Amazon to launch 45 physical kiosks soon; banking on offline sellers this festive season?

Last month IOS reported that Paytm Mall announced it will be hosting is first festive season sale online and offline, since its emergence as a separate online retail entity. Amazon also took the offline route by promoting the purchase of mobiles on its platform through physical kiosks. Amazon Fashion also tied up with major offline chains like Cafe Coffee Day to promote its ‘Wardrobe Refresh Sale’. It developed the fashion kiosks or experience centres concept in10 corporate parks from 3 cities

Now, just like its competitor Paytm, which is eying sellers offline, the US-based ecommerce company will also be concentrating these kinds of sellers. Amazon India plans on launching around 45 offline kiosks or Seller Cafes in 20 cities all over the country. These kiosks will mostly be located in tier II and III cities. Through this move the etailer expects to bring in more sellers and assist its existing sellers with their issues.

The seller induction plan

For the past 5 weeks, Amazon Indian has acquired 2,500 online sellers per week. It now has a seller base of 225,000 merchants offering more than 160 million goods on its platform. The ecommerce company is revamping its seller app to appeal to more sellers who use their mobile phones most to do business. But, the kiosks that it will be introducing will have a much greater impact and ensure the rest of its efforts pay off.

Amazon India, seller services director and GM, Gopal Pillai said, “Sellers will be able to walk into these cafés, set up their Amazon seller accounts and receive basic guidance from trained resources for navigating their accounts and getting their queries resolved. If we want more sellers from tier-II and tier-III towns, we need to make an offline push. More than 70 per cent of our sellers from there.”

The marketplace will also be conducting webinars and offline classes through its Seller University programme. These will be hosted across six cities in India.

“We also have some offline sessions planned in September, focusing on new sellers and how they can prepare for the upcoming sale in cities like Ahmedabad, Hyderabad, Jaipur, Kolkata, Bangalore and Pune,” Pillai mentioned.

To get more sellers interested in signing up with them, Amazon also partnered with YES Bank and Capital First to offer sellers secured and unsecured loans of Rs.5 lakhs to Rs.2 crore.

All in all it’s a good plan to capture more sellers, but how will a growing seller base impact the sales of existing ones?

Is drop shipping a better option to manage inventory for selling online?

Drop shipping is a supply chain management method in which the retailer does not keep goods in stock but instead transfers customer orders and shipment details to the manufacturer, another retailer, or a wholesaler, who then ships the goods directly to the customer.

The idea of dropshipping is that a wholesale drop shipper (the supplier) offers you the option of selling products without buying them first. They also act as service providers who prevent you from having to:

• Store items
• Package and ship items
• Risk money on items when you aren’t sure about how they will sell

When you buy from a wholesaler offering dropshipping services, they add a fee to cover the costs involved with offering this service.

How dropshipping works

• Select the vendor and products based on your niche

• Mark up your profit margin based on product demand

• Advertise and market your products

• Customers visit your listings, initiate payment and place orders

• Vendor ships the product to the customer

• Keep your margin and initiate the payment to the vendor

Why start dropshipping?

Low startup cost

• You don’t have to purchase a product unless you have already made the sale and have been paid by the customer. Without major upfront inventory investments, it’s possible to start a successful drop shipping business with very little money.

Easy to get started

With drop shipping, you don’t have to worry about:

• managing or paying for a warehouse
• packing and shipping your orders
• tracking inventory for accounting reasons
• handling returns and inbound shipments
• continually ordering products and managing stock level

Low overhead

Your overhead expenses are quite low, as you don’t have to deal with purchasing inventory or managing a warehouse.

Location independence

As long as you can communicate with suppliers and customers easily, you can run and manage your business from just about anywhere with an Internet connection.

Wide selection of products

You can offer an array of products to your potential customers because you don’t have to pre-purchase the items you sell.

High scalability

By leveraging dropshipping suppliers, they will handle the additional order processes, allowing you to expand with fewer growing pains and less incremental work.

What’s not in your control when dropshipping?

• Lack of control over product quality and deliveries

• Lower margin compared to bulk purchase of products

• Risk of supplier running out of stock

• Product returns and refunds pose logistical problems and affect profits

Ecommerce return rate increased by 50%, as customers value psychological contracts over legal

High return rate is one of the biggest pain points for ecommerce companies and primarily for sellers. Efforts are being made to reduce returns as much as possible. Unfortunately, the rate of returns has only increased in the last one year. It climbed up to reach 50% as the number of unhappy buyers increased.

What contributed to this increase in return rate?

From demonetisation to digital initiatives, from discouraging cash-on-delivery orders to offering incentives for digital payments, many strategies helped to increase ecommerce transactions.

Yet, the rate of returns increased instead of going doing. For online retail, the return rate is as high as 50%. Researchers and industry experts believe that this due to psychological contract violations (PCV).

PCV as a concept is usually applied to an employee-employer relationship. It is defined as ‘a construct that regards employees’ feelings of disappointment (ranging from minor frustration to betrayal) arising from their belief that their organization has broken its work-related promises’.

How PCV affects ecommerce?

Etailers and customers enter into a legal contract once the customer places an order. Few of the legal obligations of etailers include:

• Timely delivery by the promised means
• Deliver an item as described
• Abide by the payment policy promised and accept payment
• Adhere to the conditions of sale and deliver the return/refund promise

But the absence of personal engagement leads to psychological expectations, based on an individual’s perceptions. An etailer or seller might be unaware of these perceptions and expectations.

Failure to meet these expectations leads to high returns as customers treat this as a violation of psychological contract. And experts believe that buyers value psychological contracts over legal contract. As per the research conducted by the Journal of Business Research, PCV negatively affects online retail businesses.

Some of the factors that can break a consumer’s trust are:

• Product misrepresentation
• Product delivery delay
• Failure to acknowledge guarantees
• Refusal to follow payment policy

Whereas, features such as try & buy, secure e-transactions, return/exchange policies and COD service could help etailers to avoid PCV.

Etailers need to understand and find ways to meet mental/emotional expectations of customers. But they also need to simplify and communicate the terms & conditions a as mentioned in the legal contract, so that no one can take undue advantage.

Snapdeal, Shopclues not competing with Amazon, Flipkart this festive season?

To avoid the wave of intense competition from ecommerce leaders, Amazon and Flipkart, smaller etailers, Snapdeal and Shopclues plan on hosting their festive sales much earlier. The large online marketplaces are yet to announce the dates for their Diwali sales but the smaller ones are going out on a limb by guessing the perfect dates for their own sales.

Sale announcements

Shopclues Diwali sale

From 21 September to 28 September 2017, Shopclues will be hosting its ‘Maha Bharat Diwali Sale’. In October, customers will then have the ‘Diwali Flea Market’ to look forward to. This will be held from 7 October to 10 October 2017.

According to the ecommerce company, it will have over 10,000 festive utility and gifting products with a starting price of just Rs.29.

Snapdeal Diwali sale

This year Snapdeal started with a pre-Diwali sale, of three days, at the start of September. Every purchase made during this sale received gift vouchers from Yatra and BookMyShow.

The etailer also mentioned that it has multiple special promotions lined up for the festive season. It has already started spending on festive season promotions to stay relevant.

• A wide range of products across categories like electronics, accessories, fashion and lifestyle and home and kitchen are expected to go on sale at discounts ranging from 50% to 80%, on both ecommerce platforms.

Will early sales save Snapdeal & Shopclues from a brutal beating?

There are certain benefits that these etailers are looking to avail of by being the first to go on sale. They include:

• Cheaper media ad spots, due to smaller marketing budgets
• Ensuring maximum online sellers offer attractive discounts on their platforms

This Diwali Amazon and Flipkart will be slashing profits and commissions to accommodate Diwali discounts. This will draw more sellers to their marketplace during the festive sale season, leaving the small online retailers with less attractive discounts. Also, big etailers have received extensive financial backing to support their spends:

Flipkart

• Obtained $1.4 billion from its merger with eBay and investment from Tencent Holdings Ltd. and Microsoft Corporation (in 2017).
• Received another generous investment of $2.5 billion from Snapdeal’s largest investor SoftBank (in 2017).

Amazon

• Has already committed $5 billion towards Amazon India.
• Injected $63 million into its logistics arm for better customer experience during the festive season.

Paytm

• Set aside 1000 core as festive season spends.

The Diwali discounts are expected to be even more extravagant this year since big etailers are loaded with billions. And, the best thing smaller players can do is make the most of the pre-Diwali period to ensure they receive some phenomenal spikes in sales.

Paytm sets aside Rs 1000 crore for festive sales; Amazon, Flipkart have new cash-rich rival?

Alibaba-backed Paytm Mall is gearing up to disrupt the Indian ecommerce industry this festive season. As of now, Amazon and Flipkart hog the limelight during all major shopping events. But the Vijay Shekhar Sharma-led company is looking to steal the limelight by splurging Rs. 1000 crore on festive sales prep.

Paytm has set aside Rs. 1000 crore

The Indian digital wallet leader Paytm launched its marketplace Paytm Mall in February this year. The upcoming peak shopping season that would start in October would mark the Alibaba-backed marketplace’s debut in hosting festive sales.

To make it a huge success, Paytm has reserved Rs. 1000 crore for:

• Discounts
• Marketing
• Cashbacks
• Promotional campaigns
• On-boarding shopkeepers and brand authorised stores
• Hiring additional workforce

Paytm Mall’s COO Amit Sinha said, “Our promise is to offer customers the best and biggest offers from trusted retailers and make our platform the de-facto first choice for online shopping.”

He also stated, “Our business model is to build digital infrastructure and partner with offline retailers to make them the winner. In the long term, we -along with millions of stores -will be fighting one or two online retail stores. Our winning formula remains the power of collaboration and scale across every corner of India.”

O2O strategy would be put to test

The marketplace is going to host an offline-and-online (O2O) sale, which is a different strategy compared to Amazon, Flipkart and other etailers.

The etailer has chalked out a detailed O2O strategy in order to differentiate its platform from the existing leaders. Local retailers and sellers would play an important role in Paytm’s festive sales.

While speaking about its O2O model, Sinha had earlier affirmed that for the festive season, they have planned a number of special offers for its shopkeepers and retailers. The company also intends to make the shopping & selling experience same, be it online or offline and make customers and sellers in both worlds happy.

According to the marketplace, appliances, consumer durables, electronics, fashion, gifts, and home furnishing would be the top selling categories on its platform. With 1,000 brands, 15,000 brand-authorised retailers and 30,000 sellers, Paytm is all set to win. But would it succeed against Amazon and Flipkart?

Flipkart is flush with funds after Softbank invested $2.5 billion in it! And Amazon has a generous founder Jeff Bezos who wants to continue investing in India. How will Paytm Mall’s Rs. 1000 crore fare against the biggies’ billions?