In a e-commerce platform, do you collect fee from buyer or seller?
A.
In conventional marketing, this is considered 'cost of running the business'. Hence, it is to be deducted from sales, a promotional cost that is charged to seller's accounts.
In modern day e-commerce, the buyer may be sourcing for the products online. This can form part of the fee of referral or commission payable to the e-commerce operator. So, in such case customers pay a commission for a good vendor recommended by the e-commerce operator.
Which is the better model? That is the argument of this article.
Before going further, t would like to use an abbreviation - USP. What is USP?
The unique selling proposition (USP) or unique selling point is a marketing concept first proposed as a theory to explain a pattern in successful advertising campaigns of the early 1940s. The USP states that such campaigns made unique propositions to customers that convinced them to switch brands. The term was developed by television advertising pioneer Rosser Reeves of Ted Bates & Company. Theodore Levitt, a professor at Harvard Business School, suggested that, "Differentiation is one of the most important strategic and tactical activities in which companies must constantly engage."[1] The term has been used to describe one's "personal brand" in the marketplace.[2] Today, the term is used in other fields or just casually to refer to any aspect of an object that differentiates it from similar objects.
Wikipedia - "USP"
And,
"For shoppers, the big advantages of the online option are lower prices, convenience and, sometimes, tie-in benefits such as cut-price shipping and delivery. As the Internet of Things (IoT) evolves, there will also be new opportunities for reordering groceries by barcode or letting a pre-programmed home appliance do it for you when supplies, such as fabric softener, are running low.
“There is a new sophistication among consumers,” Zhang says. “Even when in a bricks-and-mortar store, they use their mobiles to check prices, read product reviews, and get comments from friends.”
In some cases, after testing or trying on an item, they may then order it online, possibly getting a discount and home delivery into the bargain.
For retailers, the challenge is to effectively integrate online and offline platforms by taking an “omni-channel” approach, upgrading in-store service, and adopting features such as location-based technology.
“They have to think about how people are now using their smartphones. They can then improve the standard shopping experience with more use of QR codes, digital coupons and big data analytics,” Zhang says. “As for e-commerce, it is not just about the system. It requires an efficient logistics network, and that can be a very expensive proposition.”
Sellers pay
The USP in marketing is more of like your positioning. It is how the service is going to be different from others. So, if it is different from others, does it differ in the emphasis of seller as advertiser or buyer as advertiser?
For simple understanding, whereby what prevails pays for the fee. If it is the formal, it would be the seller pays. And, if it is the latter, the buyer pays for the fee of using the e-commerce portal.
However, lots of e-commerce websites charge a fee to seller and yet it cannot overcome the continual consumer complains. The simple reason is that as the seller pays, it is better to lean towards the seller rather than the consumers. In simple terms, he who pays for my bills is my boss!
This is the culprit!
Buyers pay
So, if the e-commerce website charges a fee to the buyer, it would protect the buyer more. This is again due to the 'he who pays my bills' mentality. But, would the buyer pay for a fee? Especially on top of paying a merchandise which included a profit to the seller! Why should I pay when I am the customer?
For example, you go to a shopping mall, and you have selected a T-Shirt, the cashier charge you the T-Shirt price at the same time asks you to pay for cleaning of the shopping arcade, would you pay? Of course, NOT!
Hence, charging the buyer would be rather hard than charging the seller.
This is a mental block. To do that, it would have to establish a good USP that the buyer is unable to refuse to pay.
Based on the assumption that e-commerce is great for 3 reasons -
"the big advantages of the online option are lower prices, convenience and, sometimes, tie-in benefits such as cut-price shipping and delivery."
1. Lower price
2. Convenience
3. Tie-in benefits like shipping and delivery
There should be a 4th reason - Reliability
4. Reliability - where the buyer would be confident that the services of the recommended seller is guaranteed!
It could be done! When the buyers pay, it would ensure no bias towards or undue influence by the seller as buyers are the one who pay the bills! Whoever the bad vendors have to go! This will determine who is the reasonable vendor who can withstand the test of lots of buyers.
In fact, in agency practice, either an agent is contracted to source for a buyer - in case of working for the seller - or source for a seller - in case of working for the buyer. Insodoing, he receives a commission from the principal who can either be a seller or a buyer.
If the agent can deliver the best benefit for the buyer, for example to locate a good house and negotiate a fair price or price that is below market value, he is adding value to the buyer. Hence, he deserves to be rewarded for his effort!
I would aspire to start an e-commerce portal with this in mind. The emphasis should be on the buyer's side, not the sellers.
It should be able to select exemplary vendors who are tied to the reliability criteria. In so doing, a commission calculation would be tagged to the buyer, probably through his payment to vendor after the task has been completed.
“There is a new sophistication among consumers,” Zhang says. “Even when in a bricks-and-mortar store, they use their mobiles to check prices, read product reviews, and get comments from friends.”
In some cases, after testing or trying on an item, they may then order it online, possibly getting a discount and home delivery into the bargain.
For retailers, the challenge is to effectively integrate online and offline platforms by taking an “omni-channel” approach, upgrading in-store service, and adopting features such as location-based technology.
“They have to think about how people are now using their smartphones. They can then improve the standard shopping experience with more use of QR codes, digital coupons and big data analytics,” Zhang says. “As for e-commerce, it is not just about the system. It requires an efficient logistics network, and that can be a very expensive proposition.”
An extract from "Strategising pays off as e-commerce revolution takes off", 10 March, 2016 South China Morning Post at, http://www.scmp.com/presented/business/topics/online-vs-offline-commerce/article/1922686/strategising-pays-e-commerce.
The USP in marketing is more of like your positioning. It is how the service is going to be different from others. So, if it is different from others, does it differ in the emphasis of seller as advertiser or buyer as advertiser?
For simple understanding, whereby what prevails pays for the fee. If it is the formal, it would be the seller pays. And, if it is the latter, the buyer pays for the fee of using the e-commerce portal.
However, lots of e-commerce websites charge a fee to seller and yet it cannot overcome the continual consumer complains. The simple reason is that as the seller pays, it is better to lean towards the seller rather than the consumers. In simple terms, he who pays for my bills is my boss!
This is the culprit!
Buyers pay
So, if the e-commerce website charges a fee to the buyer, it would protect the buyer more. This is again due to the 'he who pays my bills' mentality. But, would the buyer pay for a fee? Especially on top of paying a merchandise which included a profit to the seller! Why should I pay when I am the customer?
For example, you go to a shopping mall, and you have selected a T-Shirt, the cashier charge you the T-Shirt price at the same time asks you to pay for cleaning of the shopping arcade, would you pay? Of course, NOT!
Hence, charging the buyer would be rather hard than charging the seller.
This is a mental block. To do that, it would have to establish a good USP that the buyer is unable to refuse to pay.
Based on the assumption that e-commerce is great for 3 reasons -
"the big advantages of the online option are lower prices, convenience and, sometimes, tie-in benefits such as cut-price shipping and delivery."
1. Lower price
2. Convenience
3. Tie-in benefits like shipping and delivery
There should be a 4th reason - Reliability
4. Reliability - where the buyer would be confident that the services of the recommended seller is guaranteed!
It could be done! When the buyers pay, it would ensure no bias towards or undue influence by the seller as buyers are the one who pay the bills! Whoever the bad vendors have to go! This will determine who is the reasonable vendor who can withstand the test of lots of buyers.
In fact, in agency practice, either an agent is contracted to source for a buyer - in case of working for the seller - or source for a seller - in case of working for the buyer. Insodoing, he receives a commission from the principal who can either be a seller or a buyer.
If the agent can deliver the best benefit for the buyer, for example to locate a good house and negotiate a fair price or price that is below market value, he is adding value to the buyer. Hence, he deserves to be rewarded for his effort!
I would aspire to start an e-commerce portal with this in mind. The emphasis should be on the buyer's side, not the sellers.
It should be able to select exemplary vendors who are tied to the reliability criteria. In so doing, a commission calculation would be tagged to the buyer, probably through his payment to vendor after the task has been completed.
No comments:
Post a Comment