In the last decade, B2C eCommerce marketplaces have achieved a phenomenal growth. It has literally changed the traditional market experience of buying and selling of products. It added a new digital channel to provide the best buying experience for the customer. The eCommerce marketplaces are designed from a buyer’s perspective; giving the best outline on product photographs, specifications, pricing, discounts, availability and most importantly delivering it at the buyer’s door step. Further, they excite the customer based on product reviews, payment options, quicker delivery and return policy.
In competition to these eCom marketplaces are the traditional brick & mortar stores, which are trying to compete the price battle on grounds of providing the true look & feel of the product and after sales support of the product. The eCommerce marketplaces have even tapped into these areas by strongly promoting their return policy whereby they enable to give the real trial experience at customer’s end. So, is it the end of the traditional brick & mortar stores? At the moment, the answer is definitely no and why so?
Interestingly, the majority of buyers visit the retail stores, evaluate the product and then search on eCommerce marketplace for the price match. Sometimes, the eCom marketplaces are also just another distributor or reseller for a brand. It’s just that the dynamics of volume and negative margin strategy have enabled them to compete on better price. The focus of eCom marketplaces is shifting to, how to ensure that the buyer doesn’t visit any other store and directly land on their eCom store for purchase.
There are multiple approaches being tried and experimented such as:
- eCom marketplace take an exclusive selling rights from the brand.
- eCom marketplace picks up a huge inventory and promotes it with heavy discounts.
- eCom marketplace offers discount coupons to repeat customers.
- eCom marketplace promotes via a small counter at various malls & local stores.
What I really wonder is…. once the negative margin sale strategy of eCom marketplaces ends, then the cost saved by eliminating physical store & its sales staff vis-a-vis the additional cost incurred from the additional product packing, logistics of product delivery & its return, plus margin for the eCom store and its publicity costs. Will there by any product price difference between the traditional stores and eCom stores? Furthermore, if eCom marketplace chooses to open local counters and stores in order to promote themselves and increase their sales then they have really bowled a perfect Googly.
The eCom marketplaces identified that the brands & their existing distribution channel lags digital presence. They created the platform, acted as an intermediary to enable digital sales to the buyer while building their own brand image at the same time. Later, they invaded the territory of the traditional distribution channel and replaced it with their own digitally enabled distribution network along with their local stores.
Thus, it will be very interesting to see the upcoming market dynamics when the brand owners create their own private eCommerce marketplace which provides an online sales platform for their traditional distribution network. It will meet all the prerequisites of the buyers in terms of product, price, quality, authenticity, delivery and after sales support. What will happen to the eCommerce marketplaces which are looking toward selling everything under one roof ? Will they redesign to provide sub-marketplace for every brand.
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