Category Archives: E Commerce

Online Groceries Market

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The market, drivers, key players, and opportunities in a rising segment of e-commerce.

Online grocery growing rapidly from its small base. Its market value has doubled from 2016 to 2018, suggesting that consumers are starting to get more comfortable ordering essentials and certain foods online — a major barrier to adoption. Meanwhile, one type of product that's popular in online grocery, consumer packaged goods (CPGs), has seen the majority of its growth come from online. Although consumers may not be entirely comfortable buying items like produce online yet, that will likely come as their familiarity and trust in online grocery grows.

Grocers are rushing to take advantage of this potential, resulting in a highly competitive market. Both established grocery players and newcomers to the space are expanding their curbside pickup and delivery offerings — the two basic components of online grocery — in an attempt to grab market share. They're each employing different strategies to find success: Amazon is leaning on its e-commerce and fulfillment capabilities to offer a variety of online grocery services, for example, while Walmart is using its strong brick-and-mortar footprint to its advantage. Still, others, like Kroger and Aldi, are working with third parties such as Instacart to provide their services.

While companies like Instacart exist that offer online grocery services for other grocers, we focus specifically on companies that sell their own products. Finally, we examine different strategies companies can use to optimize the profitability of their online grocery offerings.

  • Online grocery currently comprises a small portion of grocery overall but is on a rapid rise. Adoption is still fairly low, with about 10% of US consumers saying that they regularly shop online for groceries, according to NPD.
  • However, the value of the US online grocery market has grown from $12 billion in 2016 to $26 billion in 2018 and it has plenty of room to grow, given that the size of the overall grocery market was $632 billion in 2018 according to IBISWorld.
  • Both established grocers like Walmart and Kroger and players new to the space like Amazon are rushing to improve their curbside pickup and delivery options and all of them are employing differing strategies suited to their size and strengths.

Regardless of grocers' individual strategies, they will all need to find a way to run their online grocery offerings in a profitable way and to address consumers' barriers to adoption.

 

FULL REPORT AVAILABLE ON THE FOLLOWING LINK:

The Online Grocery Report

Multi Vendor Stores- Analyzing their Benefits over eCommerce Shops

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The dynamics of online shopping is changing as eCommerce entrepreneurs are realizing that investing in multi vendor store is just the better deal. Ecommerce investors as well as business owners are favoring multi vendor systems – also referred as online marketplaces – over regular online stores because of vast range of advantages.

Let’s first quickly explain what multivendor websites are all about and then why they are becoming the first choice of people who want to enter in ecommerce business.

What is a multivendor website?

Every seller or merchant has a separate shop inside a multivendor system which he is free to run as he likes. The platform owner only bothers with order processing, tracking and payments where they are due.

Also sometimes referred as virtual marketplace, multi vendor ecommerce websites shift the humungous task of maintaining inventories, logistics, product descriptions, and updates to individual sellers by giving them a system to manage it all as per their convenience and goals.

Popular ecommerce brands using multi vendor model

Some of the biggest ecommerce brands have evolved from the multi vendor ecommerce model. Most distinguished and globally known are;

  1. Amazon

The largest online retailer doesn’t need an introduction. It started in 1994 as an online bookstore but diversified to sell vast range of products. The ecommerce giant follows the marketplace model.

Website – www.amazon.com

  1. Etsy

The ecommerce store has caught the imagination of people who make products on small scale. The online marketplace also sells vintage items, supplies, and unique factory-manufactured products. No wonder people are searching for Etsy online marketplace script.

Website – www.etsy.com

  1. Alibaba

The China based business-to-business portal is one of the biggest ecommerce players in the world. It is where wholesalers and resellers go to buy products in bulk and at discounted price. In year 2012, two portals owned by Alibaba Group managed $170 billion in sales, far more than Ebay and Amazon taken together.

Website – www.alibaba.com

www.flipkart.com is the most popular ecommerce brand in India and has recently shifted to the multi vendor model, is giving a hard time to international players like Ebay in creating a market in the second biggest economy in the world.

What is fueling the demand of online marketplace software?

Ecommerce enthusiasts have become more interested in virtual marketplace software rather than online shop builders. Below are the reasons for the marketplace shift;

  1. Vast range of products

The products sold on a multi vendor store are featured by a number of vendors. Any ecommerce store that provides a huge variety of products is bound to easily generate traffic and sales. If Ebay and Etsy were to source all the products from one vendor, do you think they would have been able to generate as much sales as they do now?

  1. It takes away half the headache

Taking care of logistics, inventories, product additions & upgrades, pricing and various other details that comes with running an online store require humungous efforts. Multi vendor store shifts these necessary evils to individual merchants. Because sellers have to take care of their own store only, it doesn’t remain an uphill task. So, this makes multivendor shopping cart a win-win business equation.

  1. Lesser expenses

Because every seller will be managing his shop on their own, you don’t need to hire people to do it. Your team can spend more time on answering critical questions related to scaling and marketing. With an experienced development team by your side, you can drastically bring down website maintenance related expenses.

  1. No need to maintain inventory

Warehousing and human resource related costs can break the back of any ecommerce startup. Starting a multi vendor store will not let that happen as sellers will take care of inventory related complications.

Why merchants favor multi vendor ecommerce stores?

Merchants and businesses also find online marketplaces a better deal when it comes to sales and revenue generation. Below points are making online sellers favor virtual ecommerce systems;

  1. Readymade traffic

Established multi vendor websites attract huge amount of traffic and sales opportunities. Creating an online store and investing in marketing will consume tens of thousands of dollars but you still wouldn’t be able to attract as much traffic. This way, setting up a shop on virtual marketplace is a better deal.

  1. Suitable for sales minded merchants

Product manufacturers and sellers who are more concerned about making profits rather than creating a brand go for multi vendor ecommerce platforms.

  1. Small setup costs

Creating a website to sell your products and then investing in advertising means spending thousands of dollars. Online marketplace leaders get you started in just few dollars per month and small selling fee. Check out Sell on Amazon page.

  1. Flexibility

Merchants on multi vendor ecommerce platforms can manage product details, prices, and areas of delivery, make additions, and updates as per their convenience. This flexibility comes along with no requirement of technical knowledge.

Ecommerce entrepreneurs are more interested in starting virtual marketplaces because of added operational efficiencies and better margins. This justifies the growing online search for online marketplace scripts.

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Posted on FATBit Technologies.

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How Multivendor Model Solves Challenges Faced by Standalone E-commerce Stores

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Single vendor (or standalone e-commerce) stores, by their very nature, remain limited to a single market or niche.

The future of e-commerce retail sector is bright and full of opportunities. But with thousands of entrepreneurs pushing their way forward to seize these opportunities, the competition in the sector is also getting intense. As a result, in the current e-commerce dynamics, growth is the only way forward — the only means of survival. This is why more than eight in 10 e-commerce start-ups fail within first two years.

One of the major hindrances to growth is the poor scalability of a business model, which brings us to the topic of multivendor vs. single vendor e-commerce model.

Single vendor (or standalone e-commerce) stores, by their very nature, remain limited to a single market or niche; thus, have poor scalability. On the other hand, multivendor or marketplace model has the capability to scale like a jungle fire in new markets. And this is evident in the fact that across the world, growth in ecommerce sector is driven by multivendor stores – Amazon, eBay, Alibaba, Flipkart, Rakuten, & so on.

Besides scalability, there are other inherent challenges associated with single vendor model that are implicitly taken care of with multivendor model to ensure startups a seamless growth. Below we will discuss how multivendor model addresses these challenges for entrepreneurs (as the business owners& as the vendors).

Challenges Associated with Single-vendor E-commerce Model

Inventory Management

There’s only so much inventory a vendor can manage, which is one of the prime reasons why standalone online shops stop scaling after a certain extent. It’s not a dead-end situation, but after a threshold value (which vary from business to business), increasing inventory requiressizable investment ®ular extra management efforts, which often result in thinner profit margins.

In a multivendor environment, increasing inventory means connecting with more vendors, not increasing the inventory of individual vendors. And since efforts on inventory management are already distributed among vendors, its expansion doesn’t come as an obstacle to scaling business.

Market Visibility

As mentioned earlier, single-vendor online shops are mostly destined to stay confined within a certain market or niche. Even when backed by a lot of capital and with excellent hold on customer acquisition, there is a limit to how much they can stretch their market reach.

On the other hand, by connecting with an online marketplace & listing their shop there, retailers can amplify their reach almost instantly in the markets that were previously far beyond their radar. It is clear that for small-town manufacturers, home-made product sellers, artists, etc., connecting with a multivendor store is a better idea than simply relying on their own online shop.

Operation Cost

We just discussed how connecting with a marketplace increases a retailer’s reach drastically at virtually zero marketing cost. With a single-vendor model, a retailer simply cannot hope for such a reach even with a lot of investment.  Apart from that, connecting with an existing online marketplace also allowsretailers to go online without any website creation &its long term maintenance cost.

Multivendor model ideally segregates the cost & responsibilities between the owner & vendors (so that owners manage only admin related activities & cost; and vendors handle only merchant related activities & cost); thus, create a win-win situation for both.

Tips for Entrepreneurs Aiming at Multivendor Model

Choosing the Right Technology Solution

In comparison to single-vendor, there are relatively fewer e-commerce platforms available for multivendor model. On top of it, most don’t offer an off-the-shelf solution and require multiple integrations to create a full-fledged multivendor store, which makes finding the right multivendor solution quite a task.

Ideally, a multivendor e-commerce solution should come with inbuilt analytics & reporting system, social media integration, and preferably with multicurrency/multilingual support to allow marketplace a seamless expansion in different markets. As of now, YoKart multivendor solution comes closest to meet all these requirements adequately.  This platform is a perfect solution for startups looking into entering ecommerce sector and launches their own Ebay or Etsy.

Connecting with Vendors

As a marketplace, your business growth is directly proportional to the number of vendors you are partner with. So, it becomes almost obligatory for marketplace owners to devise a strategy to connect with as many vendors as possible in the target market.

Some helpful tips in that regard are – connect with online retailers on social media, join online ad networks for displaying advertisement on popular sites, invest in offline marketing to bring offline retailers on board, and connect with merchants directly through online business directories, merchant associations, trade fairs, etc.

Conclusion

I recently read a business model study published on Brookings.edu, which states“The business model—the specific combination of product, distribution, supply chain, financing, pricing, payment and sales—is often far more important in determining success than a given specific technology”.If we compare single & multivendor models, we can clearly see how the latter outperforms the former on many of these parameters.

So, as an aspiring entrepreneur, you should aim at multivendor model because that is what essentially drives the growth of ecommerce sector; that is what ultimately provides masses a better & convenient way to shop with lots of options to choose from.

Author:

Ankush Mahajan

GUEST WRITER

Digital marketer & e-commerce consultant at FATbit Technologies

October 5, 2017

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