Digital Aggregation: New Age Ecommerce

Posted in Operations & IT Articles, Total Reads: 1636 , Published on 15 January 2015
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-Contemporary booming E-businesses don’t have to be ground breaking innovations

Indian Business environment has seen lots of entrepreneurial ideas emerging in the last decade, of which only a select few turned out as monetizable innovations, those which crossed the chasm of market adoption from niche to mainstream mass markets. However, some ventures have skipped the hard phase of inventing products and services from scratch to come up with commercially viable innovation by mastering relatively simpler model of connecting the buyers and sellers; advertisers, searchers and publisher; or any resource provider and a seeker (buyer) allowing convenient transaction, huge selection, credible information to enable informed buying decision. Such platforms, called digital aggregators enable even the individuals set up shops and access a large market which otherwise was the prerogative only of bigger organizations.


-Satiating consumer woes in a Everything-Digital world

Ecommerce sector is currently paralyzed by excessive options as umpteen websites offer similar services each having different online process and format to avail those services putting up a steep learning path before consumers maximize the benefits from these websites. The consumer’s mind can retain only a limited no. of websites for specific needs and thus these sundry websites occupying limited mind share only create distracting noises in consumer’s mind impeding the buying decision. Also, considering the growing consumption, spending power and changing lifestyles of Indian consumers, the new age buyer doesn’t limit himself to local stores, or decide based on friend’s recommendations but explores the market for variety, is more aware of products and prices available across different geographies. This is the need which is being served by the new age digital aggregators in the ecommerce who without owning the resource ( fleet of cars for Uber, inventory for Flipkart, hotels for airBnB) act as intermediaries merely provision the resources efficiently, allowing the consumers to conveniently access the resources with the right information on for the buying decision.

Image Courtesy: freedigitalphotos.net, Sailom


A digital aggregator rescues the consumer by bringing together buyers and sellers, improving product awareness and price discovery for buyers, as well the keeping tight competition between sellers leading to lowering of prices. For sellers, the platform provides them a huge market of high potential buyers and operations efficiency like what is being offered by online marketplaces initiatives of ‘Fulfillment by Amazon’ or ‘Flipkart’s advantage’. Further publicly available buyer feedback (ratings and comments) on these platforms prompts sellers with similar offerings to keep improving their service. At a fundamental level, these aggregators are simply adept in the art of de-cluttering and organizing (categorizing) the market, presenting credible product information or seller profiles and facilitating secure payment transactions between the parties.. Some of such digital aggregators and marketplaces currently serving the demanding market are Airbnb, Snapdeal, Flipkart, Amazon India, JustDial, AskMe, Uber, Taxiforsure, etc.


The case of AskMe is a special one which in a way attempts to aggregate the aggregators as it combines the services like Deals, Selling, Buying, Directory and Search each of which is already being served by an aggregator like SnapDeal (Deals), OLX( Buying and Selling), JustDial (Directory). Today when the market has been flooded by large no. of service providers (online and offline), each shouting similar marketing messages making it difficult for the consumer to choose the credible provider offering relevant products based on his buying preference, then these aggregators job of being more relevant to consumer, accountable and liable for any legal violations, service failures or relationships with vendors becomes all the more important.


-Upgrading role of Aggregators

With competition intensifying in every sector where aggregators have their presence be it travel, retail or hotel industry, merely providing a platform to transact is no more a sufficient criteria for survival. Aggregators now have to increasingly integrate with vendor’s supply chains and develop the ability to predict and hence timely inform the vendors of surge in demand avoiding events of lost sales. Other than forming supply chain synergies, aggregators have to profile and analyze their vendor profile and give preferential treatment to selected valued partners or suppliers like concessions, distribution support, credit payments, etc. This level of engagement tantamount to having alliances in which relationship extend beyond transactions to involvement in advancing key vendor’s business strategies and goals like logistics efficiency, product branding, inventory management. At Alliance level, the online platforms have to go an extra mile to optimize buying and selling processes, introduce efficiencies and standardization in processes ranging from search, discovery, buying decision and making final transactions.


-Accountability, responsibility and liability

As incidents of breaking laws by the vendors are on the rise, aggregators are losing control of vendor activities and most of the action is damage control rather than taking preventive measures. Airbnb is not fully accountable for screw-ups by the room owners in user experience and it’s the same with an Uber, Snapdeal, Flipkart or Amazon in India.. In comparison, if the employee of a hotel or a vendor screws up, then they’re clearly accountable.


As per Section 79 holds that the intermediary holds no liability “for any third party information, data, or communication link made available or hosted by him, if the intermediary has not initiated the transmission, selected the recipient or selected or modified the information.” The Intermediary IS liable if it doesn’t do due diligence (publishing terms &conditions and privacy policy), or address complaints within 36 hours. Aggregators and marketplaces, being mere intermediaries hold limited liability for what the sellers sell on their platform.


Cases of an accident in which a lady was killed on New year’s eve in San Francisco after being struck by an Uber taxi has raised questions on whom, the driver or the company should be held responsible for the accident. Uber denies any responsibility clamming itself to be merely a platform and confirming the driver to be just a partner— not an employee — and not carrying any customer during the accident. Such issues of vague accountability can only be sorted if there are some clear legal guidelines on accountability by the government apart from the necessary precautions of verifying the driver and location tracking of cabs. Similar is the issue in online retail marketplaces when on a customer complaint of a receipt of spurious good, the warranty is not honored and the buck is being passed from the platform to the vendor to the manufacturer who rarely honor the warranty.


-Conclusion:

Some of the big successes recently witnessed in Ecommerce doesn’t involve any radical innovation but just a careful organization and aggregation of the authentic vendors ensuring fair practices of delivering whatever is advertised. The success of an aggregator is increasingly dependent on the trust and strength of relationship between the platform owners and the vendors as well as between the platform and the end buyers. For online retail, measures like regular screening and auditing of the ratings, comments as well as vendor profiles for authenticity can be instrumental in enforcing trust in your brand as an aggregator. Lastly, digital aggregators would have to continuously upgrade their value contribution to the vendor’s business as well as user experience by establishing strategic alliances aimed at advancing their business goals of profitability, revenues and branding thereby ensuring strong tie-ups and continuous revenue stream through those high values allied partners.


This article has been authored by Deepman Singh from S.P.Jain. Institute of Management and Research

 


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