Online Retail sales back in form to meet the festive season demand?

The season of online sales will begin with Independence Day and everyone is wondering if it will be spectacular or a lackluster affair. Online retail gained momentum when it did because it had special add ons like home delivery, cash on delivery and oh yes… the mind-blowing SALES PRICES!

Unlike online retail, offline business cannot afford sales bonanzas of ridiculously low prices. With marketplaces funding discounts to a certain degree and promoting the sales event through digital and print media, online sales became a way of life in online retail. Online sellers save on advertising costs and only have to bear discount expense. As a result, everyday was a day for insane discounts and product sales.

Prominent sales last year included:

• Big Billion Days (Flipkart)
• Great Indian Festival Sale (Amazon)
• End of Reason Sale (Myntra)
• End of Season Sale (Myntra & Flipkart)
• Republic Day Sale (Flipkart)
• Monsoon sale (Shopclues)

Apart from these etailers also hosted call out sales like:

• Month End Sale – Lingerie & Sleepwear (Voonik)
• B1G1 (Limeroad)
• Weekend sales (Myntra)
• Rush hour sales (Myntra)

Call out sales are a regular kind of online retail sales. Call outs are the usual sales held on marketplaces like 10% off on women’s trousers, Rs.399 on tops and tees, etc. They are classified into category call outs (Eg. 30-40% off on fashion and lifestyle) and price slab call outs (Eg. Rs.499 and below).

A 100% rude awakening

The online sales train began picking up steam with the fuel of discounts as high as 80%. However, it came to a complete halt with the introduction of 100% FDI in online retail of goods and services under the marketplace model.

The new FDI policy prevents marketplaces from influencing online product prices directly or even indirectly. Offline retail felt ignored with the rise of ecommerce and lamented how online retail was an unfair competitor. As a result online retail lost its edge overnight and offline retail rejoiced about an equal playing field.

How are sales still occurring on Marketplaces?

Sales have been the lifeline of online retail for a long time, ending them now is not a suitable prospect. The dependence on sales lead experts to believe it will take at least a year for online retailers to bounce back and fully comply with the new FDI norms. On the contrary, just a month after implementing 100% FDI in ecommerce, Flipkart hosted its 3 day long Big Shopping Days sale.

When talking about Flipkart’s position in the ecommerce industry, CEO Binny Bansal mentioned a thing or two about the 100% FDI ruling. He said:

1. The new rule provides ecommerce clarity
2. Flipkart has always been compliant with the law and is lucky to already be in line with it

To avoid crossing the new lines drawn by the government, the marketplace had its online sellers footing the cost of discounts.

Flipkart was not the only one happy with the new rule and still offering discounts and conducting sales. Amazon brought back its sales events after mulling over the FDI rule.

Amazon has kicked off the sales period with the Great Indian Sale from the 8th of Aug to the 10th of Aug. Thousands of online sellers and brands are participating in the sale this year and according to recent reports, the Great Indian Sale has reached a new milestone.

Amazon said, “The first 100K units sold at midnight.” And out of the several sales categories, Amazon stated:

• Large appliances saw a 5x sales growth
• Software experienced a 10x jump in sales
• Kids apparel had a 5x sales increase

Like other marketplaces, Amazon too is preparing for the festive sales season by building a fierce delivery system to keep up with the expected surge in sales this year.

Decelerated growth caused by temporary discounting pause

Marketplace sales began to shrink according to RedSeer Management Consulting compared to previous months.

Sales: December – $15 bn, March – $13 bn, Jun – $12 bn

The fall in sales is a bit worrying say experts in the industry because Indian ecommerce is still in the nascent stage.

A Flipkart executive said this festive season will either make or break the company. But despite the impending pressure of cost cutting, sales growth needs to be back on track.

Those watching the ecommerce market are convinced sales will surge, whether or not discounting continues. They feel the additional services online retail comes with will sufficiently compensate for the loss of online sale discounts.

The Internet and Mobile Association of India (IAMA) stated that Indian ecommerce is headed for growth. At the moment discounts and sales are driving sales growth.

Preparing for the 2016 festive season

With most of the Indian festivals concentrated between September and January, this is when the online sales season starts. Major festivals online sellers need to look forward to this season include:

• Diwali
• Navratri
• Durga Puja
• Dusshera
• Christmas
• New years

Online marketplaces have already begun preparing for gargantuan demands with the set up of strategic fulfillment centers. To help you prepare for the sales season we put together a couple of cautionary tips:

• Introduce relevant products and pricing

Online shoppers purchase based on their requirements for the season. For example Monsoon sales will call for the sale of rainwear like umbrellas, rain coats, rain shoes and sandals.

Pricing is another factor that needs to be taken care off. If you want to make your products irresistible during the Diwali period, you need to make sure your pricing and discounts are right. A 5% discount on a television set won’t get you as much attention as a 30% discount. However, you need to bear in mind your capacity to provide discounts. You can try offering free gifts too with your product to sweeten the deal.

• Maintaining sufficient inventory

To maintain the right amount of inventory during the sales season you need to predict the future. To get a sufficiently accurate number you can monitor your current prices and your current sale trends. What is the demand for your goods? How will lower sales prices affect the demand for your goods?

During the festive season apparel demands surge, especially ethnic formals. If you happen to sell sarees, lehengas and sherwanis stock up on these items before the festive sales begin.

• Prioritize orders

Work based on priority to ensure you meet SLA requirement and prevent delayed shipping. You can also beef up the man power on your end to make sure the right products are packaged efficiently and ready for pick up.

• Revisit your listings

Make sure your product descriptions are to the point and informative. Consumers will be in a rush to purchase, so make sure you provide correct concise information. Also make sure your size charts are up-to-date to avoid an avalanche of returns. Product images from different angles will help shoppers make well informed decisions.

• Product quality checks

Another way to ensure a good festive sales season is through quality checks. Product quality checks ensure you don’t have defected goods your inventory. This in turn helps you prevent product returns.

Have you started preparing for the ecommerce festive season? How do you plan on making the most of it this year?

Online Retail has no limits, it’s freedom to sell! How can sellers handle marketplace dominance?

70 years ago, India fought long and hard for its freedom. The battle between the British and Indian people was an epic moment in history. And till today it inspires many! One may think the age of battles and disobedience movements are all behind us.

But we see this happening even in the most lucrative of opportunities, as in the case of the online retail industry. There has been a noticeable amount of friction between online sellers and online marketplaces. A simple fix to all their problems would be leaving the online retail scene. But the industry has so much promise.

To make sense of the online sellers vs. marketplaces situation, IOS spoke with different online sellers about their online retail experiences.

What drew you towards online retail?

Free will, that’s what Independence provided and these sellers exercised it by joining online marketplaces. Question is, why did they do it in the first place?

The struggles of Online Retail – What led to your frustration with online retail?

Ecommerce has changed a lot says, Saurabh Daga. “We began selling online 3 to 4 years ago. Back then everything was so different. There was less competition and the marketplace policies were not bad. Now marketplaces are lenient with the buyers and unfair to the sellers,” he explained to IOS.

The struggles of online sellers are very real. The more sellers we spoke with the clearer it became; online retail develops a new challenge every day. If it’s not with online marketplaces, it’s with the government, the buyers or each other. We collected the most pressing ones online sellers struggle with.

STRUGGLE #1 – We sold your goods but we don’t have money to pay you!

In theory, once a sale is confirmed, the buyer walks away his purchases and the seller with his earning. According to numerous sellers that isn’t quite the case!

Online seller, Jayesh Lakhani, sells on Indiaroots and Askmebazaar. He sells ethnic wear and has received 1000 daily orders, when these marketplaces engaged in heavy promotions. He says both online marketplaces owe him a lump sum for these orders, but hasn’t received any word of payment confirmation.

“Delayed payments was nothing new with these online marketplace. But now they’ve stopped making payments altogether. The marketplaces are only focusing on sales and not time to time payments.” Jayesh says.

Askmebazaar has not made full payments to its online sellers either. It subsidiaryMebelkart did start sending partial payments, however, that seems to have stopped.

An online seller (name withheld on request) emailed the ecommerce furniture company requesting his payment be made as soon as possible! The following are emails exchanged between him and Mebelkart:

(Courtesy of ESS)

STRUGGLE #2 – Product returns are your fault

Returns are a part and parcel of ecommerce but exponential returns is what online retailers are biting their nails over.

Jatin Bhutani, an apparel and innerwear seller says, “Canceled orders, returned order, some returned products are in very bad condition and that is a clear loss, we cannot claim for losses from all the marketplace, even the order which has returned half way that has some loss, in terms of time and packing material.”

“Let’s take an e.g., I received an order of 3 t-shirts, I ship it in good condition, and the customer returned it saying, it is not the same product he ordered and I receive only one t-shirt back instead of 3.

TOTAL LOSS = Forward shipping+ reverse shipping + cost of 2 t-shirts + packing + time and reviews,” Jatin explains.

Multi-product online seller, Saurabh claims that originally shipping charges were Rs.50. Today, it has increased to Rs.70 (without including sales tax). Add 12% marketplace commissions to that and the rising number of product returns, then your profits will definitely decrease.

Another online seller, Mayank Goyal says, “As we all know, there is always a advantage and disadvantage for everything. The marketplaces are having cash crunches and they are increasing the commission and logistics cost to meet the cash crunches. Also some marketplaces are charging for RTO too.”

STRUGGLE #3 – Account suspension/closure is a weapon and we aren’t afraid to use it

According to online seller Mayank, “They (marketplaces) also penalize sellers for unfair returns whether seller is at fault or not. Fake orders, orders with incomplete address should be cancelled by Marketplaces. But to make money they are not doing it.”

Online seller Saurabh says, “There is a rise in fake buyers, product returns, and damaged goods.” He has been tweeting about his blocked Flipkart account on Twitter, for some time now.

When IOS spoke with him, he said he makes a claim for the Seller Protection Fund when his goods are returned. But because he’s made so many claims for SPF, his seller account has been closed.

“This is a very unfair reason,” he says with frustration. “Yet they refuse to reopen the account.”

To open a new account, Saurabh say, there are numerous hurdles he’ll have to jump over once more.

“I have to obtain new VAT/CST registration. I’m from Gujarat and to get that registration here it cost at least Rs. 50,000. There’s paperwork involved. I have to relist my products. At the start I had only a few SKUs, now I have at least 8,000 – 9,000. I’ve lost my positive reviews and ratings. I have to wait for my Flipkart account to get verified. I used to take 2 to 3 days when I first started on Flipkart, now it will take at least 30 days,” he explains.

STRUGGLE #4 – We own the platform, we make the rules

“Online marketplaces do not provide proper support. Flipkart has the worst seller support. They don’t know anything. In case my listings are not approved the first time and I upload them again the same way the second time and it gets approved!” Saurabh reveals.

Vikas Jain, a computer and mobile accessories seller, mentions that most of the time online sellers return goods without genuine reasons.

Back in April, IOS interviewed online seller Mayank Bhatia, who said the exact same. He told us that returned goods are not really accompanied with the right reasons. In some cases no reasons at all. If a product is returned and marked with the reason, “quality issue”, the seller may lose his account! But the seller cannot do much if his marketplace offers no questions asked returns.

Some marketplaces do not provide sellers with buyer contact information. This prevents them from confirming COD orders.

Despite the trouble, Online Retail has a silver lining

With the grave troubles online sellers go through every day, it’s hard to understand why they still sell online. Walking away is the path of least resistance. It can ensure peace of mind and fewer risks. So we asked them,

What keeps you from leaving online retail?

“Business changes very fast, I could be done for in the long run. But if I do things right, online retail is really very profitable. And that is what keeps me from leaving the online business. I want to make it big!”

–          Jatin Bhutani

“There are pros and cons with every marketplace but you have to adjust and grow with them. A good online seller is always updated with all the policies of marketplace and changes his plan of action as and when required. Good pricing, quality image, key features and well explained description are all you need to get your product keep selling.”

–          Sachin Gala

“If there are no issues with the work we do, then zeal to achieve goals and satisfaction will not be there. We always want to work hard to our full capabilities and we never give up at any time because we don’t believe in quitting. Online retail gives us a platform to reach out to a lot of buyers those who need our products.”

–          Mayank Goyal

“Though the current scenario does look bleak for online retail, however, online retail has been a boon for manufacturers like us. Online retail has enabled us to connect directly to end consumers, aiding us in brand building and maximizing our customer reach. Furthermore, it has helped us to understand customer trends very efficiently.”

–           Saurabh Daga

Bonus Read!

Seeking Online Retail Freedom?

Online seller, Chandan Kushwaha, a furniture manufacturer and online seller, from Delhi-NCR, tried ecommerce through online marketplaces. His ecommerce journey came to a brief halt as he was let down by not so any promising changes.

For about 4 months he registered on Urban Ladder and Pepperfry. However, due to lack of sales and massive losses of approximately 1.2 lakhs, he closed his seller accounts on both portals.

“I have dead inventory lying at home, document expenses, office set up expenses, salaries and other expenses to pay off,” says Chandan.

What went wrong and where?

“Online marketplaces have restrictive guidelines. The platforms I joined selected products from my inventory and requested me to send those to them so the consumer can touch and feel them. And as you know with use products lose their color and appearance with time. As a result I lost money,” explains Chandan.

Liberty from the trials of ecommerce!

Online retail is definitely beneficial, according to Chandan, that’s why he joined in the first place. He became a part of the virtual industry to expand his selling capacity but wasn’t happy about the approach.

What was plan B?

“Selling online allows flexibility. It offers a wider reach. But marketplace policies are too rigid. That’s why I launched my own portal primefurnish.com,”he says.

If you don’t like the rules change them!

“With my own portal I can reach more consumers compared to my offline business in Delhi-NCR,” the furniture seller says.

When talking to clients over the phone he says he cannot provide them with the look and feel of his furniture. Online retail offers greater visibility and better chances of convincing consumers to buy. He went on to explain.

“On online marketplaces there is unnecessary pressure on vendors,” Chandan states. With his own portal he feels he can get ahead of his competition. “I have control over the manufacturing, the manpower and therefore the pricing,” he says.

Freedom to do what you believe in

“Another thing about selling on online marketplaces is the lack of quality checks. I’m not sure if they check other seller’s products, but they didn’t in my case.”Chandan claims.

So to ensure his consumers (on his portal) get the quality they are willing to pay for, he offers quality certificates assuring the authenticity of the materials used. Chandan also explains that consumers can bring in the kind of materials and fabrics they want to make their upholstery made out of.

Selling online is the future of retail. In spite of the trials in your way, it does have the potential to provide success. And if a struggle is what it takes to survive in the business, isn’t it all worth it?

Here’s wishing you all the very best with your ventures and a happy Independence Day!

How to categorize your products on your Online Portal

Think of it this way – when you enter a supermarket looking for a toothbrush, and you find it in the pet food section, aren’t you frustrated? Categorisation in the real world is done to increase efficiency for both the customer and the seller. Imagine frustrated customers leaving their shopping and storming out of your store just because they could not find a particular product in its category. Also imagine the pain you would have to go through while trying to tally the inventory and discovering juice boxes in the clothing aisle. Now imagine the same situation in the online world.

Online, there is a tiny difference in the way things work. When a customer is looking for a product on a search engine, it is the engine that is doing the actual ‘looking’. If your product categorisation were non-existent or faulty, the search engine would take more time to look for it, or overlook it completely.

When a customer searches for a product on your website, the search function is handled by the website architecture. Again, hotch-potch classification of products would lead to null results. This means that, you are either frustrating the customer, or annoying the search engine when you are being lazy about product categorization. What is the result? Customer dissatisfaction, low conversion of CPC, and ultimately, loss.

To simplify the search process, product categorization is advised. This means that all the products featured on your website would be subdivided into broad categories, that would be further subdivided into subcategories, making it easier for both the customer and the search engine to access a product.

Let us look at a few simple principles you must keep in mind while doing this.

Principles of Product Categorisation

• Understand the Basics of Search and Sort

Your website is built to accommodate, sort and search the various entities that you feature on it. But it does so adhering to a particular algorithm. For example, type in ‘bowtie’, and ask the website to search in the apparel category, it will restrict its search to all entities present in the apparel category. Now, if you ask the website to search the same keyword in all categories, you might find something like ‘How to Tie a Bowtie for Dummies’, in your search results. The idea is, while making product subcategories, would you make one called ‘Bowties’? A solution to this problem is tagging a product with multiple attributes, rather than sub categorization. So the aforementioned book can be tagged as ‘Bowtie’ and ‘Book’, and would feature in both results. Subcategories can be rigid and watertight. Use the power of the virtual world and go for something more subtle and flexible.

• Be Specific

Do not rely on generalisations. Usually, your list of products is so huge that you can be overwhelmed with the idea of individually categorising products. But it’s important, and there are many tools available to help you do it. One bad habit is to make a ‘Miscellaneous’ category and dump all the ambiguous products into that. Be wary of the miscellaneous category, because it confuses more times than it helps. A good way to go about it is to mark boundaries with broad strokes (You would rarely have a product fitting in both Electronics and Apparel categories), and try to place all your products in one or the other. Unless you are serving an extremely niche line of products, this won’t be too difficult.

• Use Google’s Guidelines

Google has provided sellers across the world with exhaustive instructions on how to categorise your products so that it is easier for the search engine to find the right ones. In fact, this categorisation is mandatory for most countries. Although India is not one of them, it is always a good idea to follow some of the guidelines laid down by Google. Here is what they say about it.

‘For all target countries except Austria, Belgium, Canada, Denmark, India, Mexico, Norway, Poland, Russia, Sweden, and Turkey, ‘Google product category’ is required for all items that fall within the ‘Apparel & Accessories’, ‘Media’, and ‘Software’ categories. If your products do not fall into one of those categories – or if your feed targets Austria, Belgium, Canada, Denmark, India, Mexico, Norway, Poland, Russia, Sweden, or Turkey, – this attribute is recommended but not required. ‘

Google provides you with downloadable product categories and taxonomy that you can build upon and tailor according to your needs. 

• Consumer vs Search Engine

Consider two scenarios – You tell yourself, if a consumer searches for a product that is available on my website, in no circumstance will I categorize my products such that the required product does not appear in the search results. If you lay down this rule for yourself, what is the sure shot way of getting it done? The only foolproof way is to put all your products into all your categories. This means that there will be a page for ‘How to Tie a Bowtie for Dummies’, inside the ‘Books’ category, the ‘Apparel’ category, even the ‘Media’, ‘Software’, ‘Electronics’ categories. This is the only way with which there is a guarantee that if a consumer searches for this product in any manner, the search engine would be able to find it.

Now imagine this scenario from the point of view of a search engine. The engine would now encounter multiple pages of the same product, one in each category, and would simply have no idea how to deal with them. This is a slightly drastic example, but we hope you get the idea. The idea is to find a middle ground and create a system that maximizes efficiency, and not accuracy.