From online fashion major Myntra setting up shops in malls, Snapdeal starting a service to effectively reduce cash on delivery (COD), to everyone launching their premium services, the past couple of months have been a time of change for the start-up world.
Rising competition and dwindling funds have forced many to actually think out of the box, for ways to win back their investors’ trust. Take Gurgaon-based Snapdeal. It has for some months worked on building its own app system for providing all sorts of services, from online shopping to travel booking, food delivery to mobile payments for all.
Now, it might have hit upon an effective solution to the problem of COD, a constant pain for all online marketplaces. In a major rebranding exercise, Snapdeal recently launched a premium service, Snapdeal Gold. However unlike Amazon Prime and Flipkart First, Snapdeal is not charging for this. Snapdeal Gold, it says, is a free service upgrade, available anytime a user pays for the purchase through net banking, credit or debit card, monthly instalment or wallet at the time of booking an order. It kicks in every time a customer pays in advance, effectively reducing cash on delivery.
“Users have welcomed the service by consistently upgrading to SD Gold, since it offers them a meaningful benefit at no extra cost,” said a Snapdeal spokesperson. He added the number of orders upgraded to SD Gold would cross a million in the coming week.
This, sector experts say, would mean at least a million orders which would be paid for. Which would mean less cash-burn for the company. “SD Gold is a simple scheme that changes current consumer behaviour to make it win-win. Consumers get shipping for free and Snapdeal gets to save the costs associated with COD orders. Consumers don’t like to pay first to save later; hence, the SD scheme is suited to Indian sensibilities,” said a senior analyst with an international consultancy.
Snapdeal is also trying to create an app-based system, a mix of e-commerce marketplace, mobile payments and gateway to services. It recently launched its own private cloud platform, Snapdeal Cirrus. A company that had, in the past few months, lost ground to US-based giant Amazon —steadily rising in almost all business metrics that e-commerce firms follow — is now trying to set itself apart from the other two big players.
Earlier this year, Snapdeal co-founder Rohit Bansal had said he wanted to make the app a complete solutions provider for all sorts of services. He added in 2016-17, they’d be working on making e-commerce a habit. “We would be building a frictionless and reliable commerce eco-system. We want to make e-commerce a daily habit; for that, the experience has to be seamless. We would focus on removing all the unreliability from e-commerce.”
Learning a thing or two from the old-school economy, online marketplaces have also understood the importance of having brick and mortar shops. YepMe and online fashion major Myntra are now trying to grab their hands on premium mall space, to make customers get a better feel of their products and add the customer base.
“E-commerce businesses have seen tremendous growth over the past few years, but most of them are struggling to turn profitable. An omnichannel provides a larger base of revenues to amortise fixed costs such as offline advertising, manpower and corporate overheads, along with improved turns on inventory at a consolidated level,” said Angshuman Bhattacharya, consumer lead, managing director with Alvarez & Marsal, a global professional services firm.
Marketplaces have also realised that they need to make online shopping a habit for their customer base, not something they only do while hunting for the next big discount. Amazon, Flipkart and Snapdeal have all launched their ‘Prime’ services, with different permutations and combinations.
“Amazon has spent a lot of time and money on its ‘Prime’ service. A sizable chunk of customers are now ready to pay for premium service and we see this happening in offline retailing as well. It is about developing a habit and is the right time to do so,” said Amarjeet Singh, partner at KPMG in India.
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