When e-commerce took off in the mid 90s, marketplaces like Amazon aggregated supply and channelled demand through aggressive advertising.
The e-commerce game is slowly but surely moving to a decentralised model, where on one end social media platforms like Pinterest and Instagram are adding shopping capability and on the other, companies like Shopify are helping merchants get their own websites up and running easily. Even the large horizontal players are experimenting with their own Thrasio-like models. Flipkart just announced Flipkart Boost, a programme to help D2C brands grow, with support, that ranges from planning to advertising and cataloguing to sales, under a ‘service fee approach’
LBB, an e-commerce platform that offers unique lifestyle products, is pioneering its own model of decentralised e-commerce, based on insights from its buyers and sellers.
The Greater Good
Today LBB serves 22 million consumers/users across eight Indian cities and has 10,000 brands and businesses on-board.
LBB’s typical seller averages about Rs. 50 lakh to Rs. 5 crore in annual revenue and 60%-70% of them do not list on the giant horizontal marketplaces.
LBB’s typical buyer is a millennial from a Tier 1 or Tier 2 city. 65% of their user base is female who are not brand-loyal, but want an interesting selection of lifestyle products at reasonable prices.
Co-founder of LBB, Suchita Salwan, says they went back to thinking from first principles to ask what was best for this buyer and seller and came to the following conclusions:
- Sellers are most in need of higher revenue, which in turn demands higher distribution
- Customers should be able to find the products they want wherever they are shopping
This led to a somewhat contrarian model, where LBB will now help their merchants list on other platforms via a product called Mastershop.
“We believe that e-commerce today is not a zero-sum game. One or two big winners do not take all and there is room for differentiated platforms. Vertical platforms like LensKart and Nykaa have already proven this. If there are newer ways of doing e-commerce now, then we need to stop playing by the old rules.”Suchita Salwan, Co-founder, LBB
Currently Mastershop enables merchants to list on Google Pay and Paytm and other partnerships are in the pipeline.
LBB has also launched Basecamp, an accelerator in collaboration with RPSG Capital to provide young brands with mentoring and capital.
Keeping the Moat Intact
Is LBB worried about cannibalising its own sales? “That” says Salwan, ”is exactly the kind of e-commerce 1.0 trap that we do not want to fall into. We believe that if we do what is best for the buyer and the seller, growth will happen naturally. We have seen that time and again on LBB. ”
LBB’s moat is is the user experience of serendipitous discovery and Salwan is confident that this is not threatened in any way by the decentralised model. Users look for products on LBB, not brands. “We understand how to balance aspiration and reality for our customers and give them what they want, at a price that makes sense for them – and that’s our biggest moat,” she says.
LBB’s genesis lies in content – it started as a lifestyle blog. Content’s trajectory from centralised to decentralised distribution is well-established and every publisher now offers content to its readers on multiple channels. Salwan is betting that e-commerce will follow a similar path. While it is early days for Mastershop, LBB has made a start with developing the ‘plumbing’ for a decentralised shopping world.
Suchita’s advice for e-commerce players
- All large brands have been aggregated
- You can’t beat Amazon and Flipkart with the same supply. You need differentiation.
- Follow a supply strategy that is customer-first
- Mass-tige pricing: Not so cheap that it erodes your platform, but not so premium that shopping with you is an occasion
- Do not aggregate mindlessly. Selection is more important than endless supply
- Perceived uniqueness of supply beats constant stream of new supply. Focus on the experience instead of adding more SKUs
- Merchants will ask for a lot, but pay for little
- Think carefully before you allocate resources to development
4. Enable your merchants to go where customers are
- That’s what LBB is doing with Mastershop