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 - www.kraftinn.com 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 Amazon.in and Ebay.in.

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. 

Inventory vs MarketPlace

'Inventory or Marketplace ?', this is one of the pertinent questions of our times in the context of ecommerce. While the inventory model means that the ecommerce site has to carry inventory of all products it sells, the marketplace model requires the ecommerce site to act as a exchange platform between buyers and sellers and it charges a commission. The upside of a inventory model is faster delivery times and a consistent customer experience while this also means higher inventory and supply chain costs. The marketplace model shift most of the inventory risks and costs to the sellers but it becomes a continuous challenge to manage seller and buyer expectation in a consistent and fair manner.

Though both models look like chalk and cheese, it is important to remember that that the basics are the same from a business model perspective :

1) Efficient Inventory Management - For a great customer experience, having just the right amount of inventory is very important. Nothing is as annoying as telling a customer after two weeks that his or her order cannot be serviced. For websites that carry inventory, this means 'sell what you have' while for marketplaces, it is manage sellers to create a structure where sellers who manage their inventory well are incentivised (this can be done using feedback systems)

2) Efficient Delivery - Getting orders delivered in reasonable time is important for ecommerce. While for inventory based models, this is about managing inventory efficiently, for marketplaces, this is about not overdoing checkpoints and reducing unnecessary logistics costs.

3) Customer Management - Though customer service is paramount, it is worthwhile to remember that there are segments of customers that are still not ready for Ecommerce. 

At KraftInn, we have had some experience in both models - We use the inventory model for our website -www.kraftinn.com while we participate in the marketplace model in marketplaces like Ebay as a seller.

As a seller, we feel it is important to get the right balance between seller satisfaction and customer satisfaction and there are certain things that marketplaces should not do. Here is a small list :

  There are three key stakeholders in a marketplace model and it is important to get the right balance between the three.

 No matter whether its the inventory model or the marketplace model, the ecommerce space is hyper competitive and the ones which get the right mix are the ones that will work. We are a very small player and this is just the beginning of an exciting journey :) 

Shopo.in

If you are a handicraft afficionado, you must have surely come across the delightful website shopo.in. Today it announced that it has been acquired by Snapdeal.com. Its not exactly clear what direction it will take, whether the website will completely shut down or whether sellers goods will be made available at the Snapdeal website.

We were one of the early ones to setup a shop in Shopo.in. Unlike many others, they got a lot of things right from the beginning :

1) Respect for Sellers : There are host of websites that will call you and want you to list your products in their website, but most of them treat sellers as if they are not aware of the internet or plain dumb. There are designers and manufacturers that make great products and Shopo showed respect and tried to create an ecosystem rather than act like traders ready to make a killing

2) 15% Commission : India is a very difficult market and it is important that products are priced right. Another important part it should make sense for the whole ecosystem for products to be sold and customers to be happy - this means designers and manufacturers get to sell at a price that is good for them, marketplaces get a sensible commission and customers get a reasonable deal. Many players dont get that and want to charge 30%-40% which simply breaks the system. Shopo went ahead and fixed it at 15% with no listing fees - which was just great for everyone.

3) From Designer/Manufacturer to Seller - There are a lot of ecommerce stores that neither want to become a pure marketplace nor carry inventory. They get an order, place it to the manufacturer and then  get in their warehouses, package it again and send to customer. This is a bit ridiculous because 1) Higher chances of stock out 2) High delivery times and low customer satisfaction 3) Double the cost of packaging and higher chances of breakage 4) Higher price. However, Shopo did not fall into that trap and instead focused on enabling the seller (pickups from Fedex etc) rather than become an unwanted gateway in between.

4) Great Sense of humour - Shopo has a great sense of humour and it is apparent in their emails to sellers

There are also a few things where we thought Shopo got it wrong :

1) Logistics - If you are a seller, you can either ship it yourself or get Shopo to pick up the order via its courier partners. Though it was great for the seller and customer, I am sure this must be very expensive because it is difficult to estimate the size/volume of each product and probably it is best left for the seller to ship.

2) Marketing - Lately Shopo tried a form or marketing using which Sellers could market their stuff at Shopo's facebook page etc for a price. This is a bit strange for sellers because they are anyway paying 15% as commissions which should include marketing and payment etc.

3) Technology - Though most of what they did in terms of technology - feeds or the iPad app were really cool, the site was a bit slow at times and as a seller, your products kind of got lost as new and new sellers joined - somehow it felt that relevance and popularity lost out a bit to how new your stuff was.

Overall, Shopo was like a breath of fresh air and hopefully, these kind of services/websites dont lose their relevance when acquired by the big boys.

Best of luck to the Shopo team - you guys have been awesome.