By Dimithri Wijesinghe
Do you have an Instagram account? Surely by now, you have realised that it is nothing else but a market place, with the algorithm constantly trying to sell you something. With the addition of the new “Shop” tag on your Explore page, Instagram (IG) itself is no longer pretending; it is an online e-commerce platform if there ever was one.
Now that we know the nature of the beast, let’s take a look at what makes it tick – the sellers, the retailers, and the people who stand to gain from your views, clicks, and eventually buys.
For Sri Lankans, there are two major types of sellers you will come across. IG resellers are persons who make large orders from online retailers and sell the same here to local buyers with added benefits. There are also those who sell their own products designed and manufactured here in Sri Lanka, and it is likely that there is nowhere else you can purchase these items than from these individual sellers who are often also the creators.
Both types of businesses come with their own benefits for the customer. However, it does at times feel like an uneven playing field when they are competing in the same market trying to sell to the same set of eyes.
Why you buy from IG resellers
Gimhani Alahakoon and Thristorbel Bandara of Miss Meraki (@miss_meraki_sl) shared that the reason why people choose to purchase from their store as opposed to making the purchase directly from the online retailer would be to cut down on costs.
They shared that it is far cheaper to purchase from a secondary party such as their platform as there are certain items which have a minimum order quantity, and if you wish to have an item and you cannot afford to purchase in bulk, this is where they come in. They are able to purchase this larger number of pieces and make the individual sale to you. Additionally, you are able to bypass paying for shipping and taxes on an individual item, which can really add up.
Moneesha Senevirathne of Closet by Mo (@closet_by_mo) also shared that there is an element of convenience. Moneesha explained that she wouldn’t describe herself as a reseller as she does order in bulk. She is a supplier and these wholesalers she works with supply to other businesses in the island as well.
She shared that in terms of online purchases, what she brings to the table is convenience. She said that she would often get requests from people saying that they would like to have certain items that are on the retail store to be brought down and she said on occasions like that, she would provide that service.
In such situations, she said that what she would do is only charge for costs – that is shipping, tax, and if there is any, a delivery fee – and she does not make a profit.
She shared that her business model is such that she has employed three separate suppliers, one retailer, and two wholesale suppliers, the latter of whom have outlets in the UK, France, and Thailand. She said that while the wholesalers may be difficult for the average purchaser to reach, the retailer does in fact have an online store where people can purchase themselves.
Manisha of QueenBy (@queenby.official_) also added to the conversation on value addition, sharing that what is being offered to their clients would be the improved customer service, saving their valuable time taken to search for products from shopping apps, offering a creative range of products, while recommending products that they think customers may like.
Settling on the right price point
Manisha of QueenBy also referred to setting the right prices for their products as being a balancing act, sharing that a low price isn’t always ideal. “Where there would be a healthy stream of sales without turning any profit, being highly priced may see fewer sales, and may ‘price out’ the more budget-conscious customers,” she said, adding that although there is no universal mark-up within a given industry, indirect costs are relatively constant and where indirect costs are generally low, mark-ups will tend to be low as well.
She said that QueenBy mainly considers factors like production and business costs, revenue goals, and competitor pricing. Thereby, even when setting a price for a new product, or even an existing product line, it’s just pure math, “in fact, making it a straightforward step of the process”.
We also discussed the pricing aspect with the ladies from Miss Meraki as well and they added similarly that they too try to be as reasonable as possible as they must think both about their profits and being affordable. They shared that they do employ a courier service to make deliveries, and there are various other costs and so taking into account the costs, and a highly reasonable mark-up is where their price point lies.
This conversation on price points is where we must bring in the second type of IG businesses – those that have the added element of manufacture in their process.
Same playing field, different game
Speaking to Pavani of ACEAE (@a.c.e.a.e), she shared her thoughts on the nuances of the kind of business which designs, creates, and sells entirely on their own. “When you’re going into creating your own business and making your own clothes, there’s so much that goes into it. You have to create the designs for it, collect the funds for it, get the material for it, incur sewing and packaging charges, transport charges, etc. – there’s so much blood, sweat, and tears we dedicate to this one thing,” she said.
She shared that if you look at it from one perspective, to businesses such as hers, it may seem unfair that there is this reselling agenda. However, if you are to look at it from a business perspective, it is just a market where you sell and gain a profit; you do what you have to do and the bottom line is making profit.
Pavani said that it is definitely a whole other industry, adding: “Even though it is muddled up together, it is a different kind of industry altogether.” She added that she only hopes that customers are able to make this clear distinction, especially when it comes to pricing and quality, as the processes are vastly different. “They are different kinds of products, and it would be great if more people understood that,” she said.
Jacob of ANKARAA._ also spoke from her perspective as a purely local manufacturer and seller of handmade accessories.
“Ever since my business was launched, I have had to compete against those who resell similar accessories by bringing them down from various global sites for a much cheaper price and sold to local customers at a considerably lesser price. This affects us small local businesses as we are striving hard to promote and embrace local production within society. Another reason why people should promote local business is because it also helps better the country’s economy unlike some businesses that sell poor-quality foreign products.”
With regard to this final point shared by S. Jacob, Miss Meraki also added that while they are currently in a business that is primarily reselling, they wish to grow their business to gather enough capital to convert their business into an operation which creates revenue for our country; the ladies expressed that it is their ultimate goal to eventually create their own products in Sri Lanka and convert that revenue stream inwards towards the country.
Covid has affected them all
While the two types of businesses are somewhat one another’s competitors, they’ve all been equally affected by the pandemic, especially considering that they all heavily rely on free mobility, as the main convenience offered to their customers is speedy delivery.
Manisha of QueenBy shared that small businesses like hers are highly dependent on shipping and postal services to fulfil the orders of the customers who are helping them stay afloat during this unprecedented economic crisis.
“Postal services can be denoted as the economic lifeblood of my business,” she said, adding that the Covid restrictions which halted postal deliveries had an immense effect on her business and many others’ too.
Many of the others too echoed her concerns, providing that all orders have been put on hold; no new orders could be accepted due to uncertainty. Thereby, the delays those small businesses are faced with raise a number of issues, from cash flow to negative reviews over late deliveries, which they have very little control over. They shared that not only are they losing money in terms of sales, but also on shipping when it’s not received at the correct timeline.
