Decoding the online marketplace

When we started ShopClues.com two years ago – 'MarketPlace' was a concept and term we had to really sell to both our investor and customer base. Inventory-led models dominated Indian ecommerce and there were many, many ardent supporters who truly believed that was the only model that could survive. Of course, over the last year things have changed and online 'marketplaces' have drawn much attention "the question remains whether they truly have the marketplace DNA or have accepted (not embraced) the model for other regulatory reasons.

ShopClues.com started with the basic premise that regardless of geographies, online commerce should always be a form of reflection of the offline retail. India, has traditionally been a country of bazaars, strip malls, local (sell-it-all) kirana stores and the haats – basically a country of marketplaces.

As an online marketplace, we were clear that we would only be the facilitator of buyer-seller transactions and our job would be to bring in customer traffic, provide infrastructure, and develop trust between people who come to transact in the space. Another important aspect was to create and enforce policies and practices that enable merchants do good business and customers to have a great shopping experience. So here's our take on how we have instilled the true 'marketplace' DNA within ShopClues.

The 'service provider' DNA

True-blood marketplaces are service providers, not sellers themselves—they don't stock inventory, or pay sales tax or issue invoices. Instead, they manage and maintain the ecommerce ecosystem that thrives on their technology platform with minimal intervention in decisions around pricing or promotion or delivery.

Customer is king and a marketplace always has two customers—the merchant and the buyer. All policies, and processes must be made to provide the best experience for both the groups. Merchants looking to join a marketplace should carefully consider the freedom it allows them to function as an independent business—merchants should have the ability to take decisions on pricing, free delivery, CODs, et al. For example, if a marketplace has more the 70% orders offered on CoD, then that translates into a high rate of returns, which is unfavourable for merchants. However, CODs in measured doses remains critical to the business.

Large number of merchants translates into vast selection

A marketplace truly empowers the buyer with ample choices and best prices brought about by the large number of merchants selling unique and popular products. In India, marketplaces should have a significant representation of small and medium business along with authorised distributors and official brands – this is the only way to reflect the offline retail.

Essentially, marketplaces have always been and will always be a selection and pricing play—not necessarily a convenience play.

Creating a level playing field

One of the simple and beautiful things about an online marketplace is the immense power it places in the hands of even the smallest merchant hailing from the most remote corners of the country. Marketplaces are great equalisers; they provide SMBs a level playing field to compete with organised retail & large enterprises.

A marketplace is truly successful when it enables even a small merchant to create a 'brand', just like his bigger corporate counterparts with heavy distribution machinery and marketing muscle. At ShopClues, we see a host of mass-market brands driven by ambitious merchants who are willing to offer unique & quality products at competitive prices. A true marketplace provides the perfect platform for them to set up shop with minimal investment and risk, while managing all supporting functions like marketing, logistics and customer support. In an unorganised market like India, where much of the trade happens in small towns and cities, the marketplace serves as a great leveler for merchants to reach out to customers everywhere in the country.

As a passionate believer of the 'marketplace', we truly feel that when merchant ventures into building his online business, his prime concern should not just be the customer traffic on the site but also the health of the marketplace. Marketplace dynamics work best when marketplace concentrates on building a strong ecosystem between customers, merchants and service providers all the while empowering the merchants to do better business. In the end, everyone is a winner.

(Edited by Joby Puthuparampil Johnson)