The Age of the Indian E-tailers

By Pawan Verma, Group CEO, KnowSys Ecom Private Limited

KnowSys Ecom Private Limited is a subsidiary of KnowSys Group and owns online portals like Shopuli among others. Based out of Mumbai, the company commenced its operation in the year 2007.

We are a fortunate generation as we are not only living in the age of many revolutions; we are also participating in shaping up the course of their development in one way or the other. The e-Commerce revolution is a case in point. This disruptive innovation, enabling the products and service providers to overcome the limitations of time & space and vend their products & services right inside the living rooms of their customers, has unsettled the traditional methods of marketing and is fueling the rapid growth of the sector across geographies in developed and developing economies around the world. The emergence of e-tailing as an off-shoot of e-Commerce is also transforming the retail market space with India being among the hot-beds of this experimentation.

The e-tailing Ecosystem
There are three basic factors critical to the growth of e-tailing in any economy - internet density, quality of internet penetration and the depth of internet usage. Fortunately, on all these three counts, the e-tailing ecosystem in India has been witnessing quantum jumps. The internet penetration which was just 50 million in 2008 grew to 120 million by the year 2012. In terms of the quality of internet connections, even though the number of broadband connections happens to be around 15 percent only, seen in terms of the number of users, it acquires significance. The browsing behavior of the Indian netizens has also been undergoing qualitative changes. While internet usage was mainly confined to mails and news initially, today, a sizeable population of Indians is using internet for diverse activities like, gaming, shopping, social media, internet banking and others.

Growth of e-tailing
Even though e-tailing accounts for just around 0.1 percent of the total retail business in India today, there are factors pointing to a very positive growth-chart for this sector :
1) The rapid evolution of the e-tailing ecosystem in India
2) The demographic advantage
. Young population with the median age of 26 years
. By 2020, 40 percent of Indians would have been born in the age of internet and mobile phones
3) Rapid urbanization leading to search for convenience impacting buying behavior

All these trends point to the fact that e-tailing is going to take a significant share in the total retail market in India and is likely to be a major growth driver in the economy. According to the white paper on e-tailing published by Technopak, Indian e-tailing is likely to grow from the current level of $ 0.6 billion to $ 76 billion by 2021.

Rising up to the Challenge
Looking at the attractive opportunity, the Indian e-tailers are rising up to the challenge. Right from attractive look and feel to providing ease of navigation, their websites are designed to generate maximum clicks to fill the customers' shopping carts. The urge to attract customers has led to the evolution of an entirely unique genre of marketing practices in the e-tailing space. Engaging the customers on the social media, persuasive content marketing, and maximizing eyeballs to the websites through search engine optimization (SEO) are some of the novel strategies adopted by the e-tailers today to attract and entice the customers.

The Pricing Power
The price advantage offered by e-tailers scores heavily over traditional retail and happens to be a major factor in the customers' decision-making process to shop online. Added to the irresistible pricing are the other sweeteners like free shipping, daily deals and discounts, attractive freebies and others. In their urge to push their products, online retailers are also offering the option to return the products if the customer doesn't like it for any reason whatsoever. The flexible payment options like Cash-on-Delivery are some of the other features that are making online shopping popular.

Delivery as the Differentiator
Ensuring an efficient supply chain management and prompt delivery to the customers remain the other critical challenges for e-tailers today. Even though the Indian e-tailers are far from Amazon's plan to use drones to deliver goods within thirty minutes, they have woken up to the challenge and are positioning prompt delivery as a service differentiator. Thus, we have Flipcart and Snapdeal offering same day delivery service while eBay India has come out with the "9 hour delivery" concept in select markets. With this kind of delivery assurance, e-tailers would also be able to cater to the last minute purchases done by customers, an area where traditional retailers have been enjoying a clear advantage.

From e-Commerce to m-Commerce
With the growing penetration, mobile phones services have come of age now. For a good number of users in the suburban and rural areas, mobiles happen to be the only device to access internet. The application of the 3G and 4G technologies is further going to make browsing and downloads through mobiles a more robust experience. No wonder, e-tailers are gearing up to ride on the wave of m-Commerce. Thus, while established players like Amazon India are investing a fortune to build a powerful mobile platform, even newer entrants like Shopuli.com are coming out with their customized mobile Apps to give the users a unique shopping experience. The location-based-features built in the mobile Apps would further enable online retailers to attract the customers through real-time personalized shopping deals and offers. Developing Apps in local languages is going to be yet another milestone in taking e-tailing to customers in the suburban and rural geographies.

Promoting Entrepreneurship
If the entrepreneurial skills of the Indians have been best evidenced in any sector, it is definitely e-tailing. With over 200 active sites operating in the sector today, it?s no wonder investors are eyeing this sector as the next growth-spot.

The path of the e-tailers, however, is not full of roses. As customers are getting smarter day-by-day, competition among the online retailers is growing fiercer. While the logistics challenges are daunting, practices like cash-on-delivery, "no-questions-asked return policies", and more are eating into the wafer-thin margins of the e-tailers. But the market has the potential and the e-tailers have the patience and the determination to make it big. They have tasted initial success as well. If the morning is bright, the day has got to be sunny.

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