Is it profitable to sell on local e-commerce stores like Jumia, Kilimall and Skygarden?
Are you a business owner seeking to expand your business horizons and contemplating whether eCommerce stores will be beneficial to your business?
An eCommerce store acts as a medium between you and your customers. They create a huge marketplace where customers can access a variety of products on a single platform, like a supermarket. There are numerous eCommerce stores in Kenya e.g., Jumia, Kilimall, Avenchi, Shopit, Jiji, and so on.
As a business owner, trying to get the hang of eCommerce you are probably wondering:
- Customers get many benefits from e-commerce stores, but how profitable is it when it comes to selling there?
- With so many people still skeptical about online shopping, is a profit still guaranteed?
This article highlights the advantages and disadvantages of selling your products in eCommerce stores to help you make the decision on whether it is a venture that will help your business grow.
Advantages of selling on eCommerce stores
This is how eCommerce stores will benefit your businesses:
Grows your reach
Let us say you primarily market your products on Instagram where you have 1,000 followers. A site like Jumia receives 15 million monthly visitors, they might not all be your lead prospects, but the platform will be exposing your business to new potential customers. A customer buying your products from an eCommerce store would never have come by your product the organic way.
They do the hard work
Ecommerce stores bring customers to you, collect payments, and even deliver the products for you. Your only concern is processing the orders and getting them from storage. For example, an eCommerce store like Kilimall and Jumia only require you to list your products on the platform and drop off the products at the shipping point. They handle the shipping, cash handling, after-sales services, etc.
Offer a great user experience
The reason why eCommerce stores are always growing is due to the benefits they offer to users. Through eCommerce, customers get great offers such as discounts, coupons, free shipping, etc. It is also easy to buy from eCommerce stores as most offer a variety of products on the same platform which saves time.
24/7 accessibility
E-commerce stores are accessible 24/7, thus if you operate your business on a specific timeframe (e.g., 8 am-5 pm) your business still runs on eCommerce stores. Customers will still be able to view your product, ‘add to cart’, and ‘check out even at Midnight.
Disadvantages of using eCommerce stores to sell your products
To get the REAL picture of the problems vendors face when selling their products online we spoke to Stephen Chege. Mr Chege sells a variety of products, mostly electronic goods in a famous local eCommerce store, and he provided insights on these challenges:
If you do not advertise in the stores, your product may not get much visibility.
Let’s say you begin selling a commonly sold item on an eCommerce store, how long do you think it will take to get your product on the first page? Maybe forever.
Another factor that may affect your visibility is your rating. Most eCommerce stores let their customers rate their products after purchase. It’s great for customers as it protects them from poor quality products. “Human errors are always seen as a vendor’s cause. You can have at least 10 good sales on products but one sale that fails may drastically drop your rating thus affecting visibility to your customers” explained Stephen.
Lengthy registration
To avoid online scammers, most eCommerce stores have put up obnoxious registration requirements. “As a vendor, if you are new to most of these platforms it can be challenging to register as they ask for so many documents which not all sellers have”. Some documents even ask for physical location addresses and this inconveniences online businesses.
E-commerce stores take a percentage of your product earnings
E-commerce stores let you display your product to millions for free, don’t you think that’s a little too good to be true? Most eCommerce stores get their revenue from vendor sales by taking a share of the sold product value. This cut can range from 5% to 15%. Let’s say you sell your product at Ksh. 1000 but when you sell the product on an eCommerce store you may receive Ksh 800. To curb this, business owners hike their products’ prices on these platforms. So, the same business owner will charge Ksh 1200 to ensure they receive the same value of their product after the deduction. At the end of the day, it just inconveniences the customers.
In conclusion
Whether an eCommerce store will be profitable to our business or not depends on a couple of factors. However, as a business owner, it is important to take risks. There are so many eCommerce platforms that allow you to post your products for free without vendor registration, meaning you won’t be losing much money when it flops.
Additionally, here are some KEY tips to help you grow your business on eCommerce stores:
- Setting a margin that’s fair
In eCommerce stores, customers peruse the different products to find the one that meets their needs and budget. Since there may be different vendors offering the same product as you, you do not want to be the most expensive one. “We just put a margin that’s fair, if your products are expensive, you won’t get any customers.” If you sell products in eCommerce stores, you may be tempted to set your products’ prices a little higher than usual to cover the charges taken by the eCommerce store. Avoid having the highest or lowest prices on eCommerce stores. Look at what your competitors charge and aim to set your prices just at the center.
- Work on your product visibility
If your product is getting good visibility in eCommerce stores you have higher chances of selling. How do you get more visibility? Offer a great customer experience to avoid bad ratings, offer discounts, flash sales, and black Fridays and you can also throw in some coins for marketing.
To make profits by selling through eCommerce stores, you should ensure your product is visible to a good audience, offer great products and customer service to avoid bad ratings, and offer competitive prices.
For more related articles to help your business grow online you can receive updates on our latest posts by sending us your email at cex@ibuqacapital.com or signing up by clicking here.