For the sake of exploring, I signed up to snapdeal.com. Since the intention was to explore the website and not to buy, I went straight on to the sign up link and here’s how it worked after that
Step 1: Click ‘My Account’ Link
Since this is the only link on the menu (no login/signup etc), I clicked it and was presented with the following
Did you see the top most tabs of login and signup? Neither did I. Since I am not quite comfortable signing up with Social Logins I chose to create an account. This page is as far from a neat/uncluttered page as possible and who the hell signs up using “Yahoo” anyways?
Step 2: Click the ’Create your Account Now’ link
After filling up the form, I was sent a confirmation email. Here’s how it looks
Oh wait, did the email say ?
|Now that you are here, we will make sure you eat, drink, relax and have fun in your life.|
|Every day, you will receive an exciting offer in your Inbox. Get ready for up to 90% off on Dining, Fitness & Spa, Entertainment, Travel, Activities and More; all in your neighborhood.”|
Looks like in all the jazz someone forgot to tell the new users that the core business model has changed from local deals to an e-commerce marketplace
Step 3: Click the verification Link
On clicking, the verification link. It asks me to type my credentials again to login.
Step 4: Login
Not sure why on earth is Snapdeal making me do all this work just to sign up ?
Let’s compare this with let’s say Flipkart’s signup workflow
Step 1: Click ‘Signup’ link
Unlike Snapdeal which assumes every user has an account on their website and wants to immediately jump to it, Flipkart’s menu has the following links ‘Login | Signup’. As explicit as it can get
Clicking Signup link opens the following
Much neater and usable none the less
Step 2: Enter details and click Sign up Now!
After filling the details and clicking Sign up Now!, I don’t need to a) click verification email b) login on the website
Voila !! All of this is taken care of by itself
I hope now even a rookie can now appreciate how bad Snapdeal’s workflow is
April 27, 2013 No Comments
In Sep 2012 Assocham together with Comscore came out with a report on the Indian ecommerce Scene. It had some known and some new stats/key points. You can download the report here
Here are the main points
- 75% of online audience between the age group of 15-34 years
- Female population is about 40% of total users (July 2012)
- The penetration in India is about 44% which is higher than the world average for travel
- IRCTC get about 19.2% of all Indian online traffic (highest – 12mn uniques/month) followed by Makemytrip
- Redbus gets about 2%
- Surprise: Content type sites for ex: indiarailinfo (3.2%) and mustseeindia (2.3%)
- Travelyaari and Makemytrip (2.3 mn uniques a month)
- The penetration in India is about 60% which is lower than the world average for retail (72%)
- Amazon gets about 15.4%, Flipkart (11.5% – 7.4 mn uniques/month), Snapdeal (11.1% – 6.9 mn uniques/month) of all India online traffic
- Apparel is the most growing subsegment in retail
- Flowers/gifts/greetings is the only subsegment with negative growth – 33% (Our coupons??)
- Direct Debit – 58% with avg transaction of 20$ (lowest)
- Visa – 21% with avg transaction of 48$
- Master card – 12% with avg transaction of 47$
- Cash on Delivery – 7% with avg transaction of 33$
- Others – 2% with avg transaction of 43$
- American Express cards apparently have the highest avg transaction size of 110$
- SBI and SBI Direct – 29 +26 = 55% of all transactions
- ICICI (17%), HDFC (14%)
- Do a revenue of about 38 Cr
- Car rentals and bus booking online should go further up
- home furnishing and lifestyle goods to contribute more
- comparison shopping sites/apps to get more popularity
April 23, 2013 No Comments
If you are part of/related to the Indian e-commerce scene in any manner or read desi start-up blogs, chances are you might be familiar with the concept of Marketplace.
A “Marketplace” connects buyers and sellers who otherwise have trouble finding each other.
Marketplace(think eBay), is simply a model which has multiple sellers providing various goods/services through a platform. In the context of this discussion, an e-commerce website instead of sourcing and fulfilling the orders just manages the listing of products and passes on the order details to the sellers who then handles them.
Recently, India’s biggest online retailer (Flipkart) made their first move as a part of shift towards the marketplace set up.
Other Indian online retailers on scaled up marketplace model are Snapdeal(which recently raised $ 50 mn from ebay and others), Tradus, Infibeam and Shopclues. Let’s understand how the marketplace model and inventory led model compare in execution
The key components of an e-commerce set up are
- Customer Acquisition
- Technology (Customer facing/related and backend)
- Fulfillment (Sourcing, Packaging and Delivery)
- Payment Processing
- Customer Service/Support
Setting everything up for a rookie is quite demanding (capital and effort wise) and will take months to get off the ground, however to signup as a seller on a marketplace and/or opening a shop using SaaS based ecommerce store building platforms like Zepo, Buildabazaar or Martjack is a quickie. So for a newbie it makes perfect sense to open up their own shop (SaaS) and list on various marketplaces as a seller
Based on one’s expertise and priorities there are various ways of building the e-commerce store set up. For eg: while someone will prefer to control the last mile delivery experience, someone would rather let logistics companies take care of that.
The most common model is mix of Inventory led and Marketplace both (think Amazon). Here’s how it works
- Inventory Led – Short Tail (Fast moving, Commodity products, Easy to warehouse for ex: best selling books/movies/pendrives etc)
- Marketplace – Long Tail (Slow moving, Niche products, Difficult to warehouse for ex: medical books published in hindi/very old foreign language films/Furniture etc)
While it might not very clear from the examples but Inventory led model makes sense for products which aren’t perishable(both utility and demand/vogue), are easily available offline too and move fast enough while the Marketplace model makes sense for products which one doesn’t know exist or even if one knows they don’t have any clue on how to stock them, how to source them etc.
Customer Acquisition,Technology,Payment Processing and Customer Support are done by the e-commerce company.
Here’s how various models are implemented in some of the biggest Indian e-commerce companies.
A couple questions come to the the curious mind.
- Why sudden rush towards Marketplace all across?
- Is Marketplace the future of e-commerce in India?
1. Why sudden rush towards Marketplace all across?
The answer to that question (from what I’ve heard) lies in the deep VC pockets. With the Govt of India dillydallying around the FDI regulations for e-commerce, apparently Marketplace is the only way to get external funding needed to sustain the business.
Also, it could be because the bigger e-commerce companies have figured out that
a) they can’t possibly go that strong on increasing the quality/quantity of the catalog on their own
b) they ran sick and tired of doing everything on their own.
To get a sense, compare how Flipkart was managing these functions in it’s previous avatar and compare it to say Snapdeal
2. Is that the future of e-commerce in India?
On doing some rough calculations based on the information available Flipkart, Infibeam, Snapdeal, Jabong, Bookadda and Homeshop together would be doing around 1,15,000 orders a day (Flipkart and Snapdeal contributing about 60-70 %).
There are a lot more sites (ending with kart and otherwise) who just might be doing another (20-30,000 transactions or more a day)
As per my guesstimate all independent smaller e-commerce websites and platform powered online shops selling long tail products would be doing not more than 5-10,000 orders a day.These numbers could be significantly different from the mark for all we know but based on these numbers before marketplace became the buzzword, top 5-6 established players were doing about 90,000-95,000 orders a day in total while the others in long tail were about 5-10% of their size.
The balance has started to shift towards the marketplace model transactions. For now their share could be 10-15% of the overall e-commerce transactions. Going forward we’ll a lot more smaller businesses and niche startups coming online and by 2013 end their share could be upwards of 20-25%(going by the fact that between Flipkart and Snapdeal they are the biggest online retailers).
A couple of factors to speed this up would be
- More platforms like Buildabazaar and Zepo
- Better payment gateway/cash collection mechanisms (Ghar pay etc)
- Better logistics (for end to end fulfillment)
- Third party SaaS services for other components like (Catalog, Warehousing, Customer Support)
- Some VC investment in 1-2 marketplace companies
The sooner we get to see the above mentioned things rolling the faster we’ll get to the long tail moving online. At some time in the mid term future(5-7 years) the demand for long tail items (Niche/scarcely available/custom made) products could become comparable if not more than the demand for short tail products.
So the marketplace model and independent shops powered by various sites are here to stay and the current biggies like Flipkart, or maybe Snapdeal will evolve into a mix of (Short tail – Inventory led – Self Fulfilled and Long tail – marketplace – Logistics company) models.
April 11, 2013 No Comments
Looking for something interesting to read? I read the following links(and visited websites) today and liked, you might want to read them/check them out
- Too Big to Chug: How Our Sodas Got So Huge (Gulp soft drinks? Might find it interesting)
- Science Acquires Indian Startup Pinpuff to Measure and Monetize Influence On Pinterest (Interesting startup)
- Teach Yourself Programming in Ten Years (The classic epic post by Peter Norvig)
- How can I learn to program in Python? (Quora post with links to some very useful resources)
- http://www.surveymonkey.com (Great site to create free surveys)
June 27, 2012 No Comments
A couple days back I read this article on Medianama which shared that Amazon will soon go live in India as a marketplace with Junglee.com, but a tweet today morning announcing that Junglee.com is live caught me by surprise.
Amazon, of course was expected to test waters in India this year but the whole junglee.com gig is away from most people’s anticipation of how it will all unwrap.
Amazon for the records is the the biggest global e-retail/e-tail giant which posted $17.43bn in revenues in last quarter of 2011 (35% more than the revenue for same quarter in 2010). The company net sales were up 37% compared with 2010.
Amazon is India
There was a lot of speculation particularly for the last six months about Amazon’s entry to India. Amazon as countless sources have shared, already have development centers in India and had started looking for talent for their fulfillment capabilities. As per the current regulations Amazon is not allowed to open an online Multi-brand retail store, and can not make FDI in India except for a single brand retail business, thus Junglee.
Here’s how Amazon describes it
“Junglee is an online shopping service by Amazon which enables customers to find and discover products from online and offline retailers in India and from Amazon.com. Junglee organizes massive selection and multiple buying options from hundreds of sellers, and leverages Amazon’s proven technologies and millions of customer reviews to help customers make smart purchase decisions.”
For the uninitiated Junglee is like a Huge Brochure which lists millions of products from thousands of vendors. You choose the product that you want to buy and then go the vendor site or call them to order as explained here
Just one book, also I am not sure why am I being shown featured jeans when I categorically chose books. Bugs.
Here’s a sample product page(for Paulo Coelho’s Alchemist)
Amazon apparently relies of it’s own site for Metadata (Product Description for ex) which in some cases can be really screwed up like for the book ‘I Too Had A Love Story’
The product description is picked from http://www.amazon.com/I-Too-Had-Love-Story/dp/8188575704 and is as far from the actual book description as it can be http://www.dialabook.in/books/i-too-had-a-love-story_1_12247.html
Scrolling down further is the review section. Most part of this section comes directly from Amazon.com
Junglee.com for now has about 5 sellers for Books which includes names that probably feature towards the middle(and bottom) spots of a list of top 10 online booksellers in India. Almost everything from the list except Flipkart and Infibeam can be expected to list here.
Using Junglee as a Seller: Win Some, Lose Some
Junglee let’s online and offline retailers to list themselves and their catalogues for free and without any ongoing commission.
What it means for suppliers (especially small time indies) is that they get a chance to drive traffic and sales from Junglee’s visitors and will convert some customers to direct. Over a period of time as in an online marketplace set up their ratings and reviews will determine how they fare in the long run.
The picture however isn’t all rosy. For established players like Indiaplaza (unless there is some non-compete or alliance agreement) registering on Junglee will give them a temporary boost in terms of both traffic and eventually sales but once Junglee starts running it will break its shackles and given them a run for their money by listing Amazon.in as the default/first choice as a buyer. Once that happens the customers will make the switch to Amazon (in place of a retailer they found a few months back) with the blink of an eye.
(http://services.amazon.in has more details on how to set up ads on Junglee.com)
Using Junglee as a Customer: All Profit No Loss
Junglee.com is another (but branded) shiny object for the scores of people who spend hours daily on the interwebs tweeting or facebooking. They know have one more place to spend time and compare prices. It will be helpful in finding alternative vendors for particular categories and helpful in finding product categories that have been literally out of the online sphere, stuff like Pet Supplies.
Within a span of months you’ll find dozens of people selling Pet Supplies and the likes on Junglee. What this means is that consumers won’t have to wait for their favorite e-commerce site to add some category or a stand alone/vertical service around the category to launch.
What’s up with Amazon?: Junglee is the shortest(and smartest) possible path
To begin their tryst with India Amazon is trying to be the front end(influencer) of the purchase funnel in stead of starting being a back end service provider. It wants Indians to log on to Junglee.com to begin their shopping journey (they can or cannot decide to buy from Amazon) but eventually they’ll make it their in house offers compelling enough to get a huge chunk of the pie.
Here’s how it could unfold for Amazon. Junglee is essentially the market place of Amazon.com abstracted and launched a special business for legal and other reasons. In Amazon.com’s marketplace lot of vendors put their goods on sale and do most of the fulfillment too. Amazon however displays their products and collects the payment from customers (Think Ebay).
What Works Good For Amazon
- Junglee will create an incoming line for new retailers to tie-up. Retailers will flock and list products instead of the company finding them using direct/in-direct modes of advertising or marketing.
- User Data: Millions of people could potentially sign up and start using Junglee to discover new products and vendors. All the user and their shopping history details are now available for scrutiny
- All Junglee’s set up can eventually be replicated for Amazon.in’s market place feature
- A sense of how business works. Deeper/Closer look at how the things work
- Later they’ll start people for accepting payments and maybe coordinating deliveries (Customers buy a third party product from Junglee and Junglee home delivers a product which the third party retailer had in their office and sent to Amazon’s fulfillment center once they get an order). They stand to earn 2-10% commission depending on the product category and services they offer
- Use all the Seller info to tie-up directly for Amazon.in
- Based on user preferences start offering competitive prices and eventually *produce* them domestically
Having said all of that, Junglee is an interesting piece in the Indian e-commerce puzzle and it will definitely have an impact on the existing market leaders. Most Indians from what I understand would give an arm(or probably) a leg to switch to another cheaper vendor especially if it has Made in America tag on it.
What do you think?
February 3, 2012 2 Comments
If you are an Indian and watch Hindi movies, chances are you must have heard of the hugely popular film “Munnabhai MBBS” starring Sanjay Dutt(as Munna) and Arshad Warsi(as Circuit). I too like millions others watched and re-watched the film to cherish the beautiful message of putting the human touch in Medicare and focusing on improving patients quality of life.
While the film was great, I (and most others) didn’t know that it was inspired (not copied, ok?) from Hollywood film Patch Adams. The bad bit is that Vidhu Vinod Chopra and co didn’t even bother to give credits to the film or the man himself at the end of the film.
Me and my brother happened to see the film yesterday and loved it to tears. The best thing about the film however is that it’s based on real life story of Hunter “Patch” Adams . There’s nothing more beautiful and inspiring than a honest pursuit of simple philosophy which one holds dear.
My immediate reaction after finishing the film at 1:30AM was to read more about the real Patch Adams and here’s what I found. There’s indeed a Gesundheit Institute (you can read more about it here http://patchadams.org/) and Dr Patch Adams is alive and still trying to revolutionize the system.
While some of us might expect that after two films by two of the biggest film industries (Hollywood and Bollywood) things would have changed for Dr Patch Adams and Gesundheit Institute for good but sadly none of that happened, no big donations came forward their way and their team had to struggle to get the project off ground.
This talk shares more details about the real deal
What’s disappointing really is the fact no big names and not enough smaller ones came forward to support such a noble cause. Is it too Utopian to be true?
What do you think is the real reason? What would it take to catch fancy of the Social Media Generation?
PS: Really bad of the film maker Tom Shadyac and co for not doing anything for Dr Patch’s work
January 29, 2012 No Comments
Last month I was interviewed for a small video feature that covered 3 booming economies India, Brazil and China. Here’s the link to the video feature.
December 30, 2011 No Comments
COD or Cash on Delivery as we now know it wasn’t no where near its popularity today a few years back. Today quite a few people (who call us at dialabook and otherwise) know and talk about Cash upon Delivery as a concept (books milne ke baad paise de sakte hain?) if not the exact term. COD as we know has taken the entire e-commerce Industry(if we can call it) by a storm.
To give you some perspective, about 2 years back when we(@dialabook) started collecting payment for books on delivery, we had no idea about this term and no notable e-commerce site had this option. Fast forward it to today and almost all e-commerce sites(and a few others like the one below) accept(or rather promote) COD to lure more customers.
While COD as a concept has been there for ages under the name VPP (Value Payable Post) by India Post. Here’s how their website defines VPP
The value payable system is designed to meet the requirements of persons who wish to pay for articles sent to them at the time of receipt of the articles or of the bills or railway receipts relating to them, and also to meet the requirements of traders and others who wish to recover, through the agency of the Post Office the value of article supplied by them.
Govt VPP however seems to have an upper limit of Rs 5000/-, which means you can’t send goods worth more than 5k through them.
Not just VPP, some courier companies in India have been supporting COD since March 2009 at least. Though some startups like @dialabook might have been offering COD locally before, the big shift happened in April 2010 when country’s leading e-commerce player Flipkart introduced COD in April 2010 with a cash limit of Rs 2500/-, followed eight months later by Infibeam (FYI: Indiaplaza announced COD on 25th March 2010, a few days ahead of Flipkart ). It is also worth noting that some services like travelguru.com were offering COD option at least 2 years before e-commerce companies started adopting it. Seeing its success elsewhere, online travel portals yatra and Ezeego1 also launched COD in year 2011
As it turns out India isn’t the only breeding ground for COD. China,Russia etc have been a witness to the popularity of COD for long.
Going by the stats in India, as much as 60% customers of top 5 e-commerce sites in India use the option of paying by cash on delivery (COD) and many of these sites have credited COD for fueling their rapid growth. While COD for obvious reasons makes a lot of sense for Indian customers and definitely opens a new market (students etc) to e-commerce it isn’t exactly what the doc prescribed or should prescribe. Here are some of the things wrong with COD
- Cost: Nearly all courier companies charge extra for collecting cash. This cost is divided in two parts
Fixed Cost: Rs 20-150/- ; Variable Cost: 1-3% of the COD Amount. (This is mostly for high price items like mobile phones, laptops etc). If the item is priced low then the COD charges at times exceed one’s margin in the product and if the item is priced very high then the % COD charge turns out to be in hundreds or even thousands
- Delay in payment: Unlike credit card transactions, COD payment generally takes 1-2 weeks or more to be transferred to your account. This bites your cash flow especially as the COD amounts start becoming huge.
- Delay in deliveries: On an average COD deliveries are delayed by 12-36 hours when compared to normal deliveries. The reasons for the same are mostly non-availability of customer or cash and many a times both. Here unlike regular deliveries the parcel can’t be dropped to a neighbors place
- Higher Returns/Cancellations: Since the customer hasn’t paid in advance, they can always cancel/refuse to take the delivery and sight reasons like I found this phone cheaper locally and have bought it from there or I have changed my mind, will buy a new laptop later
- Overheads: Collecting the cash, collating the receipts and maintaining records et all is a nightmare
With increasingly every online business offering it despite its disadvantages(to retailers) the situation might just go out of hand and turn into a death spiral (at least for some non/less funded businesses that rely heavily on their internal cash flows). Small startups are the ones that should be really concerned about these issues instead of blindly aping others and starting COD.
With time as the e-commerce market in India matures, there *might* be more trust in established mechanisms of swiping cards for paying and some people will get over the liking for COD and prefer pre-payments. But, given the case in China, Russia etc it looks like unless the e-commerce majors deliberately start demoting COD and promoting other payment options we just might replicate what’s happening elsewhere i.e 60-85% people using e-commerce sites paying by COD.
Some ways around COD
- Multiple Payment Options (at least 5-6)
- Pre-payment methods (like wallets, cards)
- Mobile banking and SMS payments
- Card on Delivery
- Giving incentives to users for choosing online payment against COD
- Alternative payment methods such as paypal etc
While COD is a good option to have in some cases its double edged sword which should be used with a lot of caution and foresight. What do you think?
December 18, 2011 4 Comments
I’ve been wanting to write this post for quite a while now, glad this long weekend gave me enough time to finally sit on it.
A lot has changed since I started working on Dial-a-Book some 2 years or so back(then part time though). Back in Q4 – 2009 e-commerce was quite nascent and VC funding for it was not even half as common as it is today. There were just 2-3 online bookstore or e-commerce sites that looked like they could go anywhere and every week a new online bookstore was being launched. Indiaplaza was probably the most popular one.
All these existing and upcoming online bookstores were pretty much doing the same things, building a half decent website, listing a lakh odd books and giving heavy discounts in hopes of wooing the online audience. Two years into it, a couple of the popular sites at that time have grown enormously, another couple new sites have emerged and attained very good scale and almost all the remaining ones have either shut down or are doing just well enough to sustain the owners.
I’ve always been a price conscious book buyer with likings but hardly any loyalty to a bookstore. I remember when i first discovered Midlands who offered me 20% discount on all books how I moved almost all(leaving a few impulse buys here and there) my book purchases to them. Kinda same thing happened when I discovered the desi online stores, the fact that they offered even more discounts and could home deliver(for free) almost any book in a few days time was a good enough reason for me to move all my book shopping( a few books/month on average) to them.
Back then I was one of the only few people in my circle to buy books online and almost none of my friends/colleagues had much clue about the online book buying scene. The booksellers on the whole turned out to be surprisingly unaware of the developments in the e-commerce(mostly book selling) space. They hardly had any idea about online bookstores and those who did were quite dismissive of them by saying ‘Such things work in the US not in India, here people want to touch and feel before buying’, ‘These online sites give too much discounts, they can’t last long’.
Circa 2011, the same bookseller is now offering a recently released book by Amish Tripathi at 1/3rd discount, which is just 3 Rs more than the price (Rs 192) at which it is being sold at most online bookstores.
So what changed? More importantly, what led this change?
Q 1. What Changed?
A 1. The Market Dynamics
1) More for Less
Giving a 33.33 % discount on a newly released book would have been unthinkable for any bookstore, especially the ones which sells 200+ copies of each new release every month with a standard discount. But now the whole game has changed, today’s reader is exposed(and addicted) to heavy discounts, highly efficient and user friendly customer experience and the only way to survive is to offer competitive pricing coupled with widest possible range and great overall experience. Gone are the days when the booksellers used to decide which books to import/stock, how to price them and to procure locally available books on customer request (if at all) and take a week for it.
Every search on twitter(for a big online store) would reveal at least a couple tweets mentioning how people now browse books at landmark/crossword and buy them online. You can see the shift happening right there.
2) Let’s Get Online
Seeing the stellar growth of some of the famous online stores a few bookstore chains also woke up from slumber and started developing and promoting their online stores. Landmark, Crossword, Odyssey et all now have online stores where they claim to offer hugh discounts (interestingly on some books the discounts are even even more than anywhere else)
Not just this, even the smaller chains(like Sapna, oxford) and individual bookstores are online and spending money on google ads and social media to promote themselves.
Apart from these there are some publishers (like Pearson) and some distributors(like Prakash) who couldn’t resist the temptation of taking a shot and online bookselling and thus too have jumped the bandwagon and are doing their best to well, give more discounts.
Going further all the e-commerce stores which were focusing on other categories (mobiles etc) also have started adding books to their product list. In news recently was Homeshop18′s acquisition of Coinjoos
That’s not it, the grapewine has it that still more companies from different sectors dazzled by the million and billion dollar valuations of popular Indian e-commerce stores are planning to take the plunge and well start another online bookstore
3) Better Support
Thanks to the success of round 2 of e-commerce especially for books a lot has improved on the backend i.e at the end of publishers and distributors. Lots of processes have been initiated and followed regularly at the vendors end. Most distributors now stock their data and share stock reports bi weekly/weekly, publishers regularly share information about new and upcoming releases. Most of these guys are no better than sloppy govt officials who take enormous time and effort to do things but in order to survive some of them have learned to be better organized and efficient.
Q 2. What Led To The Change?
A 2. Lofty Ambitions Backed By VC $’s
A quick look at the new release section of most online book stores will put many a booksellers into depression. A new release on an average is on a 30% discount and depending on the hype surrounding it, publisher and competition it could go up to 50 % (Yes, that’s the cost which even the publishers might not give to their distributors but if you are luck that’s what a new release could cost you with free home delivery).
The logic championed first by Amazon (and thus replicated ad infinitum) is, give heavy discounts on new books to get more eyeballs/buzz and bigger volumes thus better topline and better pricing from suppliers. Repeat.
You don’t expect a regular customer to understand(or bother with) all this but seeing massive discounts on the online portals make them feel that there’s a huge margin in books and as if all this while their neighborhood/favourite bookstore chain was ripping them of by not giving as much discounts.
For a customer who has bought a book at 30-40% discount will hardly ever buy a book at 10% or no discount at all
Though as a customer this would have been a dream come true for me but being on the other side of the business I too am surprised at how its working for some sites. You can now order a 95 Rs chetan bhagat book for Rs 57-60, make it two books and its free home delivery and the book is home delivered in 1-2 working days via class A courier (Bluedart if you are lucky). It doesn’t leave much to imagination that no one, even the publisher can possibly make any money in these transactions.
A lot of small booksellers ask me “How can online sites give this much discounts when the big distributors themselves don’t get as much discount from the publishers?”
The answer more often that not lies in the fact that most sites are not focusing on making money on these transactions here but on just getting more customers. With millions of $’s in VC funding the formula is simple
- Position yourself as the cheapest place to buy stuff online.
- Buy a lot of online ad inventory from Google/Yahoo et all
- Point these ads to a web page on your site which list books at ridiculously low prices
However in all this merry making of deep discounted prices there’s a catch.
For every 5 or 10 super cheap transactions there’s 1 transaction on most popular online bookstore in which the customer ends up paying price more than the its price on a bookstore of at times even worse paying more than the MRP/MRP for Indian Market.
‘The Goddess In India: The Five Faces Of The Eternal Feminine’ by Devdutt Pattnaik (ISBN: 9780892818075) is one such title. I personally bought a few copies with Rs 395/- sticker on them and on checking online the same book (picked from the same source because I can compare the delivery time on the site) being sold for almost 4 times the price.
A possible trick here could be: Stock a few copies as per the local market MRP of book which is scarcely available, once the copies at suppliers run out, sell them at international market MRP and deliver them in 2-5 days (because its in your stock).
Such cases are more common in categories other than general books/novels, especially where chances of price comparison are less. This is clearly a minority case
This is kinda similar to what a popular bookstore in Delhi does with their super discounted sales. Buy books as per local market MRP(which is easily half or less than the international market MRP) and then sell it on the MRP pretending it to be on heavy discounts . Ex: A book with local MRP of Rs 350 is being tauted as being for Rs 1200 and after 70 % discount it comes to be for Rs 350/-. So the customer ends up paying the local market MRP (no discount at all) but might think he saved 70 % and got a great deal
Going online one can leverage efficiencies like just in time inventory, virtually unlimited list of products, pre-orders etc which in itself offers a significant advantage over traditional bookstores but selling books with -ve margins, plastering the internet(or TV) with your ads is something that cannot be competed against.
I’ve heard of some booksellers and publishers taking up this issue of excessive discounting with online bookstores and they apparently have made some progress like this popular publisher of general books has told one big online store to not offer more than 35% discount on their new releases. For every big publisher that is able to get their concern heard and acted upon there are five smaller publishers that are given a choice to shut up completely or face de-listing from the site all together.
Having said all this I feel the time has arrived for every bookseller to re-think their way of doing business and figure out how are they going to sustain themselves in these times where their much bigger and deep pocketed competitors are willing to do anything that it takes to own more customers.
And if you are beginning to start an online bookstore(e-commerce store if you will), you better have a really well thought out execution and funding plan.
August 15, 2011 No Comments
This post is partly meant to be a rant and partly to share what I feel. Feel free to agree/disagree.
In middle of a telephonic conversation with a friend(web entrepreneur) I popped a question,
Did you see Indian e-commerce stores putting up phone numbers on their website/product pages to help people buy (read order) products?
Gladly, as expected he replied with a “NO” which brings me to the question if/why/how do things change in the startup/business world with new things being introduced and then blatantly reused (copied) by others.
When we started Dial-a-Book some 1.5 years back, we were the ONLY ones that took orders on phone and accepted Cash on Delivery(COD). Yes, none of the existing players had anything remotely similar in their way of working.
Come 2011: The two biggest e-commerce players in India have started COD (about 6-8 months back for one and 2-3 months back for another) and now they also have put phone numbers on their portals to take orders. Surprising? Hardly.
Wait for a couple months and you’ll see almost everyone following steps. In fact I remember one of the young and aspiring e-commerce startups went to the extend of launching a service similar to ‘Dial-a-Book‘ and branding it as “X.com’s Dial-a-Book”, Duh.
I don’t mean to say we are the inspiration behind these but definitely the uncanny resemblances are a bit too much for them to be completely independent in thinking and execution. I know it might be really difficult to acknowledge but that’s how it is. The idea of sharing this here was that I felt like putting it done of paper/web for records.
Copying a feature or idea is one thing and doing justice to it is completely different. The most painful part of it being the big guys almost always get the credit for doing new things which aren’t really new.
It will be interesting to see how things change going forward with the e-commerce scene also extending to the phone commerce scene. Stay Tuned !!
April 18, 2011 1 Comment