Strategy

Giving power back to the merchants

by Vaibhav Dabhade, Founder & CEO, Anchanto

Asia is now in the midst of an e-commerce boom.

Not only that, the growth rate of the sector in the region is the highest in the world, with a report by Fitch Solutions noting that e-commerce sales will grow by 14.2 per cent to US$1.2tr this year. That’s even bigger than second-placed US, which is only expected to reach nearly US$456bn.

This renaissance comes as no surprise. The region is home to over two billion internet users (and growing) and many nations which were previously classified as ‘frontier markets’ are growing rapidly, meaning that incomes are rising, and people now have more spending power than ever before.

This demand has ushered in the entry of a multitude of e-commerce platforms. In addition to global players, such as Amazon and Rakuten, a host of regional ones such as Lazada, Tokopedia, Shopee and Qoo10 have established footholds – and that is not even counting Chinese giants, such as Alibaba and JD.com.

So how can e-commerce companies set themselves apart to appeal more to not only consumers, but the merchants – who are very much the lifeblood of the platforms – as well?

Getting merchants closer to consumers

It is inevitable that we refer to Amazon in some form or fashion. The e-commerce giant’s tremendous success in creating a third-party marketplace aims at giving more control to third parties over their inventories. In comparison, first-party sellers relinquish control to Amazon in deciding which product the platform will buy and how many – limiting the sellers’ inventory control. This has also festered some frustrations between consumers, who may make purchases first discovering afterwards that the product is no longer in stock.

The Amazon marketplace is different in that merchants can sell their goods directly to consumers. This is because third-party sellers gain access to Amazon’s customer base, whilst Amazon expands the offerings on its site without having to invest in extra inventory (this responsibility is then shifted to the seller). Merchants can also take advantage of either first-party or third-party partnerships via hybrid model.

This strategy has helped Amazon marketplace draw in two million third-party sellers worldwide and has encouraged competitors such as Target to follow suit.

Automating shipments

Today’s e-commerce ecosystem is thriving, but it has also added greater complexities in fulfilling shipments to customers. Now, customers will find it highly unreasonable to only receive an order after just a few days of making the purchase. This is because the bar of expectation is raised significantly with options such as Amazon Prime Now, which promises members delivery in just two hours and at no extra cost (something that grocery customers are now rejoicing at).

This means that both merchants and marketplaces are racing to step-up their efforts to reduce the shipping time to meet the expectations of the modern e-commerce shopper. In the Asia Pacific, there is an added layer of complexity due to the region’s rapidly growing urbanisation rates which are making cities more dense; creating greater levels of congestion.

This may seem as a daunting challenge, but innovators are stepping-up to it by using technology to overcome the hurdles now faced by marketplaces in merchants in fulfilling last-mile orders. In addition to leveraging on big data and urban analytics to determine the quickest delivery routes, autonomous vehicles can also supplement human efforts (especially for smaller items) to ensure that delivery timelines are met without any hiccups – creating win-win-win scenarios for marketplaces, merchants and customers.

Obtaining multi-channel management support

With third-party marketplaces, there is more burden shifted to the sellers when fulfilling orders. This burden is more significant if the seller chooses to go about their e-commerce operations alone. This is especially the case for newer merchants that are just beginning to sell their goods online.

It can be daunting, initially, for merchants to handle every step of the fulfilment chain – from ensuring that they have ready stock for all orders and ensuring the orders reach customers in time. Another important element is customer satisfaction, which can make or break a merchant’s online reputation in an age of commerce that is now so dependent on customer feedback.

These are areas where merchants can choose to work with multi-channel management service providers, which today are able to offer a comprehensive suite of services ranging from inventory management and customer service to shipping and re-pricing.

Multi-channel management solutions have grown increasingly popular between smaller merchants that are now taking advantage of online sales channels. Yet, they are also gaining traction with larger merchants, seeing as they can use the solutions to better streamline their e-commerce operations; especially if they are present across more than one online marketplace and need to fulfil orders across multiple locales.

Today, there are many multi-channel management service providers. Each of them has their own sets of strengths and limits, so merchants first need to assess their own internal limits and work with service providers that can best fit their needs and that of the marketplaces they are selling their products on. This will help to make investments more strategic and avoid the sub-optimal use of the service provider’s solutions.

Asia’s e-commerce is still in flux

Today’s e-commerce platforms face the constant challenge of keeping their sites thriving. Whilst traditional retailers were predominantly focused on their customers, e-commerce sites now need to retain and grow both their customer and merchant networks.

In a region where e-commerce competition is heating up and platforms fighting to grow their customer and merchant bases, e-commerce companies need to stand ready to adopt more innovative and effective strategies to differentiate their platform.

About the Author

Logistics and entrepreneurship are deeply embedded into Vaibhav’s life and family history. Today, with learnings from two generations of logistics experience, Vaibhav is creating a niche in the business by blending it with technology for the new digital era. He founded Anchanto in 2011 out of a belief that ecommerce logistics and fulfillment can be made seamless through technology and the right platform. In his role as Chief Executive Officer, Vaibhav looks after Anchanto’s regional business, with customers spread across more than 14 countries, and heads the company strategy with employees in 5 countries.

Previous ArticleNext Article