Indian eCommerce …the game has just begun!!

As I write this article there are probably some more eCommerce portals that are on the verge of going live.

And someone who has been part of this industry for a decade feels good about the fact that we are on the verge of getting out of the shell albeit we seem to be getting into the woods. The current meltdown should not be taken too negatively as it is inevitable in any business and eCommerce is no different.

 Despite the challenges and not so friendly ecosystem with slow growth of internet penetration, lack of awareness, lack of strong intent/need to buy online, lack of trust, strong cash economy, abysmally low credit card penetration, lack of convenient payment options, high logistics charges and very few trained eCommerce professionals, the industry has grown to an over $500 Mn industry and is expected to touch $12 Bn by FY 2015-16

Indians are still very conservative when it comes to impulse purchase, we probably take the longest to change our habits and hence one has to have the stamina to not only grow in this country but also to survive. We are a country of 1.2 Bn but every few hundred kilometres we talk, eat, wear and buy differently which is unique to us. We are multiple Europes’ packed into one but spend only few bucks and save for the next generation due to centuries of deprivation. But surely we are on the verge of a big change and revolution, consumption is growing in India and it is growing beyond needs to the wants.

Online retail solves a variety of problems for both consumers and merchants if it is executed efficiently.

Consumers get more transparency in pricing & availability, convenience, feature comparison, availability, awareness and tips/suggestive buying which to a large extent lacks in physical retail.

Merchants can scale and ramp up more effectively online, keeping the cost of distribution to only a fraction of retail distribution. Payments against sale are transparent and remitted within a week. Online presence helps create awareness, discovery, aggregate demand from markets where physically it maybe unviable to reach and also helps brands come in direct touch with the consumers.

Apart from the known challenges of availability, internet reach, timely deliveries; here are some of the points in my opinion which would be relevant in current time to overcome the challenges:

  •  Competition: There are not too many eCommerce players in the market, despite the recent buzz around eCommerce space becoming too crowded. We need more players, more competition and it will drive all players to innovate on their product mix, supply chain, marketing promotions & reach.
  •  Involve Brands: Most brands still don’t consider eCommerce as a channel. They either do not consider online to be big enough or take it as a channel conflict and hence too lazy to create any meaningful initiative out of their blank, bland, static websites.I have often observed the online division of a big retail brand struggling to have any share of voice within the organisation. Brands need to get directly involved with online initiatives as it helps reduce cost of distribution which has to be passed onto consumers, there is no channel conflict. It is market creation
  •  Build Relevance: Create better relevance, connect and trust with buyers and make sure you constantly stay relevant to them. Also create innovative models instead of Ctrl C, Ctrl V models of China or west, we are very different form them.
  •  Customer Loyalty: Build Loyalties both with buyers and sellers. Word of mouth may travel slower but makes better impact than shouting at the top of the voice, we are the best & cheapest, trust me. Give them reasons to believe your promise and it has to be more than the price. Create brand ambassadors who are influencers on both sides of the ecosystem, remember most players in India are multi-brand online stores so they are neither manufacturers nor importers but depend on suppliers.

 The game has just begun as the ecosystem is catching up fast

There are new players with great theme, team and execution across the spectrum: Logistics, payments, catalogue, internet reach & credit/debit card penetration

Consumers are better aware of their preferences, hence verticalisation of the business. Verticalised portals are better equipped to offer depth in catalogue, feature rich experience and relevance to their TG.

There are new breed of logistics service providers like Delhivery & Chhotu for whom the reason for existence is eCommerce. However, it is imperative to go beyond the current set of 10-15K pin codes. Anything in excess of 30K will change the scale in no time. Reach to these ignored markets will bring unimaginable scale from smaller towns. We will discover many emerging markets (BRICs) within India

Multiple payment partners who focus on early stage players unlike banks who prefer to work with only established players. Acceptance of Maestro with all of them will surely be another game changer.

Open source technologies which are faster and cheaper to implement unlike earlier times when it took us 1 year to just get technology and backend processes right, every relevant report, action and exception is offered on a platter.

It’s no surprise that it has taken us more than a decade and 2 big internet busts to get a decent foothold in India and for sure these are the exciting times.

Suneet Manchanda is currently the Co-Founder & COO at Ladyblush.com, prior to this entrepreneurial venture, he was the Vice President & Head Tradus at Ibibo Web Pvt. Ltd. Suneet can be reached on suneet@ladyblush.com

 

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  • http://www.intentree.com Ann

    Right said Suneet. Besides the logistics and payment issue, the current scenario of creating any random website with inappropriate business standards, user experience is going to be the thing of the past..

    The only companies that would survive in the long run, are ones which are diligent about their user experience and constantly optimize their online experience.

    Ann
    9945513546

  • http://www.tushargp.com Tushar Purohit

    Sounds very interesting, as every successful business requires
    First a viable and scalable business model, the second ability to create ecosystem , third finding right people, fourth understanding and managing the business of financial transactions and the attendant risks. And for Internet based businesses are no different. If you are just startup sorting these things out will be bigger challenge than getting visitors to your site. You will have to invest significant amount of time and energy in just setting up basic things.

    Although there are many challanges for e-commerce business that is

    • This requires the right segment of customers and merchandising is KEY. If you get the products wrong, you margins drop from the shipping costs .
    • If you are relying on your packages or sample to drive re-engagement online , your economic model needs to account for this , and you need to figure out interesting ways to re-engage the consumer who is examining the items offline that you don’t know.
    • If you don’t know your customer well, you will fail since they have a smaller selection from which to choose and you are spending money on shipping.

    • http://www.ladyblush.com Suneet

      Hi Tushar: The infrastructure and ecosystem are catching up fast, the attitude of people not directly involved with eCommerce has to change, which where part of the problem lies. With respect to shakeout, consolidation, slowdown..call it whatever you like, we all know happens across the businesses everywhere and eCommerce is no exception.

      My concern today is more with the scalable business models and in the current environment, i can see only a handful businesses trying to innovate on that side and trying to create connect & relevance for a long lasting relationship with the consumer. Most businesses are still thinking very similar and execution not so impressive which means consumers are only because of pricing and not for relevance. So next time you want her, spend some more money on advertising, put some more money in her pocket and get the transaction.

      Merchandise mix here is the key, if I was to look at some of the existing models, probably fashion & apparels are the most financially viable models and as long as you are unit level profitable (recovering the cost of shipping, COD, PG cost) you are doing a decent job.

      After all it is not science to realise that products which are consumables have the highest chances of driving the repeat purchase (w/o more mktng money) if customer is serviced well.

  • kamal

    Sounds very interesting, always thought what is holding us back besides some of the regular stuff that keeps getting mentioned. Yes very strongly agree with what has been said about Limited courier reach, lack of maestro acceptability and too little innovation in current models. They seem to have been created for investors and not out of passion to create & succeed. Wish you luck

  • http://in.linkedin.com/in/erpratikjoshiwebanalyst Pratik joshi

    This is very useful news. As we know that eCommerce mainly based on transaction of money via the web which is used to product/information/item/things exchange from buyers-sellers.

    There is need large level awareness in eCommerce for Indian web surfers to grow eCommerce more.

    Thanks
    Pratik Joshi

  • http://www.paarami.com sushant gaikwad

    Thanks for sharing a motivational article … in the current slow market budding entrepreneurs will surely motivating

    even the small start-ups are making use to e-commerce sites to make their sales process short and more efficient

  • iamwire

    The Game Has Just Begun!

  • Rajeev

    Agree with you hundred percent. Also I am of a strong opinion that the first two stumbling block those we need to remove are the Logistics and Payment partners. You said it right that the logistics are available in very limited areas across the country. The moment we increase the serviceable areas we increase available market. Internet penetration despite being low has enough audience for existing plus more players to come. Other aspect is insufficiently equipped Payment partners. Even today we struggle with type of card which can be accepted or the Netbanking standardization. Offline payment Mechanisms are unheard of. The moment we overcome these two hurdles we see a different scenario in e-commerce.

    • http://www.ladyblush.com Suneet

      Rajeev: apologies for a very delayed reply on your comment. Yes we are on the same page in terms of reach (payments & logistics) which are the biggest barriers to growth here.

      COD plugs the gap between the “willingness to pay” and “ease of making payment”. Despite COD being convenient for consumers and attractive for all players to have and promote aggressively to induce trials, it has some serious problems that few have been able to plug. COD orders for most portals today would be in excess of 50% with 50% of them getting returned causing portals to bleed financially. Could it be cash deposit at the bank branch, post office etc..just some thoughts on lowering the chances of rejections, cost of handling cash and money stuck with LSPs

      With respect to logistics, Indian Post can be very cost effective and has brilliant reach but they have high damage & loss in transit cases. Their APIs are not updated regularly, they do not pick up consignments and also usually ask for advance payment/ MG. They have sales agents (agencies) who do pick-up consignments, extend credit but as I said damages & losses are as high as 10% of the shipments, In my view if Indian Post pulls up it socks, it will do a great service to this nation and to eCommerce businesses. With 3 times more reach and 3 times lower cost of deliveries, Indian Post could be the answer to most problems with eCommerce in India.