Flea market gives Paytm, ShopClues a high; strategy helps them differentiate from larger firms The strategy of a Sunday ‘flea market’— where goods are sold for as low as Rs 15 — is helping both startups tap discount- and deal-hunting consumers, some of whom may be first time internet users and to some extent brand agnostic.
At the same time, it is helping them differentiate from larger competitors Flipkart and Amazon, who focus on higher value items including branded electronics and merchandise.
“The Sunday flea market is a flagship brand in the merchandising scheme and one of the best performing deals with over four million visits every Sunday,” said Radhika Aggarwal, Chief Business Officer at ShopClues.
ShopClues, which was the first ecommerce portal to launch its flea market, said the idea behind the launch was to encourage people to save time and money on Sundays with ShopClues’ concept markets, and use it for other activities. Among the goods sold during flea market hours are bedsheets, kitchen utilities, decor items, pen drives, chargers and other small electronic items.
ShopClues said it gets about 150,000 orders every Sunday, with an average selling price of Rs 800.
Three years after ShopClues’ flea market launch, Paytm experimented with its ‘Sunday Bazaar’. Paytm said the move has given them significant traction.
“Shopping in India is a lot more than brands, which constitute a small share of the overall products sold. Our objective as a true commerce platform is to connect all types of segments of buyers and sellers, and unstructured goods play a very important role in that,” said Sudhanshu Gupta, Vice-President of Paytm.
Paytm, on the other hand, said consumers order an average 100,000 items per day during weekends.
On average, each Paytm customer orders two items. The average selling price of goods during this period is Rs 200. During Sunday sales, the company offers small quantities of products at big discount.
“Huge discounts are not a reflection of a compromise in quality but a willingness on the merchant’s side to clear off limited stocks at discounted rates, proving to be a win-win situation for both the customer and the merchant,” said Aggarwal.
Paytm clarified that the discounts offered are driven by the sellers and not promoted by the platform. Experts said that while the volume and scale of selling low-cost items may be large, the economics may not be favourable considering the logistics cost and the margins ecommerce portals make on the transaction.
“Sometimes, the price of shipping may also exceed the value of goods,” said the founder of a logistics company, requesting anonymity since he works with both ShopClues and Paytm.
According to multiple market estimates and sources, ShopClues ships about 100,000 products daily, while Paytm ships about 50,000. Both companies declined to give figures.
For the year ending March 2016, Paytm said its total GMV, including recharge, bill payments, utilities and marketplace was $1.8 billion. The company expects to more than double it to $4 billion this year.
Source: The Economic Times