Assisted Shopping for Snapdeal, Exclusivity for Flipkart: Competition gets Tougher

We are living in the times of the ecommerce boom, which is evident from how rapidly the market is growing. And with that, expansion plans of various e-marketplaces are growing. When you have multiple contenders for the top position, how do you differentiate yourself from the rest?

Snapdeal forays into assisted shopping

In a country where over 70% of the population lives in villages, and almost 17% of urban population lives in slums, it make sense to reach out to these pockets before your competitor does. Snapdeal has plans to tap into this market – it aims to reach 50 lakh low-income households in areas such as the largest slum in Asia, Dharavi, in Mumbai and Govindpuri, Delhi’s biggest slum. Snapdeal also wants to make itself available to people living in rural areas in Gujarat, Rajasthan, Haryana etc. To achieve this, Snapdeal would launch 7000 kiosks across 65 tier-2 cities and 70000 rural areas by the end of 2014. They have partnered with FINO PayTech, an Indian financial inclusion solutions firm, for the same.

How will these kiosks work?

• Each kiosk would have PCs and tablets

• A FINO agent would be present at each kiosk

• The agent would log in and help shoppers make purchases

• About 1000 utility-cum-aspirational products would be available

• Kiosks would also serve us pick up and drop points for orders

How does it benefit people?

This model not only helps reach people with little access to the internet, but also solves the problem of people who don’t have online payment facilities, or a permanent address. Rishi Gupta, COO and Executive Director at FINO PayTech, said, “The innovative assisted e-commerce model brings the ease and benefit of e-tailing to more than 70% of country’s population not connected to internet but is aspirational and willing to explore online shopping.

Currently Snapdeal boasts of 3 crore registered users. With this move, CEO Kunal Bahl hopes that 5-10 crore new consumers would be buying from Snapdeal.

Could there be a flipside?

Though this sounds like a great idea – noble and ambitious – Snapdeal would have to ensure that the cost of operations doesn’t run too high in comparison to the volume of sales making the whole project only an added expense.

Flipkart seeks exclusivity

“Spice Retail Limited has joined hands with Flipkart wherein select flagship smartphones from Spice will be made exclusively available on the e-commerce major’s portal,” Spice Retail said in a statement this September.  Spice is not the only brand to have signed an exclusive Flipkart-only deal. Xiaomi, the Chinese smartphone manufacturer, had a successful pre-launch booked flash sale on Flipkart for Xiaomi Mi 3. Earlier this year, another Chinese brand Oppo partnered with Flipkart to sell their Oppo Find 7 exclusively on Flipkart. Other big names to enter an exclusivity partnership with Flipkart include Motorola, whose Moto G (Gen2) is said to have sold 1.6 million phones on Flipkart within 7 months of their partnership.

Michael Adnani, vice-president of retail at Flipkart, says unlike the previous tie-ups, the Motorola partnership is the first one where the exclusivity is across Motorola’s entire portfolio, from phones to phone accessories. Adnani adds that it isn’t higher margins that are the reason for such tie-ups, but that, “We are able to plan the products as we see fit for the Indian consumer.”

Exclusivity: not exclusive to electronics

Investment banker turned writer Chetan Bhagat’s latest novel Half Girlfriend was available online only on Flipkart, and it received a great response. In 2010, renowned literary agent Andrew Wylie bypassed publishers and announced that Lolita and Rabbit Tetralogy would be available as ebooks solely on Amazon, only to be met with a infuriated backlash from publishers. Myntra recently acquired the exclusive rights to SuperDry footwear and accessories collection. Satyut Gold, jewellery designed by Shilpa Shetty, was exclusively available on Snapdeal. Last month, Future Group and Amazon tied up to sell its fashion labels exclusively on Amazon.

Exclusivity: Who else?

Flipkart isn’t the only one to be entering exclusivity contracts with brands. A couple of months back, Amazon became the sole seller in India of Microsoft’s interactive entertainment products. It even pre-booked Xbox One nearly a month before its release date. Amazon had signed a similar deal with Samsung for its phone Galaxy K Zoom and with Karbonn for its Titanium Hexa.

Why exclusivity?

From the brand’s point of view, an exclusivity tie-up is a good idea because of the massive visibility it gets on the portal, since this entails an exclusive promotion by the e-tailer. From the e-tailer’s point of view, this is a point of differentiation. Discounts make consumers compare prices, but if a product is available only on one marketplace, who are the customers going to compare the prices with?

What’s the flipside?

If a brand makes certain products exclusive to an online portal, brick and mortar stores don’t take it too kindly and refuse to stock other products of that brand. Nilesh Gupta of Vijay Sales, an electronics store chain has been in the situation and says,”If two out of a company’s 10 products are doing very well, and they are both exclusive to an online retailer, I will tell the company to take the other eight online too.” Last year, Beyonce launched her self-titled album on iTunes alone. Amazon and Target, a supermarket chain, refused to stock her CDs.

Any brand that hopes to scale up would have to look at exclusive tie-ups as a short term strategy, since as the popularity and demand increases, the avenues to purchase the product should too.

How far will one go to differentiate?

This is a question we can’t wait to find answers to. Though every marketplace, sooner or later, can’t help following the same strategy (remember the talks about tie-ups with India Post for speedy delivery to remote areas?) and the differentiating factor ends up looking like another common denominator.