The world of E-Commerce is a luring one. In the past few weeks, I have been asked by more than two dozen E-Commerce enthusiasts (people willing to start E-Commerce business), regarding our platform’s functionality as an “E-Commerce Marketplace”.
The people are keen to have their own market place with multiple vendors hooked to it, who source the product. Let us have a look at the E-Commerce Market Place Business Model. It is a multi step process that is designed to work as a mediator between various vendors and interested buyers. It allows various vendors and brand owners e-commerce marketplace or e-commerce store. A start-up e-commerce guideto join the website and display their products.
- Vendors display the product along with relevant description, photographs, inventory, taxonomy etc.
- The Market Place collects the payment from customers and disburses it to the vendors as per the agreed terms.
- The Vendors pack and ship the products to the customers and also are liable to provide post sales service like taking in queries, handling goods that are returned etc.
- Marketplace ensures complete customer satisfaction and protects the interest of the customers as well as vendors.
- The marketing expenses, customer acquisition strategies and other promotional activities are incorporated by the Marketplace to provide leverage to the vendor.
A Start-Up Market Place (with no prior experience in online selling) needs to ensure the following to make the marketplace (Engine) work seamlessly:
- Ensuring correct information from vendors, about the products they are displaying on your e-Commerce website. Any discrepancy in the same, will lead to compromised buying experience, leading to unsatisfied customers.
- The photography styles should be even and consistent. For instance, Indian marketplaces such as flipkart.com, amazon.com, snapdeal.com are all finicky about having products in white background while websites such as jabong.com want their vendors to have International photography models; I don’t understand why! The bottom line is, if pictures are inconsistent, you will compromise on user experience.
- What if vendor fails to ship products or ships wrong products ? You need to have an internal business process that addresses such situations. In case you are unable to deal with such situations, the vendors will not take you seriously and you are likely to have failed customer expectations leading to decrease in traffic on your E-Com website.
- An online marketplace needs to invest a lot of money to acquire and retain customers. As per the industry sources, big market places spend about Rs.1700 to acquire a customer, being a startup, you need to give a stronger marketing push to compete with them. The question is, do you have deep pockets to compete with them? Secondly, you need to have your sales and marketing machine designed in a manner that it encourages repeat purchases from existing customer base.
Starting a marketplace is not about having a feature rich software and launching it. You need to align business processes, marketing, finance, and most importantly a team to run the show. My advice to fellow entrepreneurs willing to create e-commerce store is:
- Keep your business processes simple and lean.
- Identify an unique product that is difficult to procure for customers offline, like madhubani paintings, handcrafted products, rare gadgets that you don’t get in India, unique set of pens and stationery etc, which should be less expensive, rare, easy to ship and with a good profit margin.
- Instead of spending your valuable resources in design systems and process, invest your resources in products, marketing your product, customer service, while letting your eCommerce platform and hosting infrastructure handled by best know online store builder or platforms.
- Invest in building great online brand.
In case, you still have doubts or need some answers or you have anything that conflict with your great marketplace idea, feel free to post your comments.