Is e-comm really important for your biz?

One of the greatest changes brought about by the pandemic has been the shift in consumer behavior. With disruptions in the supply chain during the lockdown, neighbourhood shops suddenly ran out of stocks and consumers flocked online to find their essentials. Even when these shops were replenished the danger of catching the Covid-19 meant consumers again shunned markets and preferred shopping on e-commerce sites. The last few months have been stellar for almost every e-commerce site in the country as consumers across the country moved online. With consumers moving to online marketplaces, it was only a matter of time before sellers, who till now did not have a presence online, felt the need to embrace a digital identity. For major players like Amazon and Flipkart, this presented a perfect opportunity to expand their marketplace and get small businesses into their fold. E-commerce players have been for years trying to get India's millions of small businesses and artisans online, but Covid-19 has been a catalyst. Today, small businesses make up a significant portion of the seller segment of most online players in the country, and these marketplaces have stepped up to mitigate the damages caused by the pandemic. In these hard times, platforms say they want to be there for small businesses and help them out. Amazon India waived off 50 percent 'Sell on Amazon' (SoA) or the listing fees for small sellers to help them manage their working capital better. In a similar initiative, it has waived off 100 percent SoA for over 10 lakh entrepreneurs including artisans, weavers and women entrepreneurs in its 'Stand for Handmade' initiative. Flipkart on-boarded over 2, 00,000 sellers on its platform, a majority of which come from the MSME background. "Throughout this lockdown period, we have provided them with working capital support, policy relaxations, constant counsel and on-ground support to help with their business readiness, leading to almost 90% of our sellers resuming operations while following a robust SOP of maintaining health and safety standards," a Flipkart spokesperson told ET Digital. In another initiative called Flipkart's Seller Protection Fund (SPF), online sellers could claim a certain amount as compensation for unfair losses. For these claims, sellers were given an extension on all the returns received for a certain period. Sanjay Sethi, co-founder and CEO, ShopClues says his platform opened warehousing services to enable merchants who were stuck in red/containment zones, started captive delivery fleets to augment 3PL logistics, and provided cash flow assistance via fees waiver. Similarly, Snapdeal has worked on making it easier for new sellers to join the platform. "Usually, we work through a self-serve model, but given the urgency and complexity of bringing onboard new sellers for essentials during the lockdown, we introduced managed-assisted on-boarding for new sellers. This facility was made available in eight cities including Delhi, Gurugram, Noida, Bangalore, Chennai, Mumbai, Hyderabad, and Kolkata," a Snapdeal spokesperson said. Brisk businessWith changing lifestyles and mandatory adoption of digital services, e-commerce is riding on a newfound momentum this pandemic. Apart from technology-averse consumers, even offline SMEs and brick-and-mortar stores are now choosing the online medium to stay afloat. 77903094"There are multiple things that have affected all businesses during the pandemic. For example, suppliers started asking for money upfront and therefore merchant capital became more critical in just running the business. The logistics of doing business offline got completely impacted. For karigars and weavers, a lot of the business we used to do depended on the offline haats and since those haats were not organised and prepared for the supply chain disruption, there was no way for them to bring products to customers," Pranav Bhasin, Head - MSME Empowerment & Seller Experience, Amazon India, says. Amazon India had reported a 50% increase in new seller registrations in the past two months. The firm has also witnessed a 40 percent increase in search queries from small businesses seeking to enlist on Amazon. Its rival Flipkart has also seen a skyrocketing increase of 125% in new sellers signing-up on the platform compared to its existing seller base between April-June 2020. Harsha Razdan, Partner and Head - Consumer Markets and Internet Business, KPMG in India, told ET Digital, "Given the current situation, there is a rapid shift that we are witnessing as e-com has become a preferred medium for purchase. The primary reasons for these shifts are 'safe and contactless' delivery, convenience and on-time availability of products. There is no doubt that online platforms provide an immense opportunity to small & medium enterprises to transform digitally and tap a wider customer base." 77903432Existing issues biteDespite the rapid shift towards having an online presence, there are issues with offline stores transitioning to the online world and the pandemic has not done much to tackle those problems. A survey by e-commerce logistics firm ShipRocket points out that a majority of online sellers out of 350,000 respondents, had shut shop during the first phase of nationwide lockdown. In fact, less than 1% of small businesses were eligible to sell goods online.According to online sellers' lobby group All India Online Vendors Association (AIOVA), the cost of doing business on marketplaces has increased by 20% because of increase in charges, introduction of additional charges, penalties and flawed policies. The waivers provided in recent times by the e-tailers are only for a specific period. "There is also lack of alternate dispute resolutions and credit security because of which a lot of sellers have lost money over the years and faced the dilemma of either facing long legal war or not able to afford legal battle. There is also the case of differential and preferential treatment by marketplaces by which they are charging lower fees from certain sellers," the group told ET Digital. Earlier, AIOVA had highlighted on Twitter about Flipkart's revised fee for lakhs of sellers on its platform. Flipkart had more than doubled the fixed fee from Rs 5 to Rs 12 for orders worth Rs 500 or less. The fee increased from Rs 15 to Rs 20 and Rs 30 to Rs 35 for orders worth more than Rs 1,000. The increase in price was apparently done to scale the business to reach the pre-Covid level. Besides this, Flipkart's warehouse charges have been increased by four times. According to Ankur Bisen, SVP and Head, Retail & ecommerce at management consulting firm Technopak, the large e-commerce players invest in warehousing, inventory, logistics in their own capacity and expanding such full stack models in the market comes at a cost. 77903443"These large platforms invest in their own capability to expand. They invest in their own logistics, in their own training, so if you look at it, it is not a plug and play. There should be a third party guy who's doing warehousing, logistics, transactions and it should integrate them. That has not happened. Because of these full stack models, the cost of expanding the market is extremely high and they're trying to pass this down in the market," he said. He, however, added that the argument by the traditional retailers also stands true. "The fact that you are trying to expand and then you're trying to absorb the costs, this creates monopolistic situations for retailers and impossible for other players to survive. I think that's the real threat. And it's a balancing act that needs policy and regulatory intervention. People are trying to discover that common minimum ground," he said. Razdan said that while the cost of doing business online may seem higher, SMEs will have to build their operating models and cost structures in such a way that they can do well on online channels."E-commerce companies' wanting to tie up with local SMEs is a collaboration that can be explored further as the opportunity is huge. However, to make this a 'win-win' for both sides, an equal effort will be required from both parties. E-commerce platforms need to create a level-playing field for all SMEs, make on-boarding processes simpler, assist in easy order fulfilments, cataloguing & training for managing orders digitally. New sellers will have to learn from scratch and may consider focusing on and building their portfolio and an efficient cost structure starting with one marketplace and then replicating their success. Only time can tell us the impact that this collaboration can have on the overall retail ecosystem," he added. Going independentIn the meantime, Bisen pointed out that there are many SMEs who do not gain any significant advantage by taking their model online. "For many resellers and retailers going online has no significant benefit. For example, independent shops of cosmetics, shoes, knick knacks or children's toys cater primarily to local demand. The products and brands they sell already have their own online presence. So for them, going online is not relevant and does not offer advantages," he said. 77903140Further, he highlighted that the relationship of kirana stores and large online marketplaces is contrary to general perception that the former needs the latter. "Kirana stores are not listing themselves online, but online marketplaces are approaching them because they view them as necessary last-mile partners. So they have changed the definition and role of kirana stores, from being an independent entity to being an entity which is an essential part of a large online marketplace. That becomes a good value proposition for a lot of these retailers. It remains to be seen to what extent the business strategy will be successful," he said. He added that in this context, kirana stores face challenges related to technical integration, lack of digital infrastructure, internet issues, along with maintaining customer relations and preserving the previous customer experience. Beyond Amazon, Flipkart, Snapdeal and others, many SMEs are also seeing the emergence of standalone websites. Satish Meena, Senior Analyst Forecast, Forrester, said that while everyone cannot have their own website, it is not a bad time to experiment. "It will, however, take a long time to get the loyalty from the customer, the SMEs need to stand out and attract customers. But there are experiments going on these days, including WhatsApp shopping. The other problem that will arrive is to scale the business up which will require capital and large online marketplaces are the platform to attract a large number of customers. But I hope that we will see a lot of experimentation by SMEs in this period and they'll figure out a way to work with marketplaces, find out the correct model and negotiate a better deal with large marketplaces. It will not be a simple task for them though," he said. He gave an example of Shopify in the US, which is competing with Amazon and is currently having higher GMV than eBay. "So, the dependence on a large marketplace is not everywhere and there are other models which are emerging- Shopify being a good example of how sellers are working online beyond Amazon, Flipkart and eBay. In India, the online retention rate is very less, so such standalone models will take some time to scale, but you can expect a lot of experimentation in the next 3-4 years on how to sell online."

from Economic Times https://ift.tt/2F4HF2T