The Devil-Demon-Evil-Satan-Monster is in the Logistics: The Saga of a Shipper

Want to take your business online? Or sell online to make some more pocket change? Lets Start:

1. Find & Source a Product: Check
2. Make a Shopify Store: Check
3. Promote on Facebook and Get Orders: Check
4. Ship the Orders: Sorry, Whaaaaatttt??!!?? HOW!!??!!

All About Logistics

For the more seasoned ones who are still trying to “solve”  the “logistics problem”, please stop, it is not one of those problems that you can solve, you can only find an optimum operating point but expecting anything more than that will land you in hell right besides the Logistics Devil-Demon-Evil-Satan-Monster.

For those of you who have given up and found your optimum operating point, get back up, its time to expand and ship more orders to more locations.

And the newbies, I feel sorry for the sheer amount of pain that is coming for you. I am always here for quick tips to ease some of the pain, hey@sugamja.in

The sheer number of variables that come in when we talk about Logistics for eCommerce is mind-boggling. Lets look at some of the broader points involved. We will consider two channels of selling for the purpose of this lengthy case study:

  1. Marketplaces
  2. Own Website | Social Media

Marketplaces

In my previous posts I have covered the Big 6 so I will not get into that, no matter what you start selling you will generally start out with one of these 6 and eventually get on multiple. All of them provide logistics support so initially it will be all roses and lilies until the rot sets in. The commissions marketplaces are charging has gone from costly to insane.

Do your costing very well and start slow, analyse costs then only scale if profitable (Strive for Net 15-20% but it will turn out to be more of a wet dream).

The price of shipping is prescribed beforehand, always calculate on product volume, initially you will be charged on weight or simply declared values but eventually it will normalise to the volume based charge and you will not even get to know. Marketplaces have started draconian Clawback practice i.e. they will charge the extra logistics cost for shipments which were charged wrongly previously, in future, when they know the actual Physical/Volumetric weight of your product.

eBay & Amazon let you choose if you want to use their logistics service (Powership & Easyship respectively) or not, other marketplaces are not so flexible about it, they make it compulsory to use theirs’. But lesser known fact is once making a decent commission bill you can fight with marketplace to let them use your own logistics setup rather than theirs. Paytm’s NLMD and Snapdeal’s Vendor Self, Shopclues’ MDF, and underground chatter is Flipkart also allows in rarest of rare cases but personally haven’t seen them offering openly like others. This model is on offer BUT generally there is not so much freedom to choose, you have to put up your case, meet some criteria etc etc. They are right on their part and its just there for some specific reasons and specific types of sellers, but thats a story for another time.

WHY WOULD I EVER DO THAT (use my own logistics setup), you ask?

Pros of using Marketplace Logistics:

  1. COD orders hence more orders.
  2. No Management or Extra Resources required.
  3. Performance Metrics remain controlled and we as poor sellers remain blameless

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Cons of using Marketplace Logistics:

  1. Increase in return rate.
  2. No Control over anything whatsoever.
  3. You will still get self ship orders from Amazon and eBay so you need a logistics setup anyway, though now you can choose not to get self ship orders on Amazon, those orders will mostly be refused by Amazon to the customer so everybody’s loss in a way.
  4. THE REAL COST: Not talking about Freight charges. This is what you realise at scale. That the real cost of using marketplace logistics is not less if not more than the cost of Extra Resources and Management of Logistics in house. Try doing reconciliation for any one single month, include cost of damages, reasons for returns including RTOs, whether you have received these returns and RTOs and the charges of the same. All in all it will turn out to be a costly proposition.

But volume is at the marketplaces, building that  kind of sale @ Own Website takes lot of time, money and effort. So the choice is entirely on the Outlook of the Seller. The way you want to work, the principles on which you want to work. Some sellers are happy selling less making more profit, some want to less more making less profit. Neither way is right or wrong. There is only lesser of the two evils kind of way in this business.

For Any and All Self-Ship Orders we will look at the logistics part in the Own Website section below.

Own Website | Social Media

Start with accepting a few simple facts:

  • You need to tie up with at-least 2 courier partners (called Carriers henceforth), be it from local courier shop or direct tie ups with eCommerce Logistics companies.
  • You cannot provide same day and next day deliveries, don’t even think of trying yet. It will take away your focus. It will take another couple of years till a few carriers (The 3PLs) are operating this service at customer bearable costs. Customers will demand it and they will not be ready to pay for it, don’t buckle under pressure you will enter an inescapable dungeon. Marketplaces have increased customer expectations, it is on us to normalise them and be transparent about it.
  • Issues WILL come, and you will need to deal with them. Simple.
    • Deliveries won’t happen, will happen late | This is how we learn to manage customer expectations and find out ALL carriers are same, just marginally better than the other.
    • RTOs will come for no reason | Buyers will refuse prepaid orders also, carriers will return shipments for no reason.
    • Breakable items will break and nobody will reimburse you | This is how we learn about investing in packaging.
    • You will be overcharged | This is how we learn costing & How to deal with Carriers.
    • Shipments will be lost, you will get Maximum liability by Carrier after lot of followup, customer will be pissed much before anyway.
    • MANY MANY times because of N number of X type of issues your CAC (Customer Acquisition Cost will become a sunk cost)

If you expect anybody will provide you even DECENT service just because you are paying for it, forget that notion. Now there are two ways to handle it, either be pissed about everything and spend all your time fighting everyone and get some of your way eventually. OR look at the bigger picture, understand the scenario and tweak your processes and business practices accordingly. I am not asking you to bow down to every whim of every one, but only to fight on reasonable things where you know you will get something by investing your time. DO NOT ignore the TIME COST of yours and your team as well.

Truth being Carriers & the even the Infrastructure (Cargo capacity of Flights & Trains) is presently not equipped to handle the shipment volumes which they are handling, so lets try and make the best out of it. CARRIERS BE LIKE:

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Why 2 Carriers? Because:

  1. None of the carriers provide PAN India service.
  2. None of the carriers is the best one.
  3. You need a backup.
  4. Eventually, by trial and error you will find it cant be ANY 2 carriers it has to be the perfect combination of two or more as per your requirements.
  5. And further on you will find out you still need more Carriers as you scale.

Now you can either Ship to Available pin codes or Ship to All by adding India Post in the mix. It allows you to service ALL the orders and you do not have to implement a Check Service box on the checkout/product page, you become pin code agnostic but in this scenario overall delivery efficiency and your operational efficiency decreases because of a lot of distribution among different carriers as we still haven’t talked about the tedious task of after shipping tracking, raising issues and getting closures.

Logistics industry understands, one thing and one thing only, Volume. Volume of the shipment and Volume of shipments :p The rates that you will get as you start will seem to be costly because of the lesser number of shipments that you can provide but presently fierce competition among carriers has helped the rates quite a bit. More the number of shipments cheaper the rate, more the number of shipments more you will be heard. Though it is true for any business/industry but more so for this one.

You will end up doing Ship to All when it comes to Marketplace fulfilment, you will have no choice rather. But you will still need to use the most optimum mix of service and cost, remember the task is not to ship, THE TASK is to get it Delivered in least possible time with least cost possible.

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With your own website there are many other factors to consider to optimise this mix, you have more control, more freedom to choose, shipping can be charged, COD orders can be controlled, world becomes a happier place again. But at what cost? At the cost of sales? Not necessarily.

  • Define clear & transparent policies. Don’t hide them in a corner in the fine print.
    • If item is damaged/different you can choose to get item back if it has salvage value and will cover return shipping cost as well.
    • Offering return pickups is a tricky thing, avoid at the start, you can offer eventually if you have such logistics support.
    • If buyer doesn’t like the item, still accept the return but do not cover return shipping charge.
  • Try and charge a nominal Shipping Fee (Rs. 29-89/- I find are feasible values depending on product and product value, charging order location based fee is yet to come into picture) and COD Fee unless you are selling very high value and high margin small sized product in which case you do not need to charge it, but its just better to manage customers expectations.
  • Do not promise unrealistic delivery times. Distance based and carrier given +2-3 days timelines should be defined so that you can get time to still get things delivered within timeline.

With exactly such clear cut policies I have seen many friends, clients and websites’ raking in upto 100 orders a day. The Support needs to be phenomenal. Always answer customer calls and email queries and at the earliest resolve their queries, tell them the truth. As the eCommerce industry moves increasingly towards customer paid and customer chosen shipping, it will become a necessity to offer OPTIONS. Currently carriers do not provide an array of options but specialised carriers have started coming into picture which maybe service specific like Reverse Logistics or Hyper-local or great service specific to a region. But all of this again comes at a price. A cost which cannot be borne forever.

When you are Shipping to Available, you need to have serviceability checks before you accept these orders, then in case of COD, COD service to the pin code also needs to be checked, this is only possible when you have got this built into the website or are using Advanced COD app of Shopify. Even this does not resolve the issue completely, to implement this, you need a Serviceable pin code list WHICH is valid & true only at a specific point of time in the continuum of time and space. Carriers are updating serviceability every week, every alternate day, I know of a Carrier amending serviceability EVERYDAY. Let’s assume we work with one of these carriers, how do you maintain serviceability check properly? CANNOT.

So what to do now? Now either find a ground breaking earth blasting solution to it or let’s just Ship to All. Lets get the order first, check if we can send it with available carriers and then send it or cancel it. SO SO WRONG. “Service nahi kar sakte to order liya kyuuuuuun???” “India Post se kyuuuun bheja, mere yahan courier service hai!!” 

So what do you do? You tie up with every possible courier service available and then start with the Nuclear Mathematics of Serviceability, Weight, Size, Location, Cost. For one order say you end up with 3 possible options (maybe 2 for a smaller town), now toss a coin twice to choose a winner out of the 3 :p How do you decide? One is cheap, one has better service, one is the middler. So possibly, it will go to the middler if you care about service and future of your website and your customers and your self respect but as luck would have it even after all the Nuclear Mathematics the shipment still gets stuck and delayed.

So coming back, now that you know which carriers are servicing the order carrier allocation is the whale in the warehouse. Let us for a second also imagine that it is a 3Kg product (weight or volume), you can send it by Air/Express or Surface (economy/bulk), you may end up having these scenarios:

Cheaper Express Carrier, lets call it RamBharose

Costlier Express Carrier, lets call it LutGayaBarbadHoGaya

Cheap and slow Surface Service, lets call it JaaneKab

Cheaper and slightly slow Surface Service, lets call it YahiHaiWo

Can you guess the winner? YahiHaiWo is the winner obviously, but for it to be the winner you need to be able to create all these scenarios. Every order’s shipment will and should create multiple possibilities for shipping and you need to be able to select the best balanced one. For a lesser or greater weight shipment there can be even more possibilities and they will be even more confusing.

At the end, all my time was going into managing logistics while the sales tumbled. I needed to be able to manage the Business and Sales rather than Logistics ALL THE TIME. It does not and should not have to be this hard. That is how and when I decided this thing needs AUTOMATION and started working towards the same.

Moral of the story being if you have managed to manage the logistics well for your eCommerce business, you have at-least in part slayed the demon.

More on management of logistics issues in Part 2: Taming the Devil-Demon-Evil-Satan-Monster that logistics is.

Full Disclosure: Shopify link is an affiliate link & I am Co-Founder of Shyplite.com

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Sansanikhez Khulaasaa: Marketplaces Spamming Sellers | Why Spam Sellers with non-seller-y and irrelevant seller-y newsletters?

So when I signed up on eBay to sell seriously, I signed up with a new email address, to be my new business email. I had no idea what kind of these notification emails I can expect and how many. After listings were live and sales started coming in, within a week I end up creating 9 labels for various kind of mails from eBay, which also were not enough, I still had to manually label a few.

So I noticed apart from all the notifications about sold listings, new listings, payment, buyer seller messages, ended listings and claims, I was also getting the usual spam that they send to their email list of registered buyers. Soon, as I signed up with new marketplaces, Amazon, Snapdeal, Paytm, Shopclues & Flipkart I used the same email. And within a few days, to my very expected horror my mailbox was full of 100s of unread irrelevant emails making it impossible to find any relevant account related update mails, related to listings and support ones as I was still learning the ropes then.

I am a 0 inbox person, i.e. no mail is to be left unread unless there is action pending on that particular mail thread. I continued painfully sorting, labelling and deleting all of the garbage for as long as I could, every morning 30 mins of mailbox cleansing, it was my meditation, dont judge please. But joking aside, it was necessary otherwise it was simply impossible to work with these guys, the marketplace waaley.

One fine day, I was in a f**kall mood and decided to skip the cleansing and got straight to work, only looked for relevant subjects, from 70-90 odd mails and read 9-12 relevant ones, am sure I must have missed a few but time was in short supply and I simply could not afford to do the cleanse anymore. Today I proudly have 1400 unread mails in my Inbox and I am 100% sure I must have missed a couple of 200% critical updates which I will get to know in the form of penalties.

What is this if not unethical, I ask you marketplace waaaaaaloooon. Are you deliberately trying to make sure sellers don’t scale so that in-house companies get all the sales? Is it a part of the big evil corporate conspiracy to keep sellers the aam janta (mango population) occupied with trivial matters so that they can’t see the big picture? What do we do if not question your character??????!!!!!?????? What else can we do *sigh* :p :p

seller inbox

I still try to read some relevant ones and it is my sincere effort everyday to not let this number cross 1400. Wish me luck!

Update/Edit: Forgot to ramble about Product Ads, FlipKart and Snapdeal have pivoted to earning from those only judging from the amount of emails we the sellers are getting, the entire 2300 crore loss posted by FlipKart today will be recovered from PLAs it seems.

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Articles @ IndianOnlineSeller.com Part II

NO, I have not become a full time writer with IOS, not yet atleast.

Long time since I have updated the blog, girls at IndianOnlineSeller.com have kept me busy writing stuff for them :p

Topics I have given my inputs on recently:
 

Account Suspensions on Online Marketplaces – the Right & the Wrong

http://indianonlineseller.com/2016/06/account-suspensions-on-online-marketplaces-the-right-the-wrong/
 

Ill-defined Paytm SEED program, ineffective Seller Support causing trouble for online sellers?

http://indianonlineseller.com/2016/07/paytm-seed-program-has-overlooked-issues-ineffective-seller-support-the-reason-why/

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Articles @ IndianOnlineSeller.com

 [Seller Interview] Online seller Sugam feels Account suspension is necessary. Here’s why

http://indianonlineseller.com/2016/03/seller-interview-online-seller-sugam-feels-account-suspension-is-necessary-heres-why/

 

[Seller Speak] Selling on marketplaces is not just listing & waiting for orders!

http://indianonlineseller.com/2016/04/seller-speak-selling-on-marketplaces-is-not-just-listing-waiting-for-orders/

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“Itne khafa khafa kyun ho?”, Unicommerce (Snapdeal) to Paytm | Airing Dirty Laundry in Public | The Rise & Fall of Unicommerce

Edit: 21st April 2016: Paytm actually sues Snapdeal for stealing data through Unicommerce.

http://trak.in/tags/business/2016/04/21/snapdeal-unicommerce-stole-business-data-paytm/

http://timesofindia.indiatimes.com/tech/tech-news/Snapdeal-co-stole-biz-data-Paytm/articleshow/51918360.cms

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Original Post 26th March, 2016

First let’s start by looking at this hate mail Paytm has been sending all its sellers (click to enlarge and read)

paytm

Now let’s start the story of how these two kids ended up fighting like heathens 😀 :p

So, I am assuming everybody knows what Unicommerce is, but still I’d like to tell given that many would not know, its the swiss knife you need to sell online. Now being serious its a multi-channel inventory management and order processing tool. Online sellers need it to manage their inventory efficiently and to scale while selling on multiple marketplaces.

Simply put,

without such a software

it would be a nightmare.

(no it was not intended to be a poem).

So, why is this Paytm kid sending such mails and bad mouthing such a good kid? It makes no sense! It made no sense to me either (because as I said earlier without a tool like this its near impossible to do multi-channel selling), so I got very curious about why is this happening, what could be their problem because its adding immense value by enabling business on their platform by enabling sellers to sell more or simply be present. Then I thought, they have been sending these mails from months but integration of Unicommerce and Paytm is working properly, we are processing Paytm orders using Unicommerce everyday and all is good.

Why not simply stop API access to Unicommerce and put an end to it instead of using such tactics and scaring sellers (scared because they will stop all pending payment is what the mail means).

The answer is simple, because Unicommerce has leverage of approx. 5000 sellers on its platform (information from a credible source). If Paytm shuts down their Merchant API to Unicommerce and we the sellers cannot process orders and manage inventory for Paytm from the same, issues will increase rather than decrease and at least I as a seller will have to SHUT DOWN my Paytm store because as a channel which gives me about 10% of my overall sales, it will stop making sense for me to maintain a presence on it, I am sure many other sellers will agree to this.

So again, why the mail, I was given a very vague answer that the integration breaks and sync does not happen sometimes and sellers process orders in Unicommerce but they don’t get processed in Paytm panel so these orders end up getting cancelled and merchants are charged a penalty which they protest and Paytm had to reimburse many such sellers because of the same.

It again makes no sense, as when Paytm pushes shipping slips to Unicommerce, at both places orders are marked Ready to Ship and only when Paytm will provide Manifest we will get it in Unicommerce and orders will be marked Manifest Requested. If we have got the Paytm manifest using Unicommerce there is no way these orders are left in Ready to Ship status @Paytm.

SO ANYWAY, point being even if there is such an issue, shouldn’t the tech teams resolve it amicably internally instead of escalating it to this level? OR If the Unicommerce set of sellers is too small for Paytm and they can take the hit of losing them, so why don’t they? Do this or that, what is the point of sending such mails?

I think the issue here is deeper, maybe I am being a conspiracy theorist but it makes sense to me like conspiracies make sense to well, conspiracy theorists. I think the issue is DATA. So when a seller connects all these marketplace accounts to Unicommerce, and use it for order management, Unicommerce (Acquired by Snapdeal  recently) ends up getting data of your customers, the pin codes orders are coming from, the items that are best selling etc. etc. Its the ULTIMATE business intelligence tool for Snapdeal to get all this data from competing marketplaces. How well they use it is a different story. Am sure legal loopholes can be found in all of the litigation for Snapdeal to be able to use this data as Business Intelligence. So I think Paytm has problems with Snapdeal getting all this data. Though I would not be surprised if they are not thinking on this line, and the actual issue is what I was told. LOL.

Initially I also thought Snapdeal acquired it because they were using it to manage their SD+ warehouses and vendor management etc. So, they would have wanted custom functionalities to be able to do all that more efficiently so they must have thought, why spend building from scratch, we have so much investor money lets buy this platform and make it in-house. Like, ab to ghar ki hi baat hai.

But gradually I understood the DATA part but what makes me doubt that there was any DATA intention is that Snapdeal has almost killed the product, they are not actively marketing it is a fact, I think they have killed its growth and the product itself.

The Rise & Fall of Unicommerce

Unicommerce is a beautiful piece of software, fully functional and I have always been in awe of it because I have a fair idea of technology behind it and I know HOW HARD it would have been to build this platform given the sheer number of integrations that they have and HOW HARD it would be to keep it running with SO MANY dependencies, breakages are fixed at lightning speed. Salute to founders and makers. IT WAS an Amazing product with an Amazing team. They  have managed to build it in an environment, where first question when you ask for any API is, “Kyun chahiye, kya karoge?”, with what emotion should they be answered ki, “Aapka business enable karenge”.

My testimonial to Unicommerce is that without you guys I would not have been able to scale my online selling business and all you marketplaces would not have been getting lakhs in fees that you deduct from my payments every single week, sometimes even twice in a week :p

And the best part, there is virtually no competition, there are other players but some have less integrations, others’ pricing is unsubscribable and overall every other product lacks attention to detail and the QUALITY and ease of use that Unicommerce has. I took some demos but in comparison every other thing fails. It could have been the star of Indian e-commerce with a ton of leverage but founders must have had their reasons of selling to Snapdeal.

I don’t know if its a co-incidence that there have been hardly any major updates, I have stopped seeing any activity in terms of marketing, and the Support has gone down to the sewer from stellar level since its acquisition by Snapdeal. It can also be a side-effect of growing too much too fast but I highly doubt that. Its still not too late, it can be saved and used.

So I request Snapdeal to please understand that with great power comes great responsibility, you have kryptonite in your hands, use it. And I request Paytm to please let the sellers sell on their platform and help & support them grow, also, co-operate with Unicommerce/Snapdeal till another player worthy of being Unicommerce comes up.

Thanks & Regards :p

 

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Six Degrees of Separation and Separatism: Marketplace vs. Sellers | What Separates marketplaces from each other?

Are all marketplaces the same?

By definition, yes they are all the same in the sense that they do not hold inventory and are only facilitators of the e-commerce transaction between the buyer and the seller.

But are they, same?

By operations, no they are not even close to same. Each marketplace has its own model of operations which makes them quite different from each other.

Before we venture deeper into this thorny territory, we need to understand what does this ‘model’ mean. By model I mean how a marketplace manages its sellers inventory, logistics, discounts & returns etc. This includes all components of marketplace and seller interaction.

To be more clear, few examples of control would be:

  • Ebay, Amazon, Shopclues encourage buyer seller interaction while Paytm, Snapdeal, Flipkart do not.
  • EB, SC, AM give greater catalog control to sellers and also about choosing modes of fulfillment (like Dropship, Self-ship, FBA etc.) while others mostly enforce the same.
  • Only Amazon allows control of Refunds.
  • Ebay, Amazon, Shopclues also allow way more control on Catalog than others.

Some marketplaces are more open while some are quite closed, some work on hybrid model some are purebreds. This degree of openness or alternatively the degree of control a marketplace wants to exert on its seller’s becomes their differentiating factor. I believe this degree governs their evolution and even some part of their audience or buyers eventually.

Major Indian Marketplaces on Line of Control (0 being least controlled and 10 being most)

So, top six marketplaces in this market are separated by Six Degrees, hence the title. Everybody exerts a different degree of control on their sellers.

On extremes you can see that 0 level of control results into OLX or classifieds model more or less and 10 results into own website to sell online or what I have previously called Stand-alone where the seller has full control. In a way zero control is also full control, its like any number divided by 0 is infinity, so lets put a stop to this right here.

As you can see towards left more open marketplaces are eBay, Shopclues and Amazon while Snapdeal, Paytm and Flipkart are more towards the right or larger control. So immediately conclusion comes to mind that greater the control bigger the marketplace.

Seems like it, but for how long? What is the cost of this control? Another direct co-relation that can be seen from this LoC is amount of losses they are making. Though control would not be the only factor towards that loss, but I can safely say that its a major one.

Marketplaces are defending accumulation of losses by arguments like we are building the market etc. and they are right to an extent but again at What Cost?

So when all marketplaces are accumulating losses who the hell is profiting? The Seller.

So why don’t marketplaces become sellers? They want to but:

1. FDI in multi-brand retail is not allowed.

2. It is not possible to hold so much inventory by one company by which they can do equivalent GMV that they sell right now by the way of thousands of sellers. They have indirectly created “their own” sellers like FKs WS Retail and Amazons Cloudtail but again the more obvious reason is to make available more products on their platform at cheaper prices by buying in bulk and directly from brands by investing 100s of crores of capital which a seller generally cannot do and that stuff too they sell at losses.

So why don’t Amazon or eBay or Shopclues want to control their sellers? It can be understood by working our way backwards, and assuming a possibility that because marketplaces on the right are investing the most in promotions, discounts and advertising therefore, their natural instinct is to have more control on sellers to protect their investments and minimize the losses by trying to sell most possible which they cannot do if seller has more control.

There are a lot of smaller things like these which defines the overall degree of control. I feel that middle or hybrid is the best way to go forward, closest to which are Amazon & Paytm (but their marketplace product is very immature still). While the ones on the right are busy investing or burning in deals and discounts and advertising, the ones on the left and specifically Amazon is busy investing in Infrastructure (It’s all relative).

eBay is happy as is, it has defined audience, it has defined kind of sellers, it has left them on a platform with well defined policies for all matters and whatever revenue it must have made before the war started, it invested in Snapdeal to be a part of the “modern marketplace ecosystem” as well. Shopclues is big in Tier 2 and 3 cities and its catalog has mostly unorganized and unbranded stuff like you find in local market and hence “Ye Mall nahi hai Market hai”.

Though FlipKart has seen most success with controlled model but that was when 80-90% sales were done by their own arm WS retail, once due to law they started adding more sellers, the controlled environment worked but I doubt it will work in long run against Amazon’s less controlled model, towards profitability.

The more you try to control seller’s business, the more operational bottlenecks there will be. Marketplaces should mind their business rather than the seller’s. Due to these inefficiencies and forced operations lot of sellers make losses and ultimately withdraw from the marketplace because a seller has NO INCENTIVE to sell at a loss except in one exceptional case i.e. to rank the listing or to jack number of orders and lower defect rate. A seller is not getting any advantage of the assets being created i.e. brand & buyer, that is the asset marketplace is creating for themselves by operating at a loss.

This is where separatism comes in. Wikipedia says, Separatism is the advocacy of a state of cultural, ethnic, tribal, religious, racial, governmental or gender separation from the larger group. While it often refers to full political secession, separatist groups may seek nothing more than greater autonomy.

When a seller withdraws from marketplace and opens their own website, they desire autonomy or greater control which in this case becomes 100%, they want better policies so that they can create a sustainable profitable trading business nothing more. After opening own site or trying to do so is where the seller understands, cost of running own website, technological challenges, marketing costs, and overall a marketplaces predicament but still they are happier selling from own websites than fighting over useless things from controlled marketplaces who sometimes go against their own policies or the policies just fall head first on themselves. Basically, they implode.

The sellers end up wanting a separate site because they feel that if they are selling so much on the marketplace with such thin margins and even end up making losses sometimes they can maybe increase profitability by building own website and selling as much or even more and add an extra sales channel, and create assets as well, but as separatism goes, its not so easy. Some are able to survive and operate and scale own stores but mostly end up shutting them down (they become a failed state after separating :p)

To Marketplaces: Keep your Sellers happy, they will keep your Buyers happy.

Thoughts?

P.S. An excellent article by IOS http://indianonlineseller.com/2016/02/marketplace-or-inventory-led-which-ecommerce-model-works-best/

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Marketplace Product Positioning and Ranking Algorithms

List the product, sit #fingerscrossed for a sale to come in.

Indian Marketplaces, I have seen are not putting in an active effort to educate sellers or even their catalog teams about the importance of listing quality and other factors which increase product visibility and help increase sales for sellers. Currently, everyone is just pushing seller ads for sponsored products.

Flipkart, Amazon are currently doing Sponsored seller ads on full scale. Snapdeal has just launched. Paytm will soon follow. Shopclues may or may not as they have many other “innovative” seller marketing services unlike the rest. There is no such thing on eBay and will never be I guess.

Sponsored Product Ads are something which should be used to promote new listings or newly launched products and should not be used as a regular feature for a sustainable online retail business, you need a lot of data and analyse it properly to directly co-relate ad spent to sales, the tools to do that just aren’t there. After some promotion the listing should self sustain based in interest, views and conversions.

When you list a new product or create a new listing it will generally come up around the middle of your product category page, depending on various other factors and not just that its new. It will depend heavily on price and the filter or sorting that buyer has applied. Generally, its set to sort by “Popularity” when a buyer lands on any product category page. Still, a new product appears in the middle which theoretically has no popularity factor.

There are 3 broad set of conditions (which I have been calling algorithms) which govern your marketplace sales:

  1. How the marketplace derives search results based on keyword
  2. How the marketplace derives listings for category page when you are browsing
  3. How the marketplace decides who gets the buy button

So let’s look at the possible factors which will help your listing move up in your category (covers point 1 and 2). I think these factors should be worked on to get more sales but it does not necessarily mean that they will work on all marketplaces as everyone has their own product listing and ranking algorithms.

  1. Listing quality: This is very very important. Your product pictures should be good, description should be crisp and to the point, and should include bullet points to highlight product features. Invest more time on cataloging and it will 100% convert to more sales. Any question that buyer may ask related to product should already be answered in the listing. If you still get any question for instance on Amazon or eBay, update your listing.
  2. Pricing: This is another huge factor which will help get sales, be competitive but you don’t necessarily need to be cheapest as many market places support quality of listing and seller rating more than pricing. This is where the ‘core strategy’ part comes in. Here is where you need to strike a solid balance to win buy box/button or move up your listing on category page. If someone needs more info on this, leave a comment, I’ll be glad to help.

After these 2 factors are looked after properly, then we should look into promotion of these newly listed products. This is where sponsored ads and paying the marketplace comes in. But I started doing that much later, I was able to scale pretty well keeping in mind above factors. If these two have been done properly generally the sales start coming in within a day or two and then it all depends on below factors and respective marketplace’s algorithm.

  • Searches for the brand or product and marketplace’s search algorithm
  • Click through rate from category/search result page to listing page
  • Conversion rate (No. of Purchases divided by Number of listing views)
  • Stock availability (Out of stock obviously will go to bottom or won’t appear at all). I have felt that items which keep going out of stock also see a decline in position. So make sure it does not go zero. Best example is eBay listing, more u sell, more upward it goes and once stock is 0, listing ends and you have to start from the start.
  • Seller account reviews/feedback/rating I have also felt that account age and number of orders seller is doing per month also plays a role in product position.

Rest is all in hands of account managers and marketplaces, how much support they can provide to enable all this. And some marketplaces have no algorithm whatsoever or maybe weird logics which are just way too hard to crack and highly inefficient, no matter what you do product will not come up, even after a lot of sales.

Below is my opinion of top marketplace’s algos:

  • Amazon – Strong data based algorithm and this is just for product positioning, getting buy box is another story altogether but concept is similar. Ads will benefit sales. Amazing Sponsored Ads interface.
  • FlipKart – Could not notice much, but I believe they also have some kind of algorithm in place but not as strong as Amazon’s. Very amateur Ads system, I do not understand how a competitive ad system can be made to work on fixed price of 0.50 paisa per click.
  • Snapdeal – Algorithm is definitely present, considers all factors, bit more heavy on pricing but overall good and manageable. Ads system just launched and its almost premature. I was actually told that the more amount you put in as a deposit more preference your ads will get. Search is good.
  • Paytm – Very new product as a marketplace. Absolutely nonsensical ranking/positioning algorithms, no tools for sellers to price competitively even. Search is also completely broken and gives non-sense results. Sometimes it will not return products even if searched by exact title of the listing which exists.
  • eBay – Excellent search and to the point ranking/positioning, main factors are how many units listing has sold and how many people are viewing and watching a listing, they are completely transparent about all this.
  • Shopclues – Similar to Paytm, technologically weak but they are better than some others in terms of operations and seller services. Search and product positioning have no visible or justifiable basis.

More about more things in following posts.

Feel free to Question or Ridicule.

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Psst. Psst. Investors & Sellers, till when will you be paying for our COD orders & lifestyle?

If you thought all the investment being pumped into the Indian e-commerce industry right now, is going towards discounts, then you could not be more wrong. Discounts are just a small part of it. Some would say “we are investing in building infrastructure” to which I say “ok, sure, I believe you”.

A major chunk of this leftover investment or “infrastructure” investment is going towards two heads:

  1. Salaries
  2. Logistics

Overpaying people is not creating infrastructure, it is spoiling the market for new startups like mine :p Counter argument would be, its a barrier to entry and  we are a good company our people are talented, they deserve it. Am sure they are (talented) they do (deserve it). But when you say all of them deserve double of what they should be earning, I believe you, totally.

In truth, it not only upsets the market balances, when the funds run out, will you be offering everyone a salary cut to stay afloat? How many will stick? Who will pay them equivalent even if they want to switch. Overpaying hampers personal growth of true talent. What is left to strive for, for them? When you start at the top, you can only go down.

Coming to logistics, all COD orders are funded by these angels on earth called Investors. I can 100% agree that some component of cost of COD that marketplaces bear is built into the logistics cost that is charged to the item seller. BUT, keeping in mind the return rates of COD orders and amount of bogus & “accidental” COD orders, it cannot even be a break-even proposition. As mentioned earlier courier companies charge Rs. 30-60/- for as a COD service charge per shipment, assuming marketplaces give them humugus volumes, I doubt any carrier would give them this service for free.

Though Amazon is one marketplace I have seen actively trying to prevent duplicate orders by giving buyers a message, but when a buyer still places order like this (screenshot below), what are they to do. As a seller, once the order is in, we HAVE to fulfill it, no matter what, we cannot cancel it and we WILL be charged the logistics cost even though we know these duplicate COD orders WILL return. But only option we have is pre-fulfilment cancellation which attracts penalties, monetary and rating both which may ultimately lead to suspended store. So, I prefer to get these sent and bear it as a cost of business.

am1 am2

This is only one side of the story. Every marketplace has a different way of doing this. So, I can safely derive that all this money is coming from BOTH sellers & investors. For one, they just cook numbers for the other they just enforce numbers. I will also cover how sellers are FORCED to use marketplace service and pay nonsensical charges. And the only function of seller support is to create a wall between company and sellers by giving incredibly dumb responses excluding Amazon’s world class seller support.

So, as per popular opinion, I don’t think any bubble is going to burst but market is due for ‘correction’ and normalization.

Thoughts? Questions?

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Online wala Joke

Me Endorsing Online Shopping

Society Uncle: Beta, online shopping karte ho?

Me: Ji uncle, sab online hi mangaata hun.

Uncle: Samaan nahi aaya toh?

Me: Koi baat nahi uncle #PaisaNahiMarega

 

Me Endorsing Online Selling

Society Uncle: Beta, ye online selling wagera ajkal boht chal raha hai, soch raha hun try kiya jaye.

Me: Rehne do uncle #PaisaMarSaktaHai

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Story of the humble 1 Rupee Coin: Cash on Delivery

COD Order Value: Rs. 199/-

Conversation with delivery boy:

Me: “Ek rupiya nahi hai to wapas le jao”

Him: “Ok, Sir”

*delivery boy leaves*

We ignore the paisa value of orders, payments, bills and everything else, but ever wondered where all that paisa goes?

Story of the humble 1 Rupee Coin is not new to us, we have been accepting toffees and whatnot instead of the ‘change’ at kirana shops, at the panwadis and virtually everywhere else. Paytm and all other e-wallets are supposedly driven by this fact that their product solves this problem among others, at least they say so in their advertisements. Satyavachan. Agreed. But the problem here is not that we are willing to accept the toffee or let go of the unloved 1 Rupee Coin, the issues here are service and question of liability (I love this word).

Delivering Cash on Delivery orders, is a service you are providing as a carrier and somebody is paying for that service, directly the seller and indirectly us and in most cases the investors who have invested in marketplaces :p

So are we as a customer liable to pay 199 change to be able to receive our order? To emphasize on the gravity of the situation it comprises of these denominations 1×100+1×50+4×10+1×5+2×2 so thats 6 notes and 3 coins, and this is best case scenario given that the customer has all these denominations.

Can someone answer what can solve this problem?

Absolutely correct, the humble one rupee coin.

I will accept that the carrier (courier company) has no legal liability to provide me the customer with change, and I can also very easily let it go. BUT #beingbaniya, “Mujhe to ek rupiya chahiye”. What now? Whose loss?

Let’s do some maths: Rs. 50 product cost + Rs. 20 marketplace charge/payment gateway/other charge + Rs. 30 delivery charge *and brace yourself* Rs. 50 COD charge (yes that’s what most carriers charge for a COD order, Rs. 30 on the lower side), here I am giving seller the luxury of 25% margin which is not actually the case, margins on selling goods online are generally much lesser (depending on category).

Now, if I refuse to accept this order, there is also a Return to Origin/Seller charge involved and COD charge will still be charged. Paying Rs. 30-60 COD charge kills the seller, its simply not feasible, which is why marketplaces are footing this bill for now. Like, you have started seeing delivery charges, you will also start seeing COD charges sooner than later as funds dry up and for a sustainable tomorrow.

Customer loses, seller loses, marketplace loses, carrier wins! Ding Ding Ding.

So, calling all online shoppers to join the revolution, place COD orders and refuse to accept them if change is not provided, if enough of us can do this, and marketplaces see a sharp rise in COD returns (which is already very high at almost 20-30% of COD orders), they might force carriers to force delivery personnel to carry change and make sure no order returns due to this. Let’s take this pledge to empower the Re. 1 coin :p

But on a serious note, let’s assume everyday 10,00,000 orders are placed online and roughly 40% are COD then we are collectively & effectively letting go of Rs. 4,00,000 per day which sums up to be 14 crore 60 lakhs per year. Where does all this money go? To the delivery boys. I have nothing against them earning Rs. 1000/- a month more than their salary given that they get no holiday whatsoever. Amazon Transport Service was operational on 26th January, Imagine.

And this is just the case when order value is, 1 rupee less than nearest 0 figure. What if order value is Rs. 191/- you don’t have a 1 rupee coin and delivery person will obviously never admit he has Rs. 9 change. Now, you can make all permutation and combinations.

Let your imaginations run wild 😀

 

 

 

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