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COMMENTARY

Enabling e-merchants to meet expectations of online shoppers

Asia is now in the midst of an e-commerce boom, one with the highest growth in the world. A report by Fitch Solutions noted that e-commerce sales in the region will grow by 14.2 per cent to US$1.2 trillion this year. That is a far larger figure than that for second-placed United States, which is only expected to reach nearly US$456 billion.

This renaissance comes as no surprise. The region is home to over two billion Internet users (and growing) and many nations which were previously classified as "frontier markets" and are growing rapidly, meaning that incomes are rising, and people now have more spending power than ever before.

This demand has ushered in the entry of a multitude of e-commerce platforms. In addition to global players such as Amazon and Rakuten, a host of regional ones such as Lazada, Tokopedia, Shopee and Qoo10 have established footholds - and that is not even counting Chinese giants such as Alibaba and JD.com.

So, how can e-commerce companies set themselves apart to appeal more to not only consumers, but also the merchants - who are very much the lifeblood of the platforms. It is inevitable that we refer to Amazon in some form or fashion. The e-commerce giant's tremendous success in creating a third-party marketplace aims at giving more control to third parties over their inventories. In comparison, first-party sellers relinquish control to Amazon in deciding which product the platform will buy and how many - limiting the sellers' inventory control. This has also festered some frustrations between consumers, who may make purchases first discovering afterwards that the product is no longer in stock.

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The Amazon marketplace is different in that merchants can sell their goods directly to consumers. This is because third-party sellers gain access to Amazon's customer base, while Amazon expands the offerings on its site without having to invest in extra inventory (this responsibility is then shifted to the seller). Merchants can also take advantage of either first-party or third-party partnerships via a hybrid model.

This strategy has helped Amazon marketplace draw in two million third-party sellers worldwide, and has encouraged competitors such as Target to follow suit. Today's e-commerce ecosystem is thriving, but it has also added greater complexities in fulfilling shipments to customers. Now, customers will find it highly unreasonable to receive an order after a few days of making the purchase. This is because the bar of expectation has been raised significantly with options such as Amazon Prime Now, which promises delivery to members in just two hours and at no extra cost.

STEPPING UP EFFORTS

This means that both merchants and marketplaces are racing to step-up their efforts to reduce the shipping time to meet the expectations of the modern e-commerce shopper. In the Asia-Pacific, there is an added layer of complexity due to the region's rapidly growing urbanisation rates which are making cities more dense, creating greater levels of congestion.

This may seem to be a daunting challenge, but innovators are stepping up to it by using technology to overcome the hurdles now faced by marketplaces and merchants in fulfilling last-mile orders. In addition to leveraging on big data and urban analytics to determine the quickest delivery routes, autonomous vehicles can also supplement human efforts (especially for smaller items) to ensure that delivery timelines are met without any hiccups - creating win-win-win scenarios for marketplaces, merchants and customers.

With third-party marketplaces, there is more burden shifted to the sellers when fulfilling orders. This burden is more significant if the sellers choose to go about their e-commerce operations alone. This is especially the case for newer merchants that are just beginning to sell their goods online.

It can be daunting, initially, for merchants to handle every step of the fulfilment chain - from ensuring that they have ready stock for all orders and ensuring that the orders reach customers in time. Another important element is customer satisfaction, which can make or break a merchant's online reputation in an age of commerce that is now so dependent on customer feedback.

These are areas where merchants can choose to work with multi-channel management service providers, which today are able to offer a comprehensive suite of services ranging from inventory management and customer service to shipping and repricing. Multi-channel management solutions have grown increasingly popular between smaller merchants that are now taking advantage of online sales channels. Such solutions are also gaining traction with larger merchants, as they can use the solutions to better streamline their e-commerce operations - especially if they are present across more than one online marketplace and need to fulfil orders across multiple locales.

Today's e-commerce platforms face the constant challenge of keeping their sites thriving. While traditional retailers were predominantly focused on their customers, e-commerce sites now need to retain and grow both their customer and merchant networks.

In a region where e-commerce competition is heating up and platforms are fighting to grow their customer and merchant bases, e-commerce companies need to stand ready to adopt more innovative and effective strategies to differentiate their platforms.

  • The writer is founder and chief executive officer of Anchanto