E-commerce giants' push to achieve GMV numbers makes them dig out entrepreneurs in Tier II and III cities

Twenty-three-year old Anshul Agal, a resident of Bhilwara, Rajasthan, joined his older brother’s business of computer peripherals and repair services last year. The business had been operating in the traditional market since 2008. Always keen to make headways in new domains, Anshul realised the potential of selling goods via an online marketplace. His decision to turn the offline business model into an online one has gained the company a growth of 88 per cent.

Entrepreneurs in Tier II and III cities today are no more restricted to their geographical area of business, with the online marketplace giving them a national platform to expand their market. E-commerce giants like Flipkart, Amazon, Snapdeal and others have brought about a digital revolution and transformed the lives of budding entrepreneurs by inspiring and educating them on online marketplace.

However, these e-commerce giants seem to be at a tug-of-war to create an ecosystem for their online sellers. These sellers act as the lifeline for e-commerce players, enabling them to reach newer geographies with a wider customer base.

Snapdeal, in association with India Today, recently launched a new seller campaign: Udaan@India, which showcased the ease of doing business online to aspiring sellers. The company selected a cross-section of successful Snapdeal sellers from across geographies and categories, and displayed their journey.

Vishal Chadha, Senior Vice President (Market Development), Snapdeal, says,

We have committed USD 200 million towards building a digital ecosystem for SMBs in India and a large part of this investment has already been made towards seller enablement and supply chain services such as warehousing, logistics, and training sellers. With this investment, the company is aiming to create one million successful online entrepreneurs in the next three years.

Sellers form an important part of the marketplace ecosystem and therefore giving them the necessary boost will have a trickle-down effect on their profitability. Another such initiative by Snapdeal is a TVC with actor Aamir Khan launched three months ago as part of the ‘Dil Ki Deal’ campaign.

It was aimed at educating entrepreneurs and SMEs on the benefits of working with Snapdeal.

Vishal says,

The company will continue to work towards empowering the country’s smaller businesses in Tier II and III cities in tapping wider opportunities and encouraging the spirit of entrepreneurship among them.

Flipkart, on the other hand, has launched F1-Stop, a one-stop centre offering services ranging from registration, training, cataloguing, and packaging to financial assistance. Sellers get to pick and choose from a bouquet of services according to their requirements. Currently, it has tied up with five- to 10 full-service agencies in 10 key cities, which will then be expanded to top 20 cities by the end of this year.

Ankit Nagori, Chief Business Officer, Flipkart, says,

F1-Stop is an extension of our efforts to create a seamless seller ecosystem in India. The focus is to create a robust support system for sellers across the nation to kick start and grow their businesses online.

Similarly, Amazon has initiated Amazon Chai Cart to drive conversations with local SMEs and re-energise their existing or new businesses to gain nationwide scale and profitability. Each Amazon Chai Cart has trained personnel holding discussions with interested sellers on the process of selling online and introducing them to seller-specific services.

Rohit Kulkarni, Senior Manager (New Initiatives), Amazon India, says,

We have taken our message to over 1,00,000 sellers across 18 cities. We have served over 16,000 cups of tea, coffee and nimbu pani, covering a distance of over 6,000 km and interacted with over 20,000 sellers. We decided to go hyper-local and use the ubiquitous habit of drinking chai to connect with neighbourhood businesses.

Panchkula, Agra, Kanpur, Lucknow, Surat, Rajkot, Jalandhar, Ludhiana, Jaipur, Udaipur, Jodhpur, Alwar, Faridabad, Gurgaon, Kochi, Thiruvananthapuram, Ambala, and Madurai are the cities covered by Amazon.

Impact on the sellers

Ankit of Flipkart says that the seller response from the Tier II and III cities like Jaipur, Surat and more has been encouraging. The F1-Stop partners will play a key role in engaging with these sellers as most of them are not tech-savvy and would need assistance to avail support services.

The partners help sellers identify the right products to list, maintain competitive price, optimise SLAs, reduce returns, and create combo offers.

Snapdeal Plus was another such initiative which aimed at supporting sellers in order management and benefitting consumers with timely delivery through 50 fulfilment centres across 20 cities.

Vishal from Snapdeal says,

Snapdeal is witnessing a tremendous growth in the number of sellers coming online from Tier II and III cities. With the increase in Internet penetration in India, Snapdeal is able to access these markets and benefit the end consumer.

Amazon.in today offers the most comprehensive suite of services to sellers to meet their requirements at every stage of the business lifecycle. Rohit says, "We have already impacted the lives of over 1,00,000 sellers across the country by providing them services."

The services include Self Service Registration, Amazon Easy Ship, Pay with Amazon, and Fulfilment by Amazon.

To facilitate seamless management for on-the-go sellers, the company has recently introduced the Amazon Seller App that enables direct buyer-seller communication, order notification, order details, shipment confirmation and order fulfilment notifications.

Rohit says,

We also launched a service provider network to help sellers connect with verified service providers and bridge the capability gap that poses a challenge for many sellers. Currently, over 4,000 sellers use this.

Financial support

In a bid to help sellers avail unsecured loans from finances, Snapdeal has launched Capital Assist-Instant Loan facility which has benefitted over 300 SMBs with loans amounting to more than Rs 100 crore.

As a part of this initiative, Snapdeal has partnered with many NBFCs, banks and financial startups like Lending Kart and Capital Float.

Bengaluru-based Flipkart has launched financial assistance programme 'Growth Capital Initiative' for its merchant. It enabled SMEs secure Rs 4 crore loans in the pilot phase. Under this initiative, SMEs can avail loans between Rs one lakh and Rs one crore at an interest rate of 12 per cent (source).

Multiplying the number of sellers

According to Ankit, Flipkart currently has over 40,000 sellers and intends to on-board 1,00,000 by the end of this year from across all major metro and non-metro cities.

Snapdeal works with a network of over 2,00,000 sellers from across India and plans to grow this base to 2,50,000 within this year.

According to Vishal, the GMV value of Snapdeal currently is USD four billion.

Amazon’s Rohit says,

It is our core objective to enable millions of sellers leverage India’s growing digital economy to run profitable businesses on Amazon.in. We provide them with technology and customer service expertise to sell and earn more, thereby ensuring seller delight.

Yourstory Research

According to a research report by YourStory, Flipkart’s valuation over the last three years has grown at a combined annual growth rate of 150 per cent. In the same period, the eight-year-old company’s GMV has grown at 250 per cent. Flipkart, according to reports, is targeting USD eight billion in sales by end of 2015.

“Flipkart’s GMV has increased about 50 times in the last three years. Hence, this becomes an important parameter in evaluating the company’s performance and the resulting next-round valuation,” says Aviral Jain, Director at American Appraisal.

Snapdeal too has a similar trajectory in its valuation and GMV growth. Its valuation over the past four years has grown 145 per cent, while GMV has grown 566 per cent. At its current rate of sales, the company will reach USD 3.5 billion in GMV this fiscal.