Test of customer loyalty for Amazon Prime, Flipkart Assured, Snapdeal Gold

With Gross Merchandise Value (GMV) being replaced by Net Promoter Score (NPS), Indian ecommerce leaders want to win customer loyalty. And in order to gain that, Amazon, Flipkart and Snapdeal launched their premium loyalty services in quick succession. Amazon Prime in July 2016. Flipkart Assured and Snapdeal Gold in August 2016.

These services are going to be tested ahead of the festive season.

Focus areas

F-Assured’s focus is on ‘product quality’ and shipping & delivery speed to increase its NPS score. Mausam Bhatt, VP at Flipkart said,

“At F-Assured, the focus is on product quality and speed of delivery. These are important drivers of trust. Most of the delivery for F-Assured products is done within two days. Currently, four lakh products are listed under F-Assured.”

Snapdeal Gold’s focus is on ‘free shipping’ and making its loyalty program more inclusive than others.

“All customers are special and we don’t believe that better service should be reserved only for a few. Free shipping is an important consideration among e-commerce users, especially those who use online shopping regularly,” said Jayant Sood, Chief Customer Experience Officer at Snapdeal.

Amazon Prime’s focus is on ‘ease of shopping’ by expanding fulfilment centres & delivery network and increasing product portfolio. Amazon’s representative shared,

“…we wanted to offer predictability and make it easy for customers to get things quickly. We opened more than 50 new fulfilment centres worldwide in the last four years alone, allowing for more selection and faster delivery speed. Second, we added new digital benefits like books, movies, TV shows and more.”

Failed to deliver what was promised?

Less than 2-3 months old, the loyalty services by etailers are already falling short of expectations. Based on the customer reactions and posts on social media, it appears that all the three biggies haven’t been able to deliver what they promised – express/faster delivery.

Check the tweets below.

#FlipkartAssured

#SnapdealGold

#AmazonPrime

Sellers are calling it a marketing gimmick.

When asked about marketplaces’ loyalty services, All India Online Vendors Association (AIOVA) spokesperson shared an image with Indian Online Seller.

The spokesperson says,

“This is what Flipkart Assured is. (Pointing at the low rating of Flipkart Assured product that passed 6 quality checks) Like Amazon Prime. Anything you put in their warehouse is prime or assured or gold. Just a marketing gimmick.”

Subscription ecommerce yet to pick up in India

Indian online shoppers haven’t opened up to subscription ecommerce unlike the West. But etailers are hoping that fast & free delivery, longer return period, and other benefits will compel consumers to sign up for their loyalty service.

“In any category, early adopters form 10-15% of the overall customer base. Thus, with 40-50 million e-commerce shoppers today, India has potential of four to eight million customers for subscription-based services. These numbers are likely to grow thrice as much by 2020, driven by rapid growth in internet subscription and e-commerce customers,” affirmed Pankaj Gupta, Senior Practice Head, at Tata Strategic Management Group.

Shopclues’ Diwali strategy – Spend less cash, back sellers, aim profitability

Indian ecommerce leaders Flipkart, Amazon and Snapdeal are ready with fresh pile of cash to spend on marketing campaigns during the peak shopping season.

But Gurgaon-based Shopclues has slashed its marketing budget for Diwali sales (from October 1st to October 10th) unlike the big ecommerce players.  The etailer’s aim is to limit cash burn and prioritize profits.

To keep tight hold on its wallet

Shopclues’ co-founder Radhika Aggarwal divulged that compared to last year’s festive sales, the firm is going to spend considerably less on ads and promotional activities.

“Our digital marketing and television commercials (that go live on Monday) are all focused to tell the consumers that they can get a lot more (products) in a lot less (money spent),”Aggarwal said.

On the other hand, Flipkart is going to spend Rs 30 crore, Amazon Rs 125-130 crore and Snapdeal has already spent Rs. 200 crore!

Will invest in sellers

If Amazon calls itself ‘consumer first company’ then, Shopclues calls itself ‘merchant first company’.

Hence, the etailer has reserved 15-20% of the Diwali marketing campaign budget for seller initiatives.

“Our success lies in (the) merchants’ success. That’s why they remain a very important part of our campaign,” asserted Aggarwal.

Some of its seller initiatives for the shopping extravaganza 2016 are:

• Capital Wings –short term loans  service for sellers
• AdZone – a merchant ad bidding platform to display custom ads on the marketplace
• Will spend around Rs. 1-2 crore from its own pocket to assist sellers in marketing and get affordable loans
• Other initiatives like Store Manager, Business Guru

The only Indian ecommerce players to be on the right track?

Even though Shopclues doesn’t feature in the top 3 list, the company is quite close to dethroning Snapdeal. When the ecommerce leaders focused on metropolitan cities, Shopclues expanded its business in tier 2 & 3 cities, which is why the company has strong hold in non-metro cities. And it helped the company to keep its losses low compared to other firms too.  

With the decision to keep an eye on cash burn rate and focus on profitability, will it be wrong to assume that maybe Shopclues in the only online marketplace that is on the right track in terms of business growth?

Partnering with marketplaces to opening experience stores – tactics vary for the upcoming shopping season

The market is abuzz with the shopping season. Leading marketplaces like Amazon, Snapdeal,Flipkart, Shopclues and others are scrambling to net the best sales for themselves through the time tested strategy – discounts.

Vertical factions attempting different strategy

However, others like jewellery retail BlueStone, furniture stores Pepperfry and Urban Ladder feel differently. They are of the opinion that mere visits do not guarantee purchases. Kashyap Vadapalli, Pepperfry’s CMO explains,

“The Indian buyer likes to compare on price, delivery, warranty, service and easy return -which the marketplaces fall short on. While the traffic increases by close to 100%, conversions go up by 50% during the festive season.”

Pepperfry has recently got funding from its primary investors. The company will use the money to strengthen its logistics and to launch experience centres.

Likewise, rival Urban Ladder has opened a store in Amazon. Sanjay Gupta, CMO at Urban Ladder says,

“Our tie-up with Amazon India is to get more users to the platform and we are live with 30% of our catalogue right now. We will not be discounting products on the marketplace as part of the sale event and have a limited offer on few products ranging from 7-25%. Diwali is a time for launching new collections.”

Selling products online without manufacturers’ consent

Meanwhile, traders are taking to the internet to sell products normally sold through direct networks. These companies are fretting over the sale of their products online. Tupperware, Amway and others are concerned with sellers putting up the products on marketplaces. This goes against their mode of operation, they claim.

Shilpa Ajwani, MD of Tupperware India said,

“We have in the past written to online sellers to refrain from offering our products on their ecommerce sites. We are assessing next steps in accordance with the Direct Selling guidelines.”

Anshu Budhraja, CEO, Amway India made the company’s stand on the matter very clear,

“All of Amway’s products sold by Amway Business Owners (ABOs) are backed by a refund policy. We don’t offer any refund on a product sold through a third-party online platform.”

How fake unverified reviews on Amazon is ruining sellers’ business

Ratings and reviews play a huge role in every seller’s online selling journey.  More than 90% of buyers base their purchasing decision on reviews. Even offline buyers prefer to research, compare and read reviews online before going to out buy a product.

Dealing with negative reviews is a tricky task. On Indian Online Seller, you can find pointers to improve ratings and tips to keep negative reviews at bay to stay ahead in the game.

However, sellers often find themselves dealing with unverified/fake negative reviews, which is a no-win situation.

The paid reviews business

In this day and age of internet, blogs, social media, YouTube, and review sites, paid reviews are a norm. But paid reviews doesn’t equal to bogus reviews. Many individuals/firms offer to publish an honest review in exchange of money, discounts, vouchers or products. It works for both the parties wonderfully without spoiling the business ecosystem.

One such person advertised his company’s service on IOS’s forum where he wrote,

“I have a large group of reviewers who can leave products, seller reviews and social media posters that love to do reviews in exchange for products. We have a strict system as well as a 3 strikes rule. CURRENTLY WE SUPPORT ONLY AMAZON SELLERS BECAUSE ONLY AMAZON SUPPORTS THE SYSTEM.”

A professional service, that promises to strictly follow guidelines and protect sellers’ account. How neat!

Then of course there are those are willing to post not-so-honest positive and negative reviews.

The flipside is that since Amazon allows anyone to write reviews (a reason why abovementioned services are flourishing), competitors have found a way to eliminate rivals – post fake negative reviews.

Unverified reviews on Amazon

An Amazon seller AllinExporters wrote on Seller Central,

“From Last 2 to 3 Months, I have noticed that Few our Our competitors are Publishing Negative review on our Items to Negatively damage our sales… We have sent 100 + Reminders on this email in last 60 Days but till now we did not get any Response.”

The vendor went on to explain how competitors are placing fake orders and deliberating writing negative reviews below their best selling items, which is affecting their overall sales. Most of the reviews don’t follow Amazon’s general review guidelines and in spite of complaining several times, the marketplace has failed to take any action, as per the seller.

Another seller posted on IOS’s Facebook seller forum,

“Why Amazon allows customers to put feedback on products when they have not even bought the product. My stock at FBA is moving slowly just because of this stupid feedback by this customer or may be competitor.”

Getting reviews removed is tough – worldwide

Negative reviews are unsettling, even more so when they are fake. Many use the anonymity that Internet offers as a medium to rant and write negative content without really thinking of the consequences and damage it may cause to others.

There have been instances where companies have sued reviewers and sites like Yelp but it didn’t lead to happy ending. In most cases, they don’t disappear. Primarily because determining if the review is indeed fake is difficult and law-makers want to protect consumers from gag orders.

IOS reached out to Amazon for this case and asked the etailer about its reviews screening process and when a seller reports unverified posts on their listings, what action is taken.

Amazon India spokesperson replied to IOS,

“We are very protective of our customer voice and go to great lengths to keep reviews up on the site, even if they are aggressively critical or obviously untrue. This is essential in order to maintain trust in the authenticity of our reviews as a whole. We let other customers weigh in by voting or commenting.”

The spokesperson adds,

“We are deliberately impartial. To ensure we are not biasing toward removing critical reviews, we do not judge any review on accuracy when it comes to guidelines enforcement.”

While Amazon wants to protect its buyers’ voice, the ecommerce giant sued its own sellers earlier this year over fake reviews.  

IOS asked if Amazon India would take similar action against Indian sellers as well but the spokesperson refused to comment on this.

How can sellers tackle this?

“To help customers make informed shopping decisions even when a review may have outdated or incorrect information we allow other customers or manufacturers to comment on reviews to add necessary clarifying information. We encourage publishers, authors, and manufacturers to take a respectful tone in such comments in order to prevent customer backlash,” asserts Amazon India’s spokesperson.

So sellers, you can do the following things:

• Reply to the fake review (avoid disrespectful, angry tone) and ask the customer to share his/her order id and contact details so that you can pull out the order details
• If the customer doesn’t reply in 4-5 days, leave a comment again that you have checked all the past orders and couldn’t find the details. Request again to provide the order id
• A week later (if customer doesn’t respond), write an update that the customer failed to share the order details and leave it at that. Share your number/email id for others to get in touch with you to clear any doubts/ask questions
• Request your other loyal/satisfied customers to comment below the fake negative reviews and share their positive experience in detail
• In the meanwhile, focus on adding positive reviews in your account. So reach out to your recent customers and request them to leave honest reviews. Because buyers often use ‘latest’ filter while sorting out reviews
• If you have offline customers, ask them if they can post a review on Amazon (as anyone can write here). If they aren’t tech-savvy, take their permission to post a review on their behalf in their words
• Lastly, report every fake review you spot with proofs, even if no action is taken

Amazon can follow Snapdeal’s example

Indian etailer Snapdeal recently introduced a new seller rating framework where it will consider only verified customer reviews. This is a very good move and Amazon should consider following the same route. Don’t you think?

Sellers, let us know your opinions. Do you think only verified reviews should be allowed on an online marketplace? Or do you think restricting reviews will have a negative impact on your business?

Amazon pours Rs. 115cr. into wholesale unit; Competitive pressure or potential prospects?

Amazon dabbled into the wholesale business last year with its pilot projects running in Bangalore and Mangalore. The etailer recently announced its online wholesale services, on B2B website Amazon Business, will be available in more cities across the country.

In June, the General Manager of AmazonBusiness, Kaveesh Chawla said they would take things slow with this idea. But now the etailer is concentrating on growth of this business and has injected a total of Rs. 115cr. into this unit of online retail, as per regulatory filings. The wholesale unit now has a total capital of Rs. 155cr as a result of the fresh funds.

At the moment, Amazon’s B2B unit meets the needs of small and medium-sized businesses. It lists items like:

• Stationary
• Office products
• Kitchen and housekeeping supplies
• Personal care goods
• Health products
• Food
• Beverages

Has competition spurred this investment?

Snapdeal joined the online wholesaler club last week, right after its head-to-toe branding makeover. The wholesale business by Snapdeal is expected to boost its fashion retail and enable seller funding. Snapdeal may be stuck in third place at the moment but in a business this volatile, nothing can be left to chance.

Alibaba has also been nurturing its B2B offerings in India. During the previous week, the Chinese ecommerce group announced its tie-ups with different service providers like banks (IDFC and Kotak Mahindra Bank) and logistics firms (DHL and Delhivery). Amazon and Alibaba are foreign ecommerce rivals who will soon face-off on Indian terrain. Preparation at every level is essential to make sure neither one is knocked out in the first round.

Is online wholesale business FDI-friendly?

High volume products like smartphones are being sourced by this wholesale unit to merchants selling on the Amazon online retail platform. This way Amazon is following thenew FDI norms for online marketplaces by the Central Government. By using its online marketplace sellers, the etailer doesn’t exceed the 25% sale limit instated by the government.

The online marketplace has already kerbed Cloudtail’s (its merchant arm’s) smartphone sales. Earlier, Cloudtail sold almost half of the total smartphones on Amazon, this made it the largest seller on the portal. Now, the foreign ecommerce company is requesting handset makers who bill products and inventory to Cloudtail to direct their bills to Amazon Wholesale India, say reports. And as a result, the need for working capital in the wholesale unit has risen.

What potential does Amazon’s B2B portal have?

Amazon has plans to expand this section of online selling by increasing the number of cities it is available in. But the existing tax structures make expansion complex due to restrictions. Hence, the decision to take things slow.

The sales on Amazon’s business portal were a total of $1 billion in 2015. That is in spite of being at the infant stage. More than 10,000 wholesale sellers exist on the business portal in Bangalore alone and the opportunity for this segment is expected to grow more than Amazon’s B2C business.

By 2020, the B2B industry in India will reach $700 billion from $300 billion according to a 2014 Walmart report. The consumer ecommerce industry, on the other hand, is expected to rake in $103 billion by 2020. According to Goldman Sachs, this figure is a total of online retail and online travel sales, yet it is far less compared to the wholesale estimates for 2020.