Introduction
From a jumbled repository of information to a well-organized exhibit, the Internet has come a long way. The Internet was a geek’s playground until social media and e-commerce happened. From making the first transaction 2 decades ago to exponentially growing into an industry of worth more than $5.8 Trillion, e-commerce has not just arrived, but it’s here to stay, and it’s time to address the challenges it brings. Today, the e-commerce industry is in a commanding position from where it can influence policymakers and market trends. While e-commerce marketplaces continue to convenience to the lives of common people, it is crucial to recognize that they are also the lifeline for many sellers. However, they are failing to provide sellers with the same respite, and this needs to change. E-commerce platforms have certainly made it easier for sellers to reach more people and acquire more customers, but certain areas need immediate attention. The increasing number of seller pain points is not just persuading merchants to stop selling online, but it’s also threatening the very foundation of the e-commerce industry. This is a problem that needs urgent solutions.
Advantages of selling on marketplaces:
- Established market
- Instant gratification
- Test your product’s acceptability among buyers
- Well-developed IT infrastructure
- Buyers pay with confidence
Table of Contents
- Seller Pain Points
- Bracketing
- Duplicate Listing & Brand Interference
- Logistics & Pricing
- Lack of Store Customization & Prohibited Products
- Delayed Pay-outs
- Frauds by Customers
Seller Pain Points
While millions of sellers are venturing into the e-commerce landscape every year, thousands of them are also leaving online marketplaces. The growing biases of marketplaces, customer-centric approach, and frauds committed by customers are not just driving sellers away but also affecting the audience. The audience, as potential sellers or consumers, are directly or indirectly impacted by these issues, making it a collective concern. Seller pain can be best defined as circumstances and measures that make it difficult for merchants to have a smooth online selling experience. Ambiguous policies, sanctions and heavy charges levied by marketplaces are some of the common seller pains. While a lack of clarity about laws and hefty commissions are part and parcel of selling online, other pains that are impacting online selling experience are:
Bracketing
About 36% of US online shoppers stated that they “bracket” at least some online purchases.” Bracketing is a common practice where shoppers buy multiple versions of a product, try them at home and return the items that didn’t work. Bracketing is very common in lifestyle and apparel categories; ambiguous data related to style, size and material often coax people into ordering multiple versions of the same product. Every time a product is returned, sellers have to bear the double cost of shipping, which includes the cost of return shipment as well. Such additional pressure on sellers who are already on the back foot due to heavy discounts can drive them out of business. The fact that sellers need to pay extra for return shipments is yet another seller’s pain point that needs to be addressed. For example, if the cost of delivering a product is INR $20, then the cost of a return shipment is $30 because, with the return, the logistic company needs to go the extra mile and pick up the item.
How to control bracketing?
Marketplaces can control bracketing by improving the catalog and offering better insight into the product. Some of the common ways of improving the catalog management and offering a better understanding of products are:
- Catalog Quality Check: Running a catalog quality check on products with maximum return requests can prove to be a game-changer. The quality check can assist marketplaces to improve the quality of the catalog that offers correct information related to size, style, and material to shoppers. Such quality check ensures: Proper Classification of products, Products are attributed correctly, Images are compliant with Internal and Legal Guidelines
- Catalog Enrichment: A shopper looking for a watch generally looks for terms like waterproof, kind of glass and material of glass. Through catalog enrichment, such attribute values can be placed correctly and highlighted to offer better exposure.
Duplicate Listing & Brand Interference
While genuine sellers are struggling to get their listings approved and drive sales, some desperate sellers are resorting to illicit activities like creating duplicate listings. Marketplaces urge sellers to list their products under the already created catalogs and not create a separate listing for every product. When duplicate listings are created, genuine sellers suffer. Marketplace algorithms are designed to rank the sellers with the best reviews, fast delivery and quality post-sale support at the top, but fake sellers are stealing ranks by creating duplicate listings. Brand Interference is the biggest side-effect of duplicate listings. With a duplicate listing, incompetent sellers can list fake products as genuine and acquire a higher ranking. With wrong products ranking higher in search results, genuine products and sellers will be impacted. Duplicate listing not only deprives genuine sellers of a fair opportunity but also results in increasing return rates.
Logistics & Pricing
Sellers often find themselves struggling with logistics and increasing operational costs. Initially, marketplaces offered a heavy discount on logistics, but with increasing competition and dipping profits, stores are now charging sellers heavily for delivering products. Since marketplaces build fulfillment centers in remote locations, sellers find it tough to get their products stored there. The increasing cost of transportation to the fulfillment center is one of the biggest e-commerce seller’s pain points. Also, the lack of fulfillment centers in big cities is adding to the overall cost of selling online. With a huge percentage of orders coming from bigger cities, sellers have to dole out extra bucks to get their products delivered as soon as possible. Since Amazon has different shipping charges for products being delivered to different areas, sellers have to spend differently to get their products delivered to varied locations within the country. Amazon.com divides its geography into three regions, namely local, regional and national, and the charges vary accordingly. With three different prices applicable on one product based on the region it is being delivered to, makes it tough for sellers to keep a tab on profits. Sellers face difficulties managing tax books and filing returns.
Customer Focused & Lack of Communication between Seller and Buyer
One-click returns, no questions asked returns, and instant refunds are some of the lucrative offerings used by marketplaces. While these offerings have worked wonders and helped marketplaces acquire customers abundantly, they have impacted sellers negatively. While the Fashion category accounts for trillions of dollars globally, it also accounts for maximum returns. In an analysis by Shippo (and compiled by Richpanel), the reports show that the average e-commerce return rate sits somewhere between 20-30%. One-click return window leaves sellers from the fashion category vulnerable because 30 days is a long period, and people tend to return products once they have found better products. The huge number of returns leads to the same product being tried by 4-5 persons. Lack of margins to wash and repack garment leaves us unshielded. With electronic gadgets, the return rates are low, but the cost of handling returns is way too high. Buyers often return gadgets because they fail to operate them, which impacts sellers heavily. Sellers can easily assist buyers to run a gadget properly but lack of communication between seller and buyer often leads to a product being returned.
How can marketplaces make sellers feel valued?
Some companies have established Marketplace Protection Fund Teams under Seller Experience verticals. These MPF Teams are responsible for acting on grievances raised by sellers. The team goes through the case intricately, weighing every aspect of the order and decides whether the seller needs to be compensated or not. Having one such team that looks into buyer and logistic abuses and helps sellers receive compensation for financial losses can help marketplaces control seller churn.
Lack of Store Customization & Prohibited Products
Organic and indigenous products are very popular among the masses, but the lack of store customization options and high commission fees are keeping sellers from onboarding. Marketplaces like Amazon and Walmart are helping brands establish stores on their platform but the cost of customization is very high. Small scale businesses that deal with organic and indigenous products are unable to shell out such big money, which is keeping them from getting online. Lack of funds and support from growing marketplaces is one of the biggest seller pain points. Apart from the excessive commission fees, marketplaces have also restricted sellers from selling some items. A huge number of products like sexual wellness and burial artifacts are banned due to government policies, but then marketplaces have kept some verticals for their choice of partners. Such unfair ground is one of the many seller pain points that need to be addressed swiftly.
Delayed Pay-outs
Small-scale sellers function with very little cash in hand. They are dependent upon frequent payments to keep themselves in business but 30-day return and one-click exchange policies are making it difficult for them to sell online. For e-commerce companies, COD implicates additional charges. In addition to handling cash collection and employing delivery people to handle cash transactions, they must even maintain the proper accounting practices. These expenses can build up and impact profit margins, especially for businesses that receive a lot of COD orders. Since countries like India and the Philippines are heavily dependent upon Cash on Delivery, seller pain increases.
The issues with cash on delivery orders are:
- It doesn’t reflect on the balance sheet immediately
- Accountability issues
- The additional cost of handling
- High risk of delivery rejection
Also, unlike online payments, money from cash on delivery takes up to a week to reach e-commerce companies, which takes its own time to process it further and pay sellers. The COD cycle is long and full of terrors.
Frauds by Customers
While the marketplaces continue to be extremely customer-centric and skewed toward sellers, abuse by buyers is also adding to the seller’s woes. The increasing number of cases where fake or damaged products were returned has left sellers with no choice but to stop selling online. Credit Card frauds and card-n-found frauds have kept sellers away from online selling for a long time now. Marketplaces have invested in developing a cyberinfrastructure that relies on machine learning 3D secure paradigms for identifying and confiscating frauds before it impacts marketplaces. Machine Learning and 3D secure authentication systems can identify chargeback and card frauds and help marketplaces function under a safer blanket. Sellers can now shed their worries related to online fraud and start selling online with confidence.
Conclusion
It is estimated that by 2024, 95% of purchases will be made online. Amazon alone has 9.7 million sellers selling over 3.4 billion products worldwide. In the process, millions of sellers and billions of buyers will join the e-commerce landscape. Marketplaces will have to function as a guarding angel for sellers and ensure they are compensated well because they form the backbone of a successful e-commerce system. Data Excellence for e-commerce
