Internet growth has led to a host of new developments, such as decreased margins for companies as consumers turn more and more to the internet to buy goods and demand the best prices, as observed by C.K Prahalad. The internet means that traditional CAF businesses will change because ‘’incumbents (in markets) and large firms do not have the advantage‘’ just by virtue of being there first or by being of big. The implication of perfectly competitive market as the world will observe is that, markets will produce an efficient allocation of resources. Internet has truly been an effective agent in changing the fundamental ways of doing CAF business.
In any market with no entry barriers – the Net is biggest of them, the continuous influx of competition will, automatically means enormous benefits for consumers including service, price, offerings, etc. Today, Indian middle class of 288 million people is equal to the entire U.S. consumer base. This makes India a real attractive market for CAF e-commerce since it’s the one of the most searched categories not just in India but globally too.
Talking about coming times, there has been positive progress towards the financial objectives. We have seen fewer investments in leftover stocks of offline brands and companies following more sensible approach of SoR (Sale or Return). The downfall in blind distribution of Gvs induced purchases has brought down the cost of each order by at least good 15-20 percent. Focus on shorter LTV is coming along, with increased focus on Content and Social Marketing.
In the end, our message to the CAF E-com industry is that we all need to look at e-commerce as a business model and not a customer acquisition model. With the entry of very senior and seasoned professionals from the CAF trade like that of Fashionara, Limeroad, DonebyNone, Shopnineteen, etc., very soon we will see the basic Retail fundamentals too in place which are missing currently.
Gobind Pahwa is a Vice Chairman of Shopnineteen.com & a management expert from London School of Economics; Gobind’s primary experience has been gained from extensive business development and financial management besides building and managing an exports business of more than Rs. 30 crore annually within 5 years without any external borrowings. He has tremendous experience of over 30 years right from low cost sourcing across the globe to manage a huge manpower of exports business.
Join for the panel Discussion on Opportunities in Clothing, accessories & footwear Industry in ecommerce at Internet Retail Expo 2013