Ebay.com and amazon.com are probably the only two companies which have successfully established themselves as the favoured online marketplace destination. The rest are probably trying to copy the concept and trying to be somewhere there. It is going to be herculean if not impossible to achieve what these two companies have. Marketplace is basically a concept where the company provides a platform where sellers can showcase their products and buyers can buy the item from them. The company facilitates the transaction in such a way that none can cheat each other. Amazon.com has a hybrid model in that along with other sellers, the company also sells the goods directly to buyers through the common platform and hence competes with other sellers. This may be a great monetising idea but is very likely to discourage a number of sellers, potential or existing since they may fear that they may be disadvantaged in competing with the “owners” directly and mostly it is also seen that Amazon is able to offer better prices and terms compared to outside sellers.
Coming back to Online Marketplace Selling, the platforms that are available in the country are Ebay India, tradus.com, snapdeal.com and shopclues.com to name a few. There are many others on the fringes but not much happening in them worth writing. However eBay India is undoubtedly the most popular and well known platform. Buyers loved it since it provides a no-non sense and ruthless buyer guarantee programme where in even if a buyer just says the item is not as described and asks for refund, the company more often than not just offers them full refund without even asking for proof of the claim and the same is adjusted against the seller much to the disappointment of the sellers. Knowing fully well that there isn’t a worthwhile competition to it and that the sellers who sell only online will have no other platform to sell, the company is assured that the sellers will not go anywhere inspite of all this.
photocredit: paloaltonetworks
However slowly but steadily a big change is happening already in this field as well. Many large sellers after painstakingly building their business on ebay over the years are suddenly calling quits either completely leaving the online platform or going solo by building their own website. Now most who end up going solo are not going anywhere since this business is very very difficult to start and build from a scratch. Ebay India has though rightly sensed the changed mood of the sellers and has now started a programme called seller protection where they pay a reduced compensation for a transaction where the buyer is fully compensated from their kitty. There are issues in them as well as ebay is also keeping a track of such compensations to sellers and is treating them against them for performance evaluation.
Under this rapidly changing scenario, there are great opportunities for both new and existing sellers on ebay. For new sellers, it remains one of the most fascinating and exceptional platform to sell to a very wide audience at minimum possible costs. For the existing sellers, the trick lies in sticking on come what may and continue to grow the business slowly but steadily. Loss of big sellers fortunately for such sellers is good news as it means relatively lesser competition and better margins. However one also needs to be guarded against situational development where in one ends up being one of those sellers who end up quitting their business.
The trick to this lies in many factors. However two factors that come to my mind foremost are perseverance and low overheads. I would explain them one by one.
Low Overheads: It is a common Management knowledge that in a segment of business, where there is high margin and low entry barrier in the beginning, competition is bound to come rapidly and the margins will continue to shrink close to zero and below sometimes depending upon what kind of market is at stake. Suppose one is into selling say mobile accessories which offer 30% gross margins. A new seller will crop up since the entry barrier is close to nil especially in platforms and will start selling at 20% margins. Soon someone will sell at 10% and then at 2%. If you are a large seller, you will have fixed and sunken costs which will increase your overheads and no matter how hard you try you can never bring it to the level of a new seller. Therefore even if you decide to sell at nil profit there will be a new seller who can sell cheaper than you and still make a nominal profit or breakeven. As a large seller, you may have a little pricing advantage but it is little only and may not be adequate to sustain the business. The lesson to be learnt here is that your size as a big seller will also give you the cushion of better sustenance, larger pool of past and repeat buyers and better reputation and pricing power. However one should continue to ruthlessly cut costs and overheads so as to reduce the difference between them and new sellers. The lower it is, more the number of new sellers will find themselves quitting the business. Since they will suddenly find the business no so profitable and will end up turning over. And lower overheads means lower selling prices which will eventually bring in more revenues and profits.
Perseverance is one of the most important virtues that one needs to have while selling online. It may take days, weeks or months to get that first or first few sales. It is during this time that one feels why one is doing this when there are better options available. Most platforms including ebay are pretty ruthless and harsh on sellers. It comes from their belief that both sellers and ebay exist because of buyers. If they are unhappy, eventually everyone will lose. Hence they make sure every buyer is satisfied. Now this knowledge is misused by a few smart cookies and ebay’s internal systems is always on a look out for such elements and weed them out, but more or less ebay remains a sustainable platform to sell. However one must not lose patience, hope and calm especially in light of cases where the buyer is clearly trying to cheat and there is nothing much you can do. The best option during such times is to just shun that buyer. There is a very good option that ebay gives to sellers where in they can block any buyer the seller chooses to from buying from them. Pity only 5000 can be blocked but we are far away from that figure on both of our ebay shops.
There are many other factors which would be crucial to your achieving success on ebay and other platforms, You can read about them here.
I am Sanchita, a Hometrepreneur mother of two who also runs a remuneration-free community shop here in Port Blair besides occasional blogging at www.gizmobhai.com. I along with my bro-in-law run M/s D-Tek Trading Pvt Ltd which owns the above blog, online businesses on ebay (gizmobhai, indiacod) and our own little e-com site www.indiacod.com.