JOIN USThe Indian ecommerce industry is making a deep impact on the buying behaviour of consumers across the country by roping in lots of sellers. The recent announcement of the Department of Industrial Promotion and Policy (DIPP) defines an ecommerce marketplace in India and it has attracted more sellers.
If you look at the major sellers on these platforms, one can understand that majority of them are direct distributors or manufacturers. We have small sellers from rural areas too who sell non-branded products. The seller service got a fillip with the advent of eBay as an early player in 2005, but the company later failed to catch up with the ecommerce boom in the country later. Players like Flipkart, Amazon, Snapdeal and ShopClues became the leaders as this marketplace attracted more sellers with their advanced technology, marketing strategy and local penetration.
Even though India has a population of 1.3 billion, the country has only around 300 million Internet users. As per the Internet and Mobile Association of India (IAMAI) study, Indian digital commerce has registered a compounded annual growth rate (CAGR) of about 30% between December 2011 and December 2015. While it stood at Rs 1,25,732 crore last year, the report estimates that it will hit Rs 2,11,005 crore this year. But here, the interesting fact is that online shopping comes only after online travel, which is valued close to Rs 76,396 crore. Online retail has grown by 57% since December 2014.
Sellers are the backbone of the ecommerce business chain and the marketplace help them reduce capital investment. Besides digital advertisement, cataloguing and other marketing supports, the marketplace helps sellers avail other services like supply chain management, logistics activities, and warehousing, among others.
According to some rough estimates, Indian online platforms accommodate a total 100 lakh sellers placing products like apparel, footwear, home decor, mobile accessories, baby products, consumer electronics and kitchen items. But the active sellers who are using this platform will be around 20 lakh only. If you sell unbranded products like handicrafts and mobile accessories, then there is very good chance to earn more. According to a study by IAMAI, electronic goods and fashion contribute close to 49% of overall spends in e-tail . Fashion, however, is where vertical players shine.
No level playing field
Merchants or sellers on the marketplace are basically carrying out retail trade. Traditionally, retail happens over the counter and the payment is made upfront. Ecommerce retailers are the only retailers whose money is also residing in the hands of these marketplaces. We have marketplace-related entities like Cloudtail, WS Retail etc, who are involved in selling activities. But merchants on board find that the costs such as commission, advertisement, and shipping, are higher than what is being charged to related entities. They allege that there is no level playing field.
With the marketplace’s help, sellers are able to avail technology to exhibit their product in a better way. Amazon, which started operations in India in June 2013, led the charge in its seller service with its solid investment of $2 billion into its India business. It also ramped up investments in June this year, as Amazon Founder and CEO Jeff Bezos has committed to spending another $3 billion in India.
According to Amazon India Seller Services GM and Director Gopal Pillai, the company experienced the biggest ever festive season since launching in the country over three years ago. “Our sellers across categories witnessed increased sales during the Great Indian Festival. With the three waves of the Great Indian Festival spanning the month of October, we were committed to ensuring festive cheer in the entire ecosystem and are delighted to see how our platform helped sellers across the country to grow at significant scale,” said Pillai.
Amazon revealed that 236 new sellers joined the crorepati club in October this year. Over 15,000 sellers witnessed their biggest sales in October. Sellers across categories on Amazon.in’s platform witnessed increased sales during the festive season. Smartphones, electronics, large appliances, fashion, kitchen appliances, household consumables, grocery, furniture, luxury beauty, and gold jewellery were some of the categories that generated great customer traction. In line with its constant endeavour to transform the way India buys and sells, Amazon.in’s started seller enablement initiatives such as Seller Cafes, Seller Lending, Amazon Connect, EasyShip, and Fulfilment by Amazon.
eBay Marketing Head Shivani Suri Dhanda stated that there is more rationalisation happening after the massive discounting on ecommerce platform. “Now, there is massive efforts by the platform to bring on board more products and sellers as a differentiator. Today, we have 10 crore products on our site, and no other player can boast of such a range. Last year, we had three crore products on our platform. We have really put our efforts into building such a supply and range, thus felt that the time is right to talk about it,” she said in an interaction.
ShopClues, India’s first and largest managed marketplace, has kicked off an enticing campaign for its seller base, called ‘Big Business Boom’ with the tagline, Business Badhaao, Diwali Manaao . The campaign is aimed to equip retailers with the right mindset and approach techniques to meet each and every demand of consumers during the high-action festive season and Diwali. Launched at the ShopClues’ Seller Summit in Mumbai, the campaign ran until Diwali, October 30, 2016. With this campaign, ShopClues built engagement with its seller community of over five lakh merchants.
The All India Online Vendors Association ( AIOVA ), a representative organisation of more than 1,500 small and big Indian sellers, said its members were getting good business during 2011-2014. “As marketplaces started calculating losses and implemented irrational policies along with failed merchandising and category teams, sellers started facing unit losses, stuck inventories, unnecessary penalties, etc. The loss of sellers’ business resulted in more losses to marketplaces and this lead to payment issues, job cuts, firing of top executives etc. Currently, sellers are looking forward to GST implementation, which can lead to a reduction in prices as the cascading effect of taxes will be eliminated,” said an AIOVA official.
He also pointed out that due to losses of payments default by AskmeBazaar, Best Deal TV etc, sellers sentiment is very low, and sellers are seeking the government intervention to set up a regulatory body. “Currently, the multibrand retail sector is not open to foreign companies, hence these marketplaces have been set up with foreign funding. Tomorrow, if the sector opens up, overnight, these marketplaces will start retail activities. The government should prescribe rules on how a current marketplace can change itself from marketplace to retail. Such conversion should not happen without the consent of sellers,” said the official.
Millennials, who comprise the majority of online buyers, look at ecommerce as futuristic, contemporary and breaking away from the norms. But only time will reveal how far the marketplace and government policies will help the sellers pan- out their business, bringing maximum benefit to customers.