Marketplace e-commerce made simple

Oct. 4, 2024

What are the common questions that come up for the sellers when they work in Indian marketplaces?

By marketplaces, I mean Flipkart, Amazon, Meesho. These marketplaces charge a commission fee for every product sold. Other than that there are shipping fees, advertising fees and occasional festive promotional discounts.

If there is no return, then one’s work is easy. Just raise an invoice and keep track of invoices that aren’t paid yet. But returns complicate this simple setup.

When e-commerce was in its early stage, it was assumed that the buyer would bear the brunt of the shipping. Moreover, if she wants to return the product, she will pay for the reverse shipping herself and that too only after the seller has authorised her request in the first place. I believe this was the setup when amazon.in first launched in India.

Obviously this doesn’t sound much customer friendly and eventually all e-commerce became “free shipping, free refunds, free replacements no questions asked”. It became customer centric and that reflects in the growth this sector has seen in India. Walk into any retail shop in any city and they will tell you all about it.

Now it has become a high competition, low margin game but there was a time in the beginning when many sellers thrived.

But let's talk about now. How does this work?

• You catalog your products.
• Marketplace gives you visibility
• Customer clicks and buys.
• Customer gives his feedback on your products(review, refunds)
• You take lessons and refine your product.

That is all. Note that the only thing you can influence is whether customer feels intrigued enough to click and then purchase after seeing reviews and ratings.

Let's proceed with an example

Suppose you are a retailer. It has been a month since you went live on the marketplace. Here are your questions:

1. Who is keeping track of payment for every order id? I sell 100 units a day. I am not creating an invoice for every order in my ERP. I hope the marketplace is keeping track of it.
2. How much is Flipkart liable to pay me at this point? I have sold 3000 units till now. 900 have been returned to me. There have been shipping charges. Some returns are in transit. Flipkart isn’t liable for these. I have to keep track. Then there are lost shipments and wrong returns.
3. 60 returns were delivered today. Their status has been updated on the seller dashboard. What is the condition of the product? Is it sellable? Is it even mine? Collect your photo, video evidence and apply for claims.

How much did I get paid last month? What are my liabilities? And what is the current stock I have with me at the warehouse? Do note that the returns in transit are also your stock.

And those returns will end up in three states:

1. Delivered
2. In Transit > 60 days
3. Lost

And status for the same is provided in the dashboard. Most logistics provide POD. Tally your returns and provide proof of your identity.

Here is your order journey. Customer places the order. You fulfill it. Customer returns. Product is delivered to your warehouse. That is your complete order cycle. After that you do the following:

• Raise claim for wrong returns.
• Raise claim for “do not expect delivery” shipments.
• Raise claim for “delivery date breached” shipments.
• Raise claim for lost shipments.

Raising tickets and keeping track of the conversation is one other job. One other expense.

At what point would you stop looking for each little expense? Most experienced people do not meddle in this, they look at the bottom line. You have to trust the marketplace. You have to trust the data on the dashboard. So how should you start?

Know the return rate for your category. Know the average reverse shipping cost. Add it to your cost with other packing and manpower expenses. Keep track of the payments coming in. Keep track of the payments going out. Check if you have enough to pay your creditors. Check the stock at the warehouse? How much returns are you expecting? Most people work like this. That’s all that is needed starting out.

All of this requires capital. You will burn some money. Again, only thing you can do is work on your products. Keep reiterating on customer feedback.

You might want to take a deeper look at your catalog. How much margin did you get over each sku after deducting all costs? Is a new launch not giving you much profit because it has high returns? Should you price down your top sellers if you are getting enough.

Go to profitpersku.com. Upload your payment reports. Upload your costs. Get your profit margin at order and sku level.

Hope this was helpful. Write to profitpersku@gmail.com for any queries.