred in your account three times a week. One of my friends, who sells ethnic wear in the offline market to boutiques and retailers gets paid in 4 to 6 months.
Recently we got two calls – one from Flipkart that they have tied up with Bajaj Finserv and will provide unsecured loans against sales. Second was from Capital Float on same lines for FK, SD and Amazon. If this works out we can double our sales in few months.
Competition
You are saying sellers are made to compete on prices. Yes sellers are competing on prices but they are not forced to compete on prices. The competition is everywhere. In our b2b textiles business we have competition from other vendors and countries like Bangladesh and China. We lose some good orders sometimes because of competition. But it’s part of every business. Apple is charging full premium for their products but they have competition too from Samsung and other brands. We have to find our own niche and beat the competition.
Taxation:
I think I will leave it to my CA to handle and we haven’t faced any issue with this so far.
Marketplace
Yes they can block you any time if there are many complaints about your products and service. On the other hand if you are a good seller they respect you more and discuss with you ways to increase sales. I am sure soon they will shortlist good sellers and work with them for the long term.
Online Buyers
Yes they are spoiled right now with discounts, faster deliveries and ‘no questions asked’ return policies. I am personally happy about it and love shopping online. Few customers who are cheats by nature like to return used products or sometimes they replace the expansive item with some cheap item and return. But these are very few and we get our claims on these items very fast.
Bottom line
Gurudatt your problem is you are selling branded items like Milton and all. How do you compete on pricing with sellers who are not paying vat and may be some seller comes up with fakes. You will never be able to make money on these products on market places. GET OUT OF IT AS FAST AS YOU CAN. Another idea is to combine these items with some freebees. Be creative just don’t compete only on pricing.
It’s a great opportunity for SMEs. The only only thing is you got to be a manufacturer or find a friend who is a manufacturer and if you can find an item where there is not much competition your life is made. One my young friend who makes meditation chairs and some other unique accessories is growing his business on these marketplaces and earning good money. He always thanks me for introducing him to these marketplaces and guiding him. You should have minimum 50% or more gross profit then all these headaches will not be headaches because you will sell so much which is otherwise impossible to do offline.
I hope this helps.
I’m on twitter @PerfumesCrush
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