Setting up network sales channels for DO-RA gadgets
In early March 2019, Intersoft Eurasia team completed work on a test batch of DO-RA gadgets — personal, cross-platform dosimeters-radiometers to monitor the radiation situation at the measurement site, compatible with iOS and Android smartphones and tablets.
By buying such a device, the user receives the following: reliable electronics which have undergone radiation testing in the factory laboratory, stylish colored case in the spirit of Malevich ;) for every taste, gift packaging, color insert instructions in Russian and English, special USB charging cable, a free updateable DO-RA.Pro application from the App Store and Google Play.
The next step in our project implementation is to find the best sales channels for Made in Russia products in the challenging environment of stagnant purchasing power.
Domestic network sales channels
In practice, the choice of promotion of DO-RA line devices was limited by a number of the factors typical for our investment opportunities, combined with the characteristics of retail networks and above all: price of entry into the network, the possibility of consulting support in the sale of goods to the consumer, the size of the coverage of the audience and network commission fees, return policy for the goods sold, advertising budget.
In the Russian Internet space, the main e-commerce market players who work non-stop were selected: «OZON,» «GADGET,» «DNS Retail» and others, where the first mini batches of our goods were sent for review.
Then, the representatives of the DO-RA product distributor started negotiations about product promotion in networks of cellular retailers, and in particular, negotiations with the company Svyaznoy and its network of offline stores, in aggregate consisting of more than 5,700 salons (monobrand + franchise). Svyaznoy agreed to take a sample of the first hundred DO-RA products for its C-Store.ru network.
Negotiations were also held on the promotion and sale of DO-RA products in networks owned by other large companies, such as: Megaphone — 5350 salons (monobrand + franchise + 50% of Euroset salons), Beeline — 5000 salons (monobrand + franchise) and Tele-2, which had an approximate total of 15,000 retail locations at the end of 2018. Negotiations began with specialized electronics stores: M-Video, Eldorado and others.
It is important to know that in addition to the arrangements for the sale of devices with the retailer, there are a number of particularities of their network «entry,» which should be taken into account. For example, the commission of retail chains can range from 15% to 30% of the value in retail goods (i.e. on the virtual shopping shelf). By the way, virtual world networks work at the upper part of the commission: Google Play and the Apple Store, taking a fixed 30% from each purchase in their online markets. At the same time, the initial fees of the owners of goods on Google Play are USD 29 for registering an account, the annual fee to the Apple Store is USD 99.
However, there are champions of commission — some Russian retailers who ask for up to 40–50% of retail, which is the limit of profitability for the sale of any product. We immediately refused such offers.
In addition, we must not forget about the refund period for the goods sold, which is typically anywhere from 3 to 6 months in the Russian retail. At the same time, for some retailers, a systematic delay in the return of money can reach from 1 to 2 months in addition to the refund period specified in the supply agreement.
Foreign retailers declare a shorter return period for the goods sold. In particular, AliExpress promises 1 month for a refund for the goods sold, which also includes 14 days for any possible claims or the return of defective goods.
Actually, all of the factors above determine the final retail price of a real product on the virtual shelves of the Internet retail.
In many cities, including Moscow, there are some souvenir retail chains that work with the tourists from around the world. This is an interesting trading area, and it warrants a closer look.
I decided to visit a souvenir shop in Moscow on Plyuschikha, driving to work in the morning, watching the buses delivering the Japanese customers to the shop. However, as it quickly turned out, it was not their format — they do not sell even simple electronics at this point (indeed, why would the Japanese need it ;)). The staff gave the following explanation: they mainly bring in Japanese retirees from the deep provinces of Japan who have little interest in wearable electronics and gadgets.
Global retail network
Among the global e-commerce channels, we identified several networks where DO-RA gadgets could be potentially sold. Three of them proved to be large and well-known: Amazon, AliExpress, eBay in addition to: Taobao and Tmall (working mainly for China) and Rakuten (mainly for Japan). As for Southeast Asia's largest online market, Lazada—an «Asian Amazon» that sells products mainly in the high-end segment: in Malaysia, Indonesia, Singapore, Thailand, Vietnam and the Philippines—we left it for a titbit.
Amazon.com is the world's largest Internet retailer and one of the oldest online markets on Earth, headquartered in Seattle and launched in 1995. Half of the globe, and in particular Canada, USA, Great Britain, Germany, Brazil, Japan, India, Italy, Spain, China, buy everything here, from pens to tire covers.
To become a seller on Amazon, you need to do the following:
- Create a special bank account prior to opening an account on the site. It’s worth knowing that Amazon has a cash limit for online transactions.
- Having created a personal account on the site, determine whether you are an Individual or Professional Seller. The format depends on the volume of trade, branding, and other features.
- It is necessary to register your brand. Trademark registration allows you to specify a unique key that is useful for displaying goods without using any standard tools (EAN, UPC).
- For registration of the trademark you will have to pay USD 275 in one category or USD 550 in two or more categories.
- You can register your trademark yourself by completing a special form — called «Administrative fee» — in English on the USPTO website, so that the application can be considered. The cost of the operation is USD 300.
- If you have difficulties with registering a trademark on Amazon, you can hire an English-speaking assistant, which will cost an extra USD 300, or go for a more expensive option — hiring an attorney for prompt registration on Amazon — which entails costs starting at USD 1000.
- Upon registration, Amazon will give you the opportunity to secure the main attribute. This is a special number assigned to the trademark. You can choose from the following:
- vendor code;
- numbers of the style, catalog, model
- The main attribute of the product is automatically registered as the original and cannot be changed in the future, which is why you should directly select successful identification codes for your product.
AliExpress.com — no online store in the world is growing at the rate of AliExpress. Alibaba Group Holding Limited owns this resource. It also owns Alibaba.com — the largest online platform for entrepreneurs.
The main advantage of the AliExpress online store is that the seller cannot receive your money for the goods until the goods reach you: the site has a customer protection system that guarantees a refund.
By the way, at the end of 2015, the Skolkovo held an awards ceremony for the winners and prize-winners of the Skolkovo Foundation and the Alibaba Group competition — AliExpress Challenge. Our company «Intersoft Eurasia» won first place in the nomination «End product for promoting on the global market.» However, at that moment the level of investment was insufficient for launching industrial production. Let's try to use this prize now for promoting the product. Now the DO-RA gadget can be purchased from the Russian distributor online «Stastus-Factor» or in the communication technology retail locations mentioned above.
In order to become a seller on AliExpress, one must do the following:
- Foreign entrepreneurs looking to organize their own store on AliExpress should register an address and phone number in China.
- To register an account, visit the website at seller.aliexpress.com. The site works in several languages.
- Registration confirmation is given within 24 hours. When this time expires, the link will be invalid.
- Upon registration, an activation code will be sent to your phone number. Precisely 60 seconds are given for entering the code. Don't waste your time because, otherwise, the registration will have to start all over again.
- In addition to the account on the trading platform, you must create an account in the Alipay payment system.
- After confirming the registration, proceed to the next step — setting a password, providing the first and last name, mobile phone number, address, business model:
In the last column — Internet experience — you must specify one of four trading platforms:
- Alibaba (China’s domestic trading platform);
- Alibaba (international marketplace).
- The final step in creating a merchant account on AliExpress is to provide a photo of the entry stamp and visas.
- If you have completed the above registration procedure successfully, you will automatically be assigned the status of a new seller. At this stage, you will have the opportunity to place a range of up to 50 products. Over time, if the status of the seller increases, the limit of the goods for sale will also increase. Verified sellers can place up to 300 positions, Gold sellers up to 5,000.
eBay.com is one of the largest trading platforms on the Internet, and it appeared in the USA in 1995, in the golden year for online trading. This is not just a retailer, but a historical milestone of virtual trading. Users value this online store for the fact that they can not only buy there, but also sell: new or used items, antiques, electronics all while choosing between a direct purchase or auction.
In order to become a seller on eBay, you must:
- Come up with a simple handle which is easily memorable for the customer. This will make it easier for customers to recognize you and your product in the future.
- Confirm a permanently working mailbox — e-mail.
- Generate a PIN via mobile phone, for ease of recovery in case of loss.
- It is also necessary to have your PayPal account, and it is recommended to confirm the already registered PayPal account, which will save losses on the exchange rate difference between the ruble and the dollar.
- A passport is sufficient for verifying your identity on eBay. Fill out the information in the appropriate fields and attach a scanned copy of the first page. The verification will take a maximum of 5 days, after which the account will be considered as confirmed.
- Remember to confirm the refund program. Without this, trading on eBay is impossible because the site guarantees people a refund if the product was defective or did not reach the customer. To do this, go back to the «Personal Information» section of the site where you created the PIN, and you will see the column «Method of reimbursing payment» below. Click Add, select PayPal as your payment method, log in to PayPal and accept the license agreement.
- Congratulations, you are now a registered seller and can proceed with putting your first product on eBay.