Investors are pumping money into e-commerce firms in India. The hope is that as more young people with higher disposible income start shopping online in the next 5 years, these companies will become profitable. With recent rounds of funding to some of the leading ecommerce firms, the dark clouds over the e-commerce sector have started to disappear. For any retailer, opening more and more offline stores is capital intensive and the online channel definitely looks like a viable option. Besides, the Amazon entry has further validated the online market in India.
The second most important aspect in today’s tech savvy world is that an online presence is seen as a MUST by most buyers. The first thing that a customer does is to find the retailer on Google or Facebook. If the retailer has a good online presence, automatically the level of trust in the brand is established in the minds of the customer. Also, it’s a very good idea to showcase your products online. That way, this can also act as an interface for the franchises / remote retail outlets that sell your products. In most cases, you can avoid the exercise of sending samples to these guys and just provide them the link to the new products that you have launched. So, in today’s world, it becomes really important to be online. Also, it’s very important to figure out the right way to get started. Offline retailers moving online is definitely a trend that’s here to stay.
So, what are the key steps for any retailer to go online?
1. Analyze whether his products or similar products are already selling online
A: One needs to cautiously stay away from the online space if you are dealing with volumetrically challenging products with average margins. Ex: Handicrafts. This sector has particularly seen a turmoil with lot of websites shutting down not able to cope up with the costs involved. Most handicrafts that appeal to the offline audience are a logistical nightmare when it comes to shipping them. So if you look at selling a product in the 1000 rupee range that comes to about 3 kilos after packaging, it will be really hard to justify the margins and figure out a profitable transaction.
Second, if you are dealing with low margin products like electronics, as a retailer, it would be hard to sell online as most brands have their own representation either directly or through Tier 1 distributors and can afford to offer a better price and a quicker delivery as well. They will also get better costs on logistics because of economy of scale. What would make sense is to device a strategy around what can sell online without too much of a cost on logistics, has good margins and preferably can’t break in transit. Apparel, for instance. This is a sweet segment, so you could see the likes of Flipkart move to call themselves a fashion destination.
A retailer will also need to leverage on his offline strengths while going online. If they have customer databases with emails and phone numbers, it’s very important to talk to existing customers about your new online store. Any kind of media coverage helps. Once all this is done, the logical step would be to also sell on India’s top marketplaces like Flipkart, Snapdeal etc.
2. How do I figure out the most cost effective solution that is available?
The do-it-yourself (DIY) online solutions will offer a retailer anything between 1000-3000 per month, so it will not be heavy on the pockets, but it will demand a lot of time from the retailer. So, the question in simple terms is going to be whether you value time over money or vice versa. The customized solutions can be anything between a setup cost of about 75,000 to over 3-4 lakhs based on what is required. If you as a retailer are serious about your business, you would probably like to focus on your core competency, i.e manufacturing or distribution while you outsource the technology aspect to a company who is an expert in this field.
3. How do I figure out the payment gateway, logistics and the technology partner?
For any Indian retailer, the offline business is the core revenue source. So, one can’t expect them to deviate focus on figuring out technology, logistics and other aspects of going online. Retailers need to look at players who can do this end to end and by that you would expect someone to take care of cataloguing (photos, photoshop, content), website, logistics, payment gateway and also look at helping you drive sales from as many sources as possible, be it B2C or even B2B. There are players who offer end to end solution and make the process of going online very easy.
4. How do I approach Flipkart, Snapdeal, Amazon and start selling on these platforms?
A: All marketplaces are trying to open up to as many vendors as possible. One can look at these sites as a virtual mall, where you have a retail presence. Typically, you would need to write an email to these guys and wait for a revert. Some companies are very responsive and some take their own time. Once you get in touch with the person who handles your category in a particular marketplace, the next steps would be
a. Send all your product details (photos, content, inventory, pricing etc) in a format defined by the marketplace
b. Once the products are up, have all the branding material specified by the marketplace ready
c. When you have orders, keep them ready, brand them with the marketplace guidelines and coordinate with the logistics company to ship the product and upload the manifests and the courier tracking numbers on the marketplace interface.
Working with different marketplaces and their control panels and managing stock, pricing, accounts can be tough. But there are companies like Eye and Buy who can help you with the on-boarding and managing your entire processes after that. The advantage of selling on these top websites in India is that you start driving value from day 1 itself. It’s like you have a retail presence in about 20 different virtual malls in India and if not sales, you are bound to at least get a lot of eye balls. Secondly, this also drives traffic to your own website over a period of time and can justify the costs involved in going online.
Parkal Suhas Kamath is a co-founder at Eye and Buy Retail Pvt Ltd . Prior to this he was working in sales and marketing consulting with ZS Associates and has a B’Tech degree from NITK Surathkal. He has extensive experience in the e-commerce domain and has helped a lot of clients figure out the online strategy right from small start ups to fortune 50 companies as well. Suhas has been covered on CNBC Young Turks for the UnWrapIndia initiative and also on The Hindu and a few other online publications in the past.
Disclaimer: This article first appeared STOrai Magazine