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E-commerce websites tweaking their business models

E-commerce websites are tweaking their business models; building B2B links with brick-and-mortar merchants

November 12, 2012 / 03:44 PM IST

Khyati Dharamsi


Frequent users of e-commerce websites would have noticed a subtle difference in the portals’ design and interface, such as the emergence of ‘Brand Stores’. But these are no mere design changes. They hint at a much bigger shift – a paradigm shift from the B2C model to the B2B. In their quest to scale up business, e-commerce portals are leveraging opportunities offline – yes, offline! – both in the metros and Tier II and III cities.


Hooking Up With Sellers
There are many ways in which portals are partnering with brick-and-mortar merchants. They are trying to empower sellers and brands with more visible space online, while others are using their vast user database and expertise to promote small and medium merchants via SMS, social media campaigns and even local television advertising.


Using an innovative strategy, Tradus.com, is developing a network of retail kiosks with Internet connectivity. Thus, customers can book products, make payments at retail outlets and get delivery at their doorstep or through the retail store. Mybuzz.com, an initiative of Mydala.com, is helping local merchants tap the right audience via SMS, local television, social media sites and a store or a domain website routed through the portals’ mastersite. Snapdeal.com has started offering exclusive ‘Brand Stores’ to companies – both large and small enterprises – and offering an account manager to manage their online stores.


Why The Shift?
Scaling up operations is the key factor driving the move to offline marketing and engaging local merchants. Krishna Motukuri, Managing Director, Tradus.com, reveals, “Internet penetration in Tier 3-4 towns was low and we wanted to extend our reach to these towns. Also, many of these customers lacked online payment instruments such as credit cards and netbanking, and cash-on-delivery becomes difficult as you go deeper.”


Portals are also banking on their expertise in online business channels and their strong consumer database. “Local merchants don’t have access to a user base and we help them reach out with their deals and discounts to people who would actually use them. We have become big in using mobile and local television for local merchants,” explains Arjun Basu, Co-Founder of Mydala.com.


Illustrating his point, Basu adds, “Suppose there is a Chinese restaurant in Connaught Place and its target audience is the local population around Connaught Place. It would be a waste of money for the restaurant to offer deals to people beyond a limit. We match city-wide users who are interested in Chinese food as we know users in and around Connaught Place. This database has been created by asking users to personalise their user preferences so that they get the right deals.”


How The Concept Emerged
The shift from B2C to B2B was not a standalone decision, and both brands and merchants as well as consumers had a part to play. “A small-town retailer in Patna had expressed interest in expanding his collection. He said he didn’t have unlimited shelf space and was wondering how he could show customers all his products. The answer was to display them on our website, where customers can place an order for his products,” says Motukuri.


By offering exclusive stores to brands on their portals and more freedom on the product display, Snapdeal.com too is tweaking its model. Ankit Khanna, Vice-President, Product Management, Snapdeal.com, explains, “The concept emerged when a few brands said they wanted to alter the listing of their products on our site and have a say in what type of products should be promoted through discounts. Customers too were looking for specific avenues, so that they could get the offline mall experience online. We zeroed in on a concept where, just like a mall, where shops are brand-based, we used our own property to display brand stores online.”


Revenue Model
The standard offering is free for sellers but the spruced-up versions come at a price. “The seller will have a store front offered free on our site. Through our standard store, they get an identity and can share some information. We are developing a premium version, which will entail a fee but will provide the seller online tools to manage his storefront, free. We are also looking at rewarding top performers,” reveals Motukuri.


A microsite offering is only one of many options. “We run certain packages that operate on a B2B2C model, where the merchant gets a microsite on Mydala.com, and they can customise their page. We have account managers who advise them and help them aquire users. The site, where you get a domain name, is a part of the paid services. A 6-month package would cost Rs 10,000. Depending on the services offered, it can cost anywhere between Rs 2,000 to Rs 1 lakh a month,” reveals Basu.


Thus, exciting times beckon the e-commerce space as they explore new worlds and take a fresh look at their business models. Some portals claim they have already experienced traction from Tier I cities. “Using the network of the aggregator, we will reach about 500 towns in the first phase,” says Motukuri.

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