Tuesday, June 7, 2016

Should you outsource your online marketplace sales?

An article in the ET today talked about how marketplaces are turning to advertising as a way to increase revenues. It also talked about how smaller sellers are turning to online distributors to manage their online marketing & sales.

The first part about marketplaces opening up advertising for sellers and brands was a given and bound to happen soon. Amazon has been doing this very successfully in the other markets for some years and now in India too. It is a win-win for both and other marketplaces have to follow. Its logical and it works for the marketplace, the seller as well as the customer.

As regards the second part where sellers are outsourcing their online marketing and sales, that’s the part I want to talk about today.

About two years back, in July 2014 I had written a blog post “How to sell your products online” to help people get on to selling on marketplaces. Sometime in August the same year I had written another post “How to increase your online sales” to help sellers understand the importance of analytics and marketing.

The basics are still valid, but the number of people trying to sell online in this span of 2 years has grown multi-fold. Competition has also thus grown. Not only are there more sellers, but there are also more robust and multiple marketplaces. There were not many experienced third party online marketers in India offering online management of marketplace sales at that point in time, and those that were, had just started. Same was the case with third party software to manage inventory and sales across marketplaces in India.

Selling online and specially so at marketplaces, though simple can be daunting for a newbie as they get started. It takes, time, manpower, analytics and of course some common sense apart from money. Let’s face it, first time online sellers or small sellers find it difficult to get their products online and selling, and specially so in a market like India where knowledge and experience of online sales is limited. The fact that these people are not just giving up, but turning to businesses which specialize in this, is a good sign. And that such businesses are growing, is also a good sign.

What sellers must however keep in mind is that selling online is like opening a retail shop in a mall but a virtual one. And whatever you do, if you are a serious long term player, then outsourcing all your retail outlets at all the malls for a longer period may not really work that well. You have to manage your stock, your price, your customer experience and feedback and use it all to learn and grow your business and grow your customer base. That can only happen if you run at least a one such store yourself, then a few more, understand the dynamics of how it works and apply it to other such stores as you open them.

How does one sell online? By cataloging the products well - the title, the description, the images, the price and the description and keywords. By marketing. Then monitoring & analysing the results and tweaking all of these based on the customer response. Deciding on stocks and procurement and product innovations. Monitoring and responding to the reviews and ratings. Ensuring timely delivery and managing returns. Monitoring the competition on a regular ongoing basis and building your strategy. Monitoring sales and price point triggers. Taking all this this information and using it to create better products. And a lot more.

Now tell me can a third party know your product or customer or competition better than you? Can they understand the seasons, and buying patterns & behavior for your products better than you? Can they internalize this knowledge to make or source better products or its variants and respond to the customer better? Can they be as committed to your long term success as you?

Yes, they would understand the nuances and technicalities of the front end and back end better, they would be more adept at using software to manage inventory and logistics. They would have the knowledge of selling multiple kinds of products across marketplaces and hence would know tips and tricks better, and may also have better relationships with the marketing managers at some of the marketplaces. So, you do need the technical expertise that they possess. But online selling is a combination of product knowledge, customer knowledge, technology, warehousing delivery and logistics, CRM, analytics, and marketing.

So my suggestion to all people starting or wanting to start now is to start small yourself, or by outsourcing, but learn fast and move it in-house as soon as possible. And learn all the way. Finally, only you can understand your own products, market and consumer as well as you do. Slowly build a team of people who can master the software to manage your sales, inventory & logistics. So if you want to really do this well and do this long term, then at the right time take it in house. Use the right software and build a team to manage your online sales. If you are also selling offline, then integrate the two teams so that learning from one can easily flow across to the other and both can leverage on each other’s strengths to increase business.

Do it slowly if required, but do it well. Learn, adapt, use all the software available to automate as much as you can. Online sales is here to stay and will continue to grow over the years. It can help you reach markets you could not reach before and also give you information that you can use to create better products and brands. Internalize it. 

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