Sunday, February 23, 2014

Online Market Places

We are a small handicrafts manufacturing company and we primarily sell online. A good part of our sales come through our own website - but we soon realised that as a brand, looking at your website alone is sometime not the best strategy. This is basically because of the following :

1) Costs : Setting up an online store is not very difficult nowadays. However getting good traffic is indeed a continuous and difficult task. This is where marketing comes in and whichever channel you choose be it Google ads or Facebook, cost of marketing is significant. Apart from that there are other transaction costs like Payment Gateway costs that are significantly high at small scale.

2) Brand : Each brand is unique and people connect to it in different ways and even though customers may love your brand, many are more accustomed to online purchases through the very large established online players like Amazon - this is due to a lot of different reasons from trust to customer service to purchase guarantees to robust feedback mechanisms.

Because of the above, we made a conscious decision to make our products available in well known marketplaces like and

Some of the great advantages of the market place model are :

- If you got a great product, you just need to list it. There is no additional expenditure for marketing and commissions are paid only when a product is sold. This frees up marketing expenses that can be put back in the business for expansion.

- Good marketplaces reward you for good performance. This means if you ship on time and customers are happy with the product, you get good reviews, your products get better rank and this converts into better sales.

- Marketplaces have great followup mechanisms and analytics tools that can give you excellent insight into what your customers are looking for.

- The commissions that are charged are usually in line with the industry one operates in.

The only model that works for us in the marketplace model right now are ones that just connect the buyer with us for a reasonable commission - the ones that take care of the logistics or ask us to ship to them or ask for very high commissions don't work because the Indian Ecommerce market is a value market - where the customer has to be happy, the vendors have to be sustainable and inefficiencies have to be minimised. Thats all for today. Thanks for reading.