Why Offline Sellers Should Ditch Mainstream Seller Platforms like Amazon in 2016
E-marketplaces clearly dominate the e-commerce ecosystem of India and other Asian countries. The transition that started in 2011, forced all offline stores to register as ‘third party sellers’ to meet the online demands created by the leading e-marketplaces. In 2013, when the news of brick-and-mortar stores like Vijay Sales and Univercell being wooed by e-commerce players like Flipkart, Amazon and Snapdeal broke out, the era of e-marketplace model in India officially dawned. Now, the eCommerce companies did not own any inventory, they merely enabled sellers and buyers to transact on their platform. While the tier 1 and tier 2 sellers quickly decided to scale up, the small and average retailers were left confused and without much options.
The irony of the situation now – retailers who should dominate and guide the market trends, are putty at the hands of the leading marketplaces, which govern and guide how a seller should sell! The biggest loss makers are still the small and average retailers who get stuck in the loop of e-marketplace jargons. If you are already a seller on any of these leading platforms like Paytm, Flipkart, Amazon or Snapdeal, you would forever be haunted by questions like “What would be my expected payout or transfer price after deducting the commission?”, “By what time will I get my payout?”, “What would be the marketing fee or payment gateway fee or the fulfillment fee?”, “Who would bear the cost of shipping or packaging?”, “What would be the return policy?” and many similar questions.
A simple analysis of these questions will show you how much money is deducted from the seller at each level. Let’s do a brief analysis of the same, but before moving to that, retailers/sellers have to understand that in the age of “Mobile Apps” and “E-commerce Platforms”, it is not really hard for them to find a good alternative. M1-Order does exactly that, how? We will shortly discuss this as well.
Where did all my money go?
A lot of sellers register online as third party sellers without understanding the process of “product listing”, “feature -listing”, “subscription fee” etc. Let’s assess the prices below:
Amazon, one of the leading marketplace in India, charges a monthly subscription fee of Rs. 499 per month from its sellers. There is also a closing fee of Rs. 10 per sale on their platform plus the commission is charged depending on the product category @5% to 15% per sale. Now this structure is more or less similar for all the other leading marketplaces, and that is standard for sellers to pay. So where do you end up losing money?
Average Cost of Shipping – Domestic = Rs. 30-35/Kg
Average Cost of Shipping – National = Rs. 45-50/Kg
Packaging Cost = Rs. 15/per order
So that you do not get lost in the pool of 2000+ and ever growing list of retailers, you need to invest in marketing that is where the feature listing, suggestion listing and site insertions come in to picture.
So the costing becomes something like this,
If you have a product priced at Rs. 1000, the e-marketplace commission applicable would be 15% i.e. Rs. 150, now shipping charges (for 0.5Kgs) is Rs 50 in India. So, on an average an e-marketplace will charge you Rs. 200 per product. Depending on the product category, the commission can increase and decrease.
But the taking out the money part does not stop here!
- Product Returns – There are time when customers use the product for a week and then send it back, the product might incur some damages which are not paid out to the seller. The seller cannot give this product to any other customer and either dumps it or keeps it forever. E-marketplace do not have any clear policies on the same and place customer over sellers.
- Reverse Logistics
- Cancellation – Even if the order is cancelled, the commission is charged to the seller. Sometimes customers cancel within minutes of placing the order and the seller is still charged the commission.
Other Seller Pain Points
– Communication – E-marketplace dominate and govern retailers. If there are added features on the e-marketplace app or the website, they would impose it on sellers without consulting or informing them. The recent one was the return policy update on Flipkart.
– Pickup of the product is not always regular, and if there are delays in transit, customers cancel the order.
– E-marketplace can take anywhere between 7 to 15 days to settle the payment. The e-commerce taxation also works in a different way, and if you do not have fair understanding of the same, you will end up losing more.
What’s my alternative?
Going back to the initial discussion. India is going hyperlocal. People want to access their favourite stores on the go. So, if I am a regular shopper of Jai Hind Apparels (Ethnic Clothing Store Famous in Maharashtra), I would like to be able to browse through their catalog online, on my mobile and buy it with a click of a button, even if the store is right at the corner of my house. So as a consumer, I need these demands to be fulfilled. As a seller it is clear that you have to get your inventory online.
A small or medium seller or someone who does not have a physical store cannot afford to man a website and then mobile app. The best course of action is to go the e-marketplace way.
And, this is where you can choose. India is brimming with e-marketplace models. You have the authority to pick and choose. This is where M1 comes into the picture. M1-Order gives you that authority. It lets you have your own mobile store without investing in a website or online store. The biggest USP you have with M1 is the fact that you can go COMMISSION LESS (almost, if you think Rs. 5 per sale, irrespective of the product cost, is a commission) with them. Explore a new marketplace with M1, connect with us here or reach out at firstname.lastname@example.org.