With the advent of the New Year, surely everyone has new hopes and aspirations particularly with respect to one’s business. With the uncertainties that fell into the lap of Indian ecommerce last year, it is only natural that online sellers like Neeraj Khanchandani will hope to catch up for lost time and opportunities this year.
Last week, we read how although online retail opened new doors for Neeraj, he had to bear the brunt of kinks in Amazon’s system of working. Let’s find out more.
Issues with Amazon (continued)
Increasing commission rates and hidden charges
Although Amazon is yet to address most seller complaints, commissions are hiked almost quarterly.
In 2016 itself, pricing chart was revised 3 times.
A couple of years back when we started selling, we were being charged 6% as commission which then became 8% and has been increasing since then. Current commission in our category is 22% of sales price, which is highest. From November 2016, Amazon has also started charging 1.25% of sales price as Delivery Service Fees. When we add service tax to all these commissions we have to pay 27% of product cost to Amazon.
Althought a lot of sellers opposed Delivery Services Fees introduction in November Amazon as always remained silent. And they don’t have answers for solving seller problems.
Amazon has never been serious about other sellers misusing our brand names like Snapdeal or Flipkart have been. There simply does not exist something that we can call as brand protection.
At one end they force us to go for brand registry and then own products under own brand name. But then when some of our products become hit or are sold more, they send list of those famous ASINS to new sellers to get them on board. Irrespective of several complaints, they are hardly removed. All that means to amazon is commissions they earn on those sales.
We have premium range of products and new sellers offer cheap products in our brand name; we then get negative product reviews for sales made by them. Sometimes Amazon removes their offers for limited period from our listings but we end up losing customer trust because of the negative product reviews earned by these other sellers.
Amazon infact motivates such sellers to misuse our owned brands. So there arises no meaning to register for Amazon brand registry program.
When product starts selling more, Amazon starts sourcing the same via cloudtail and then sells it at cheaper price using our brand name and listing.
This is unlike Flipkart and Snapdeal where a co-seller is not allowed to misuse any other brand like this.
Misguiding new sellers
Amazon and their sales team play lots of dirty games with sellers, especially new ones. Onboarding team goes to any extent to get a seller on board by assuring them to misuse other seller brand names. Then when established sellers complain to Amazon registry team for brand infringements, their accounts are suspended. In some cases new accounts making good sales or new seller accounts are suspended without giving any reasons.
When these sellers approach Amazon by submitting Plan of Action, they are misled. And then suddenly, the very same sellers receive emails about onboarding again, but this time using Amazon Third Party Services. So this means after suspension, Amazon shares data with these service providers who then levy more charges to onboard these sellers.
However, there is no guarantee about account reinstatement. Sellers suffer a lot and payments are withheld for 90 days.
The online-offline coordination
We have an offline wholesale network of the same products. Online and offline sales have their own pros and cons. Through online you can serve in any part of globe, which increases reach, but have to face challenges like payments being held for weeks by marketplaces, high returns ratio, poor after sales support etc.
Offline sales, on other hand, are a good medium to earn quick money and sell faster products. We have 80% of our total sales from Online Business. Online Sales is a good medium to come up with establishing own brand image within a short time by selling good quality products at reasonable prices and handling after sales issues in a better way, which leads buyers to reorder from same seller again in future.
Giving up on ecommerce?
Current scenario of marketplaces has definitely led me to lose faith in ecommerce. Biggest reason for the same is COD payments. Even after demonetization, ratio of COD orders has not yet decreased and buyers simply keep ordering products from multiple sellers and take deliveries for some of them and reject other ones.
Ecommerce clicked in foreign markets due to prepaid payments, hence cheaper courier charges. Here courier charges are more because of COD and those COD orders then lead to lots of returns and fake updates etc. Paytm has done a good approach by providing discounts in forms of cash backs for Prepaid orders.
In the long run, COD needs to be discontinued for benefits in ecommerce so that the fraud buyers can be filtered out.
We have ourselves now shifted to website model and are targeting customers for our website. If we are able to direct 40-50% of sales from that, we can reduce a lot of costs like rent, salaries etc.
Marketplaces lack …
Proper Seller Support
Almost all of these marketplaces have trained robots as seller support executives. All they do is send us scripted mails without looking into whole matter and we have to then fight on those cases/tickets to let them know the issue. Tickets raised are unsolved for months and they keep sending us daily scripted mail that they are working on the issue.
3 most critical things about selling online
High rate of returns. Marketplaces themselves show ads by which buyers are motivated to send back products after use or taking deliveries.
Most marketplaces take 2 weeks time for sending remittances, which leads to shortages in working capital requirements.
Advice to a budding seller
- Invest slowly and wisely.
- Always choose self brand model for generic products rather than using someone else’s name.
- Never fully depend on online sales or single marketplace.
“I don’t regret being an online seller. Today all that I have learnt or earned is thanks to being a seller here. We do have lots of issues or challenges but we accept them and fight against them and give our best. All it means to us is customer satisfaction,” Neeraj signs off.
Is Neeraj alone? Are there others amongst you facing these issues with Amazon or other marketplaces? Do share with us.