Browse Month

February 2016

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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The Curious Case of Return Shipping Charges

What do you mean by return?

I do not mean, undelivered shipments, they are a different case altogether. I only mean shipments returned by buyers after accepting delivery.

Who is liable to pay return shipping charges?

Depends on case to case basis.

Who are the parties involved?

Seller, Marketplace, Buyer & Carrier

As a general rule of thumb, seller should be liable to cover return shipping charges if the product is damaged/different/defective than the listed one, even a very small difference makes the seller liable to cover return shipping charges otherwise buyer or marketplace should cover it just because they don’t “like” the product or “changed their mind”.

Other side of the coin would be to argue that its the cost of doing business i.e. bearing return charges. That argument should be understandable by most online sellers but it does not mean that marketplaces choose to abuse it and shove it down sellers throats. That phrase is in bold just because its funny, no relevance.

Most marketplaces have this “seller protection policy” in place which they do honor, but filing a proper claim and fighting for it maybe required to get that protection. Its like dealing with a ‘sarkari office’, primary protection of marketplaces against seller protection claims is that the claim is not proper, they will try to block or shoot down your claim in whichever way they can but then its on you to keep doing followup and keeping pointing things back to them if you know you are well within your rights and following their commandments to file the claim. Inquilab Zindabad!

As a broker, its on marketplaces to promote a valid return practice or information to their buyers, but they are also building the market (in India) currently, so can’t blame them completely. If marketplace was not there, a seller’s shop would not be there, if they don’t do it, order volume will go down gradually over time. So, everybody should live in peace and share return costs and hope that one day we will see valid return practices where buyers may also have to pay for return shipping. “What!!??!! Huh!!??!! What !!??!! Come Again? Did you really just say that? *Panic Everywhere*”

Moving On…

First let me clear carrier’s role and put them aside for the purpose of this rant session. They should be liable for damage to/of shipments but I don’t think any carrier these days is taking that responsibility, what they generally say now (in case of e-commerce shipments) is that seller is liable for damage due to bad or poor packing. But this also has a lot of loopholes, like if buyer says they got damaged item, carrier can reply that seller must have given damaged item only. Who is lying? Answer: No way to know. Buyer may have used it one day and broken it, seller may not have checked its broken or it may have been broken in transit by carrier which happens mostly due to poor packaging. So, now the carriers only take responsibility of lost shipments, for that also you will have to file claims and this and that and do 10 follow-ups. Will somebody open a service company which provides some actual, quality and decent service, already?

So, what actually happens (this is to the best of my knowledge as per current practices):

Paytm/Snapdeal/Flipkart: They do not charge any return fees to sellers and bear it themselves because of their easy (also read indiscriminate) return policies for buyers. They also offer seller protection against used/damaged goods which were returned, but please bear in mind that you have to meet everybody’s guidelines and file claims within proper timelines and provide valid proofs. Paytm & Snapdeal have an option where sellers can do fulfillment themselves but I do not have any knowledge of those mysterious programs so will not comment on their return policies. Snapdeal calls it Vendor Self Ship and Paytm calls it NLMD (Non Last Mile Delivery), guess they could have also called it GLSY (Get Lost & Ship Yourself).

*Snapdeal Seller Protection Claim hack* Submit a picture of your remarks like damage/different which you mentioned on the delivery guy’s run sheet (as per policy you are required to do that, Paytm also followed the suite). Regardless of damage/different, write on his sheet damage/different and keep a picture of it, so you can attach it with product pictures in case its actually damaged. Sometimes they will also say, buyer got it damaged only, I don’t know yet how to fight this one. Who is lying? Answer: No way to know.

First time I filed a claim and they (snapdeal) asked me for the proof that I mentioned these remarks, I was like What? Why would I take a picture of my remarks on DRS? Some would say its a reasonable, logical question. But apparently not, not in SD’s case. I was like show me, where its written in the guidelines and they were like no sir everybody does, you also have to do it or we cannot give damage claim. I was laughing my guts and crying my eyes all out at the same time. They will also not give you the claim on 7th day citing that you should have submitted within 7 days and they have a treasure trove of weird and funny reasons to deny any protection to you even after you pay them the “hafta” on a monthly basis. Ok, bad joke.

ShopClues: They sometimes let sellers authorize returns, sometimes they do it themselves, I am not very sure whats the practice exactly. But in all cases they will charge for return shipping, whether seller at fault or not, you can technically raise claim for unreasonable return chipping charges when product is not defective/damaged/different but I doubt it will be approved.

Problem is you need 1 resource dedicated to this task itself of checking and submitting and following up on claims.

eBay: The underdog runs a tight ship, buyers claims are not easily approved, only after seller acknowledges or if they actually see seller’s fault and buyer provides a return shipment proof. To buyer they provide some extra amount coupon to shop on eBay to cover their return shipping charge and do not charge sellers generally. If they provide buyer with a “eBay Powered Return” then they might charge your seller account. Seller protection is also provided reasonably without any “paperwork”. But if they do approve a claim unreasonably (mostly Refund Requests for non-delivery which are different than claims) and you are at loss, no matter what you do, how much you fight or argue, it will not be reversed, they will become like a faceless bot, I have not seen any success cases yet. You have to then beg the buyer to pay, which in some cases they will and in some they won’t. Here the fact in play is that most people are inherently good :p

Amazon: The soon to be largest e-commerce player in India (I will explain why later) leaves this part to your (the sellers) imagination and capabilities. For ATS (Easyship) and FBA (Fulfilled By Amazon) orders they will not charge any return shipment fee. The main problem area is seller fulfilled orders or in some cases even Easyship orders which buyers have to self ship. Amazon help states that it will be as per individual sellers return policies but that’s just a hollow promise (a teardrop rolls down my cheek).

Who is responsible for return shipping charges? Amazon Customer Care freely & openly tells customers that seller will pay return charges, regardless of seller’s return policy, then they also send sellers a message on behalf of buyers to do the same, best you ignore them. Then if you will raise a ticket with seller support regarding this, they will take so much time “anal-yze” your case that you will end up refunding yourself before it turns into an A-Z claim which is buyer’s nuclear warhead. Below is the most beautiful page on this topic that you will never find:

https://www.amazon.in/gp/help/customer/display.html/ref=hp_left_v4_sib?ie=UTF8&nodeId=201472500

So best is you make a reasonable return shipping charge coverage policy as per rule of thumb above, show some courtesy to buyer if you are at fault and look at the bigger picture (mainly of avoiding negatives and claims) AND very important to communicate to buyer that upto what amount you will cover return shipping charge as they may send it from a very costly service and expect reimbursement of Rs. 750/- return shipping charge for an order totalling Rs. 728/- So a total refund of Rs. 1478/- (actual case) and return was because they did not like the product.

All parties involved must NOT choose to abuse, for a greener ($$$) tomorrow.

Questions?

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Gaming the Amazon System Experiment

Been selling on Amazon for a while and recently discovered a way that a seller can be cheated by a buyer (intentionally or unintentionally) but this is only if seller’s operations are not tight or efficient enough to detect this. I have not personally tested this but it may prove to be a valid hypothesis.

  1. Place 2 different orders for a single item/product, make sure the item is not Amazon Fulfilled and COD eligible so that it is delivered by ATS/Easyship only, it may or may not work for seller fulfilled orders but chances with ATS are higher.
  2. Pay for both orders and accept the items.
  3. Now raise a return request for one of the orders.
  4. When Amazon person comes for reverse pickup, handover the other parcel (for which return request is not raised)
  5. Now when the return is delivered to seller, most times amazon system or support (if seller is enrolled in runaway program) will refund you for the order for which you created a return request.
  6. When seller processes the refund they will refund for the parcel they have received.

Let me know the result if any of you decide to test this or feel free to poke holes in it :p

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Official Ninja Guide To Selling Online Part 2 of X: I have everything I need to sell online, what now?

Now we will look at different ways to sell online. It is important to classify various channels of selling online, as each has different requirement in terms of operations and investment.

Since the advent of e-commerce there have always been two avenues of selling online:

Building own website with payment gateway and all the fancy blingy stuff or what I like to call a standalone e-commerce website.

Marketplace where many sellers like yourself are selling their wares and a common party which is the marketplace entity like eBay or Amazon is handling the technology to enable all this and other major parts like getting buyers for you, also logistics in some cases.

For building a standalone website you need some more investment apart from your product inventory, you need to have an inclination to be able to learn and do a little techie geeky stuff (it does not involve any programming or coding) or you need to outsource it to an IT development company.

Tip: DO IT YOURSELF using CloudCarts, its very very easy or if you are a boss kind of a person with an already running business ask someone on your team to do it or get it done from a freelancer but DO NOT outsource. I strongly discourage you from doing that.

Ways to build a standalone website:

  • Conventional way has been to buy a domain name, rent a shared server (bluehost maybe, i like it), deploy a shopping cart script like opencart or hottest these days is Magento, install/enable some plugins to add payment gateway and make transaction facility functional, choose a theme of your liking, get some graphics designed for banner and stuff, add products and images etc and start marketing your very own Online Shopping Website! If you need custom functionalities this is where you will need to rent a developer to make changes to the code.
  • CloudCarts – These are Software platforms which offer a turnkey solution to start selling online via your own e-commerce site. You simply sign up and pay for the plan which suits your requirements, login to your setup panel and simply add products, select theme and you are ready to go. Its as easy as using your email. For some smaller technicalities these companies will provide you full support and step by step guides for how to use their panel for setup and also how to make the website live and enable payment gateway (which is also readily available on these platforms). There are a lot many of these platforms available today but its important to choose carefully as its a service more than the product itself. Major ones are Shopify which comes with global experience and reach, Zepo and Kartrocket.

Cost comparison: When starting a business, fee of  Rs. 24,000/- a year (roughly average price of these platforms) may seem little steep but you will end up spending way more on custom development. If you scale exponentially it may prove difficult to work with a cloud cart which is their primary drawback. Then you should work towards moving to custom deployment when volumes are sustainable. When you start getting sales Rs. 2000/- per month will seem to be cheap for the ready solution these platforms are offering.

Let’s cover marketplaces in the next post.

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