Top 5 pitfalls Indian ecommerce sellers should look out for

It goes without saying that the online retail and ecommerce market is continuously evolving and heading in new directions. This has led to tremendous competition between online sellers, and those retailers who do not adapt and keep up the pace tend to disappear very quickly.

Keeping this in mind, here are 5 most common pitfalls that you, as an ecommerce seller, should look out for:

1.Steep competition on pricing

Usually hundreds of online sellers and merchants list identical products on marketplaces and quite often the only differentiator is the price-point. It’s this sort of price competition that especially hurts retailers who do not have the purchasing power to compete with large online sellers.

One of the ways to compete on price is to procure larger quantities in a single order and get bulk discounts; this comes with its own problem, namely working capital finance to pay for such orders. Capital Float, the leading digital lender in India, has come up with a product “Ecommerce Seller Finance”, where online sellers can get loans up to 1 crore against proven marketplace sales. These loans are available for a duration of 3-6 months, and can be availed without any collateral!

2.Managing returns

Marketplace policies are highly favourable for buyers. The usual 30 days return policy provides a lot of time and often buyers return used products to the seller within that time frame. The seller would have to pay commission to the marketplace even if the product is returned in a damaged state.

Also, generally it’s the seller who pays for the return charges. The biggest challenge is to resell the product, once the label or the packaging are significantly damaged. To solve this problem, ecommerce sellers can connect with various refurbished goods sellers, who are more than willing to buy such products, although at discounted prices.

3.Lack of working capital finance

The recent trends in the Indian ecommerce industry has seen mostly established, large, offline retail outlets doing well online due easy access to capital from traditional banks & NBFCs; since they have physical assets to use as collaterals, large turnovers & multiple years of vintage. A new entrant to the vibrant ecommerce space does not generally have easy access to any of these.

Here again a financer like Capital Float can help them out. Their loans are completely collateral free and do not require extensive financial documentation. All that is needed is proven ecommerce marketplace sales of 6 months, and the seller is given a multiplier of his sales as a loan. These loans can go upto 1 crores and are disbursed in just 72 hours!

4.Competition with OEMs

Many small online stores buy products at wholesale prices from distributors or manufacturers to sell at retail prices. This is the classic business model for retail stores.

Unfortunately, ecommerce’s low barrier to entry has encouraged numerous manufacturers to start selling directly to customers. This means that the same company that sells your products may also be your competitor. As more manufacturers start selling online this problem will likely become worse.

5.Customer loyalty

Simply put, it’s easier and much more profitable to sell to loyal customers than it is to constantly search for new ones. Smaller ecommerce sellers rarely have resources to drive loyalty for their products or store. Also, the loyalty built is generally towards the marketplace, and not the actual ecommerce seller. The best way to tackle this is to create a delivery experience which is memorable for all customers and drives them to give high ratings on the marketplaces. Positive reviews can also be sought by connecting with the customer post-delivery via SMS/emails.

Disclaimer: This is a sponsored post and the views/opinions are of the writer/company.

About Capital Float

Capital Float is a digital finance company which provides working capital finance for SMEs in India. They offer flexible, short-term loans that can be used to purchase inventory, service new orders or optimize cash cycles. Borrowers can apply online in minutes, select desired repayment terms and receive funds in their bank accounts in 3 days with minimal hassle. Capital Float’s mission is to bridge the current gap in the market with financial products for SMEs, delivered in an efficient and customer-friendly manner. Click here to learn more about loans from Capital Float