Is there a way to successfully implement a true marketplace
model online ?
- Abhinaw Kumar
Agenda
1. My understanding of the problem and intended goals
to achieve
2. My Approach and Solution
3. How does this appro...
1. Understanding of the problem and Goals
Currently, e-commerce portals in India have been successful in building an inven...
2. Approach and Solution
I recommend that platform offer both kind of shopping experiences - 1. Buy Now and 2.
Marketplace...
2. Approach and Solution (Contd.)
Flow of the use case in Marketplace model is mentioned below -
2. Approach and Solution (Contd.)
Next slide depicts mock-up of auction panel for a particular user.
- User wants to purch...
3. Differences between Offline and online Marketplace
Feature Offline Online Solution
Negotiation over price Yes No Sugges...
4. How do sellers set the right price by engaging customers ?
1. Selling price of a product is a factor of its underlying ...
5. How can customers communicate that price is attractive/ not-
attractive ?
1. I assume that such a solution will have st...
Price discovery in e-commerce
of 10

Price discovery in e-commerce

Indian e-commerce should try an emulate a perfect 'Mandi' or Marketplace. I see such solution as holy grail of Innovation in indian e-commerce. This is my attempt to think in that direction, proposed solution definitely needs refinement. I worked on in it for 4 hours and thought to share it with everyone.
Published on: Mar 4, 2016
Published in: Business      
Source: www.slideshare.net


Transcripts - Price discovery in e-commerce

  • 1. Is there a way to successfully implement a true marketplace model online ? - Abhinaw Kumar
  • 2. Agenda 1. My understanding of the problem and intended goals to achieve 2. My Approach and Solution 3. How does this approach solve differences between Offline Vs Online Marketplace ? 4. How does this solution engage customers and compel sellers to set the right price ? 5. How can this solution help in arriving at best price of the product? How can customers communicate that price is attractive/not-attractive ?
  • 3. 1. Understanding of the problem and Goals Currently, e-commerce portals in India have been successful in building an inventory based model (e.g. Flipkart) .E-commerce companies are also working towards building the marketplace model and have implemented some features such as multiple vendors(e.g. Snapdeal) . In an offline marketplace, customers talk to different vendors , negotiate prices and make an informed purchase decision based on vendor’s profile(reputation,Quality of service, post sale experience etc.) However, in such offline models,vendors are not aware of the demand projections and hence they are unable to offer the best price. Goal is to utilise technology to innovate along with keeping the best practises of offline marketplace. This platform should leverage the countrywide reach to customers and vendors while creating a transparent medium for price discovery and transactions to ensure customers get best price.
  • 4. 2. Approach and Solution I recommend that platform offer both kind of shopping experiences - 1. Buy Now and 2. Marketplace model. Buy Now - This is similar to what is existing in current e-commerce platforms. MarketPlace - In this approach, let’s create an auction based model where customers can indicate their preferred price for each vendor for a particular product. At the end of the day when the auction ends, based on projected demand at a specific price point of the product, vendor decides the final price and dispatches the product to interested customers. Major Steps involved in use case(slide# 5) and sample Auction panel(slide #7) for a consumer is mentioned.
  • 5. 2. Approach and Solution (Contd.) Flow of the use case in Marketplace model is mentioned below -
  • 6. 2. Approach and Solution (Contd.) Next slide depicts mock-up of auction panel for a particular user. - User wants to purchase a seagate 1 TB hard disk. - This product is offered by 3 different vendors (RS,WS and SS retail.) - User is also presented with profile(QoS, ratings, delivery and reputation etc) of vendors. - Each Vendor indicates stating price and a minimum price that he can offer for a particular product. However, this minimum price can be changed by vendors in real time. - User indicates that he can purchase this product at 4.3K , 3.9 K and 3.6 K respectively from 3 vendors. - User is also asked for the preferential order among vendors in case all 3 vendors decide to sell at or lower price than the specified price by user. - Demand projection is only visible to vendors not buyers. Based on this projection, vendors will decide the final price. Admin panel for vendors will be different where they can see projections and change the prices in real time. - What happens to 200 users who indicated 4.5K and 4.3 K if RS retail decides to sell the product at 4.2 K ? Answer -All 400(4.5K, 4.3K and 4.2K) users will get the product at 4.2K. - Platform also suggests users the most probable final price from each vendor based on historical data. - Users can also suggest a new price for a particular vendor if they don’t see any suitable price. - At last, user can also suggest if the price offered here is not minimum similar to - price matching from Amazon.
  • 7. 3. Differences between Offline and online Marketplace Feature Offline Online Solution Negotiation over price Yes No Suggested approach empowers consumers to specify the preferred price based on vendor’s profile and product value. Access to accurate demand projections No No Vendors get a precise demand estimate for a product and can reduce the prices to a minimum in order to get more customers. Access to large number of vendors and customers No Yes Platform will provide access to N number of competing vendors and countrywide customer base. Trust and Transparency No Yes Platform will provide financial security and trusted partners to do business with based on users’ feedback.
  • 8. 4. How do sellers set the right price by engaging customers ? 1. Selling price of a product is a factor of its underlying cost, competition in the market and customer’s willingness to pay. Vendor has the flexibility to change the price in real time based on the information on prices being offered by other vendors. Customer’s desired price is also captured by his preferred price for the product . 2. Through the platform, seller also gets the critical input related to demand projection. Providing an estimate over demand projections and customer’s willingness to pay upfront helps sellers play a volume game and maintain their profit margin. 3. Price Matching feature enables customers to provide input on why is he not buying from this marketplace.This feedback can be utilised by existing vendors to offer competitive price as well as by the marketplace to bring best vendors into the system.
  • 9. 5. How can customers communicate that price is attractive/ not- attractive ? 1. I assume that such a solution will have strong network effect and will generate huge customer and seller base. This will further ensure fair and best pricing. 2. In case of single sellers (designer products or brands), customers can suggest a new price ,which he or she thinks is fair for the product. This will help the seller understand the product’s market value and promote responsive pricing. 3. I also suggest that in case of designer products, platform gathers feedback in an easy and engaging way (e.g LinkedIn endorsements) to provide valuable insight to sellers.

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