Browse Month

March 2016

“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 ūüėÄ :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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