How Shopo plans to beat its parent, Snapdeal, in one important metric this year

E-commerce marketplaces call themselves as commission agents for a reason – they claim to take no part of the sellers’ revenue, but charge a certain amount as fee for the tech platform. Registration and annual fees have bothered smaller sellers, but they do not want to lose the extra business. However, no seller would say no to a marketplace which offers the same opportunities on widening sales for zero commission.

About a year ago, Snapdeal found this idea. They had acquired Shopo – an online marketplace for designer handicraft products – in 2013. By July 2015, with an investment of $100 million, they re-launched Shopo as a mobile-only marketplace. Sandeep Komaravelly, Senior Vice President at Shopo, says: “Out of the sellers reaching out to us, only 20 per cent was getting through. We needed a platform to enhance their chances; Shopo was the answer.”

Having acquired one lakh sellers in nine months since its inception, Shopo is now targeting a 10x growth to integrate one million shops by March 2017, about four times the current number of sellers with Snapdeal.

Necessity, the mother of invention

With online selling becoming a necessity rather than luxury for small businesses, there is inherent need for a platform to accommodate more sellers. Hence, Sandeep believes, adoption of Shopo will be much faster than Snapdeal or any other platform. “We are also working on payment and logistics tools to ensure they can do it themselves. Once it is in place, we can ensure further growth,” he adds.

All you need to sell on Shopo is a smartphone. Shopo is an open platform with no need for registration. One can set up a shop and start selling in less than a minute. Those with no previous experience in selling, including home makers who want to sell cupcakes or cookies, have made it to the platform.

Shopo does not provide logistics, but gives references to sellers on the kinds of courier partners they can use. Similarly, they assist sellers who choose payment support by giving them the options of cash on delivery and online payment methods. “We are planning to integrate FreeCharge as a payment option in the future to build a seamless transaction experience for our sellers and buyers,” Sandeep adds. This could be a value addition for Shopo, as FreeCharge had recently integrated a 'Chat and Pay' feature to enable merchants and consumers to chat, shop and pay.

Chat away

In Shopo, sellers and customers can interact through the ‘Chat and Buy’ feature. The buyer can enquire about the products, pickup and delivery, customisation, etc., and can bargain with the seller, who is free to reject offers. [The mobile numbers of both the seller and buyer are kept confidential.]

“Some sellers are very responsive; they end up getting more customers. Sellers can monitor their business, amount of leads we are sending, its growth, enquiries generated, etc.,” says Sandeep.

Enhancing seller experience

Shopo educates their sellers on how to describe products. “We want to ensure that sellers have all the tools to put a lot of listings, build and customise their shop, and merchandise it the way they like. The app is convenient to use, so they do not need any additional education on it,” says Sandeep.

Sellers are free to set up their area of operation. They can follow each other as well as users and get email updates on what the customers are buying.

Keeping a tab

Zero commission and flexibility for sellers do not mean that the marketplace is devoid of responsibilities. “We have our own checks and balances to ensure that the quality is maintained – right from when someone lists a product. We check whether they can sell it legally – ensuring there is no explosives and abusive weapons for instance,” says Sandeep. His team watches how each seller is performing, and whether they are responsive to customers. “Over a period of time, these ratings appear on the corner side of the page,” Sandeep adds.

Like most marketplaces, Shopo also has most growth in fashion, home, and handicrafts, with a large demand for non-branded items. Shopo’s top six cities are New Delhi, Mumbai, Hyderabad, Bengaluru, Pune, and Surat. About 43 per cent of the sellers are from Tier-1 cities and the rest from Tier 2 and 3 cities.

Revenue model

Shopo controls few processes unlike Snapdeal, and operational costs are hence lesser. “We have to hit one million shops this year. With traction, monetisation will automatically happen,” says Sandeep. Shopo has not begun ad sales yet.

Zero commission marketplaces monetise ads, services, and provide working capital loans. Ankur Bisen, Senior Vice President of the Retail and Consumer Products at Techopak Advisors, says that whatever assistance Shopo provides has to be top notch to attract more sellers. He adds: “The model can succeed if vendors use your services. But if there is no value to those services, you are not in a position to charge for it.”

Walking a different path

Shopo’s predecessor in China, Taobao – launched by Alibaba group in 2003 – succeeded as a zero commission marketplace by monetising through advertising. Ankur believes that Taobao is a good business model for emerging markets. But he warns against any complacency. “Shopo might be a one-of-a-kind model. But any marketplace is a competition, as it is the prerogative of customers to choose where to shop from,” he says.

Shopo could beat its unicorn-parent company very soon in number of sellers. Whether it can sustain in the $350 billion ecommerce industry – only time will tell. The boom in the sector, surely waves green.