From disbursing loans to taking commission cut for discounts, E-commerce companies across the board are leaving no stone unturned to make most of this year’s festive season sale.
E-commerce players – who in 2014 queered the pitch for brick-and-mortar retailers with the latter witnessing the slowest festive season sales – are struggling to keep up this year majorly because of the e-commerce FDI policy that has banned discounts by these marketplaces.
This, coupled with a funding freeze this year has become a matter of concern for e-commerce players in India.
Now in order to sail through the challenges, players are betting big on sellers, better products and improving backend and logistics networks.
For instance, Snapdeal and Shopclues are disbursing loans to sellers to enable them to stock up for the Diwali spike. Last week Shopclues – which claims to have half a million merchants on its platform selling 50 million products – announced its plans to disburse Rs 5000 crore worth of loans under its financing initiative capital wings. Of this, Rs 200 crore will be disbursed ahead of this year’s Diwali festival.
The company said that the sellers will be offered working capital loans at low-interest rates and customized solutions for repayment and prepayment of loans.
Mirroring Shopclues, Snapdeal also announced similar plans to disburse collateral free loans worth Rs 1000 crores. The festive season loans would be disbursed through its on-going programme, Capital Assist.
Similarly, Flipkart’s Growth Capital program for sellers has also crossed Rs 125 crore milestone recently. In just a year of its launch, the program has successfully disbursed loans amounting to over Rs 125 crore to more than 800 sellers on its platform.
Keeping Discounts Alive
Meanwhile, Amazon has reportedly decided to cut the commission it gets from some large and preferred sellers by 30-50 per cent on the condition that the saving is passed on to consumers.
eBay India, on the other hand, has started working with their sellers to figure out reasonable discounts that can be offered to end consumers.
VP and MD, eBay India, Latif Nathani in an exclusive interview to Indiaretailing Bureau also indicated that not bumper discounts but services and products will be the major draw for consumers this year.
“Discounting is the part of any companies marketing strategy either online or offline. It was detrimental when it was out of hand but now what we will see will be the healthy business practice. We are working very closely with our sellers to see what best they can do. Meanwhile, we have invested in deepening and diversifying our product range, through the small and medium entrepreneurs in India or by bringing in supply from across the globe. This festive season we have over 10 crore global products on offer for Indian consumers,” Nathani said.
Getting The Backend Combination Right
Along with extending loans, the companies have also invested in fulfilment centres (FCs) to meet growing requirements of their seller base.
Like Amazon India has invested in six fulfillment centres taking a total area of 2.5 million square feet with a one-and-a-half times growth in storage capacity at 7.5 million cubic fee.
The FCs will allow Amazon.in to offer its Fulfilment by Amazon (FBA) service to several thousands more small and medium businesses. Over 80 per cent of the sellers on Amazon.in currently use its fulfilment services.
Similarly, Snapdeal has also set up six mega logistics hubs(3 in Delhi-NCR and one each in Lucknow, Hyderabad and Kolkata) to deliver products faster as it competes head-on against rivals like Flipkart and Amazon.