Tuesday 5 April 2016

Will Alibaba’s entry give Indian ecommerce industry a makeover?

In the last few weeks, two major developments in the Indian ecommerce industry have the potential to be big game-changers. First, Alibaba’s direct entry. Second,100% FDI in the marketplace B2C format.
This means things are about to change for online buyers, sellers and etailers, once Alibaba sets foot in freely.

Popularity of AliExpress with Indian buyers

In spite of no promotional campaigns, Alibaba’s online retail service AliExpress has managed to grab attention of many Indian buyers. The etail portal, which was launched in 2010 acts as a platform for Chinese SMEs to serve global buyers. For Jack Ma, AliExpress’s success is a window to India’s ecommerce potential.
It has been reported that:
  • People looking for low-priced deals browse on AliExpress rather thanFlipkart, Amazon or Snapdeal
  • Affordable mobile, computer accessories, soft toys, and artificial jewellery are the highest-selling product categories
  • Demand from tier 3 & 4 cities, the highest
An executive of an ecommerce company revealed,
“They (AliExpress) deliver over 40,000 products every month. And that’s a conservative estimate. While most of the items shipped are low-ticket, ranging from Rs 200 to Rs 2,000 — the maximum demand for such products is from tier III and IV towns. And that’s what present ecommerce players in India are missing out.”
How Alibaba managed to do this? Most electronic products & accessories are sourced from China. Indian etailers add operational costs such as logistics, inventory holding, taxes and other miscellaneous charges to the final price. On the other hand, a Chinese merchant can sell the same product at 40% less price even after adding shipping and custom duty charges.

Sellers have pinned their hopes on the Chinese etailer

So far, Indian online sellers are extremely unhappy with the treatment etailers are giving them. Amazon India is still in the good books of sellers but Flipkart andSnapdeal are the least favourites.
Therefore, expectations from Alibaba are high, since it is known as a seller-friendly organization.
A seller, Anup left a comment below this IOS article on Alibaba’s 2016 entry,
“Welcome Alibaba to India. I think if they enter this e-commerce market in india to capture the major retailers, they should enter with their minimum commission and minimum charges. Because other companies they are charging higher commission and hidden expenses from merchants. Most of the merchants are not happy with India e-commerece companies because of their non-cooperation policy for the merchants. They work on clients basis attitude.”

Etailers will have to fight hard to retain buyers & sellers

Existing ecommerce players will have to fight at two fronts. First, offer products at affordable prices to match Chinese etailer’s pricing. Second, woo sellers to maintain its seller base and deflate poaching attempts.
The wooing has already started. From waiving shipping charges entirely to offering full compensation on returned damaged products, etailers are doling out incentives to sellers in order to please them. All thanks to the Chinese biggie.
“It’s the sellers and the consumers who stand to benefit most from the dogfight between the ecommerce players. It’s not that ecommerce players have become generous to sellers. They are being forced to do so because of the threat from Alibaba,” asserted Darshan Mehta, a seller from Mumbai.
Merchants feel that with Alibaba’s entry, Indian ecommerce companies will finally listen to their grievances. If not, then they are more than happy to take their business on the new platform.
“I would have never imagined such a thing some three years ago. But cut-throat competition means ecommerce players are going all out to woo sellers. Consumer loyalty would be hard to achieve, so they are trying their luck with sellers,” said a Delhi-based seller Rajat Sethi.
Online Sellers, what are your expectations from Alibaba? Lower margins or better return policy? Please leave your comments below.

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