June 28, 2017
A lot of entrepreneurs, seasoned e-comm professionals, sellers and brands have reached out to me over the last few months on how to build their own e-commerce marketplace/business for the global markets. While some consider Amazon Global or Aliexpress a good listing platform, the others consider them a competition.
Almost every country has its own local marketplace (Lazada, Souq, Rakuten etc) apart from Amazon Global & Aliexpress. They are all great platforms, providing a good source of revenue and presence building for those who are considering listing on them. For those who are planning to launch their own e-commerce, these platforms can act as a good test bed( Similar to the way Amazon used Junglee to learn about the Indian market).
However, these platforms have their own individual focus and lack some key features, thereby driving Indian consumers across the globe to hunt for other marketplaces. For those who want to build e-commerce marketplaces, focus on these key factors can make or break the game. I will walk you through these key factors on a broad level with some in-depth information specific to fashion e-comm business.
The international e-commerce business essentially has 5 building blocks:
1. Category - The choice of category is a make or break point and hence takes the first spot. There are three categories (Food, Clothing, Utensils) for which international marketplaces can and should be built. With 16M NRIs, fashion is a multi-billion $ category with both B2B and B2C opportunities.
2. Customer - The propensity to pay (a measure of the AOV) of these customers is ~1.5x to 5x that of the average indian customer based on the target market. In case of fashion products, stitching of apparels is a key requisite, and drives improved conversions for B2C clients. Expedited delivery is an important add on. Customers are usually not finicky and you can expect very low rate of returns ( partly due to lack of options). They are fine with minor differences in product unlike the Indian customer. Pricing : The products can be marked up at 1.5x to 2x of the retail price in India.
3. Operations - Logistics is one of the major costs in the international business and is usually borne by the customer. Hence, most of the customers usually order multiple products, to ensure that the logistics cost per product is minimized. As a company, bunching of orders is an important precondition, to save on shipping costs. Quality check therefore becomes an imperative requirement, as import of products is extremely difficult for the import costs and two way logistics!. Operations is a huge task and requires a separate post altogether. I can try to do it if there’s enough interest.
SEO should be a major priority, given that it’s a source of free and rich traffic. Please choose your stack wisely. Our code was written in Angular 2.x with pre-rendering and it took us a good 15 days to get our SEO basics in place, with a lot of hacks.
Server Location: Yes you may be using a CDN but it is important to place your servers in the right regions (in most cases US) to serve all API calls. Time lag, delay in serving webpages, leads to loss of marketing dollars. Marketing costs can plummet by ~30% just by ensuring right server locations.
Conversion: Conversion is affected heavily due to PG problems. PayPal is a must which will provide you conversion in the order of ~45 %. Lack of a single factor authentication PG in India hurts the conversions. There are 2 work-arounds, that’s for you to figure out.
5. Marketing - Broadly, there are 2 very different markets to target. First is the Low AoV, inexpensive traffic of SE Asian countries and Africa. It’s a market poised to provide a good source of B2B business. Second is the High AoV, expensive traffic of the West (US, UK, Aus etc).
The decision to target one of these markets is a business specific call.
I hope these learnings provide you with a good base to begin building the global business you want to. However, as with all matters of business, execution is the key