Ekalavya Bhattacharya

I’d written a post on this blog last August… - The Digital Switch (eCommerce) and that post got the most no. of pageviews for this blog in the last year or so.

In the mean time a lot of eCommerce startups have been founded and more than a couple have gotten funded. FashionAndYou, 99labels, ThePrivateSales et al have all raised a hell lot of money in the last few months.

The problem?
Luxury items are suddenly affordable to all! A Quiksilver tshirt which retails at approx Rs 2000 and makes you think twice before buying is now at Rs 500! Of course it sells like hot cakes. But does a brand like Quiksilver or Diesel aspire to sell more? They’ve built a brand over a couple of decades. They wouldn’t want to become massy…

And the next issue?
I’ve seen the same CK products on sale at FnY and The Private Sales.
So the future? All the dotcoms going to the same national and international exclusive brands and demanding for better and better offers.

I can only see CONS and very less PRO’s…

• All the sites competing in the same space. All of them asking the same brands for the same awesome deals.
  
  
• Brand dilution and loss of exclusivity.
  
  
• Loss of vanity and show-off factor.
  Earlier wearing a pair of Diesel denims was a statement. I can afford a pair which costs Rs 15K! But now…almost everyone can buy the same pair for Rs 7K!
  
  
• I’ve bought stuff at these sites and I’ve had a really pathetic experience when it comes to apparel at FashionAndYou. When you’re spending 3000 on a shirt and it doesn’t fit you well…you are definitely going to be pissed.
  General tshirts, accessories, perfumes etc will do well. But I still doubt someone will swipe their credit cards for a Rs 10,000 suit without bothering to check the fit. I know I’m contradicting myself to a certain degree to what I mentioned in the earlier post… But you’re not going to be running out to try and test everything you see.
  
  
• The offline guys will start matching the deals once they feel the pinch…
  Let me share a little story. 5 years back when I was working at PaGaLGuY.com, we cracked an idea. Each year thousands of students join a B-School. Each B-School student has to have or buy a laptop. And since PaGaLGuY was pretty much the hub of all business school aspirants, we thought why not make some money by selling laptops! So I went about researching and meeting a lot of companies. One particular chap at Acer said something which I still remember. Vijay Sales gets me 3000 sales a month in Maharashtra. If I give you a better offer than them…you’ll have to guarantee me that you are going to be selling more than 3000 laptops else I’ll be jeopardizing my dealings with Vijay Sales. Also he wanted a guarantee of 3001 sales + Significant amount of pre-payment + Wanted me to take delivery of all at the same time.
  
  From the above experience and drawing parallels with the current eCommerce scenario… Warehousing, up-front payment, delivery and customer service etc all become a headache. FashionAndYou can’t possibly guarantee a particular number of sales. They obviously don’t take prior delivery of all goods because they take more than a month to deliver what you’ve bought. For things to get fucked up someone just has to go and disrupt the system…
  i.e. Someone like a YepMe or BagItToday should guarantee a brand a particular no. of sales, take prior delivery and ensure next-day delivery to the customer! This will then be expected from all the sites and we’ll end up seeing the same product go on sale over and over again on the sites. Like we see the Marvel comic tshirts go up on sale every weekend at FnY.
  
  
• Are people really buying? So I was really intrigued when I saw a ‘Sold Out’ across a watch which cost 75,000! Did someone actually just pay so much?
  On asking a couple of friends in the industry I found out that this is a simple marketing trick.
  The company got 10 watches but they put up 16 on sale. 6 of them went up with a ‘Sold Out’ tag to impart the illusion that a few lucky people had managed to snag some really awesome deals. It also paid of psychologically…because if a prospective buyer sees a ‘Sold Out’ sign, he’ll at least think that there are others in this digital world who are also spending.
  The con? The buyers are going to get smarter.
  
  
• Niche sites are sprouting up too soon. Some might think that this is a good thing…but this will actually end up harming this fledgling line of business. Also when I visit these sites…I’m not really looking for something particular to buy. That’s the beauty of such sites. You suddenly chance upon a good deal and are forced into a dilemma of wanting that product.

Anyways…
This vertical will be nice to see and follow over the next couple of months. I’ll write about the deals business later this week. I’m still not convinced a model like GroupOn will benefit businesses in India. You can read what I’d written a year back on this model here - The future of group buying sites is still dicey in India.