The E-commerce industry is a hotbed of competition right now. In the previous post, I noted how E-commerce companies have failed to adequately differentiate themselves and create any sort of brand loyalty. Let’s look at how the various companies have strived to one-up the rest, how they can differentiate themselves and what will drive profitability in a time when burning cash is the going catchphrase.
1 INCITE SELLERS: Often referred to as the ‘push’ strategy of marketing where sellers prefer your platform to sell their goods to the others and motivated sellers bring forth greater inventory for sale. Perks and benefits such as faster payment cycles, no commission charged on certain goods, seller financing (through partnerships with NBFCs) and seller rewards on timely deliveries, etc. have been conceptualised by different e-tailers. The others pick up these tricks from those who conceptualised it which makes these tactics inefficient in ensuring that sellers absolutely prefer one platform over the others. Flipkart can probably crack deals wherein they offer exclusive benefits to a seller who agrees to stay exclusive with Flipkart (not list products at other places); but then again, there are multiple sellers of the same product, so this might again be tricky.
2 CUSTOMER LOYALTY PROGRAMMES: Make customers always choose you when variables such as product, price, delivery are equal between you and Amazon. Discount cards of the kind offline retailers use, wherein customers can accumulate points according to their volume of purchase and redeem it for additional discounts is a great way of ensuring a subscriber only shops at your platform. ‘Amazon Prime’ is one such initiative Amazon runs in the US and has been ripped off by Flipkart as ‘Flipkart First’ in India. Though it was planned as a customer loyalty programme, it did not provide any meaningful benefits and has been a failure. ‘PAYBACK’ has emerged to be a successful start-up that is based on building customer loyalty for its clients. (It’s crazy how people come up with such start-up ideas!). Though as they say, when everyone is special, no one is actually special- similarly, if everyone is running the same deals through Payback, no one is really winning. Flipkart should try and sign a deal with Payback that makes them Payback’s only n the E-tail partner.
3 MONETISING VISIBILITY: It is a common phenomenon for shoppers to pay greater attention to the products that are shown first on the search results page. Further, most buyers will purchase from the default seller that appears along the product page and will not care to consider the other seller of the same product even if the other seller is selling at the same price as the default seller. In this case, the default seller stands to gain immensely. Flipkart can charge sellers in exchange for them being listed on top and being made the default sellers for the specified products. Further, Flipkart can charge brands in exchange for showing the particular brand’s products on top when the shopper types in a generic product name. E.g. when you type ‘heaters’, the first few results you see might be from Philipps- the company that paid Flipkart to be listed first. This is similar to how Google monetizes the visibility of its search results. To be fair, Flipkart can explicitly state that the particular search result is sponsored (most people wouldn’t care).
4 COMPETE WITH YOUR OWN: An interesting fact about Flipkart is that it isn’t exactly the marketplace it claims to be. WS Retail is the major seller on Flipkart which is a company with strong ties with the founders. In fact, Flipkart used to own WS Retail before FDI regulations kicked in (More on this in my next post). Also, if you notice, in the product categories that WS Retail is a seller, it is always the default seller which appears first. This gives an edge to Flipkart which now operates not only as a marketplace but also as a pseudo direct-retailer. This is similar to how Amazon operates (legally) in the US. Moreover, Flipkart now sells electronics under the brand ‘Digiflip’ which competes directly with the other brands’ electronic products that Flipkart sells. In an interesting article in the Harvard Business Review, it was discovered that Amazon in the US slowly displaces other sellers and becomes the default seller for the product categories it sells in. To quote from the article: “Independent sellers often have a hard time competing on Amazon when Amazon itself offers the same product. One reason: The lowest cost doesn’t always mean top billing on the site.” Flipkart with its hold over WS Retail and now the entry of Digiflip is doing pretty much the same thing. It gets higher margins on Digiflip products and the ones that it sells through WS Retail.
5 BIG DATA ANALYTICS: Big data is making waves in e-commerce. Ever been to a website and seen an ad by Amazon showcasing a product that you had recently searched for at some other place (like google or even Amazon itself)? Coincidence? Obviously not. Analytics firms process large amounts of consumer behaviour (revealed) data and curate ads, display pages etc. From TechInAsia: “Flipkart is investing in seller analytics and recommendations too. For example, using the data mined, Flipkart can find out when demand is high in a certain region, and tell a seller to stock up in the local warehouse for faster delivery and lower transport costs. Using comparative aggregate analytics, the company can spot trends and recommend courses of action to its sellers.”
If you have identified any tricks that have or can work in this industry, do share it with us through the comments!
Read why the E-commerce industry might be the next big bubble in India: Will E-Commerce Survive?
Know who is most likely to survive the E-commerce battle between Amazon and Flipkart: Who will survive the E-commerce Battle? Amazon or Flipkart
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