India has witnessed a near flood of online retail stores in the past two years. and shoppers in India have responded well. But with good news comes the bad – the clutter is growing. What are the portals doing to win in the fight to kill offline retailers and grab attention in a growing online buyer market? By Anirudh Raheja
Rohit Mathur, one of the few thousands of teenage college-goers in the small tier III town of Bikaner (Rajasthan), in the past three months, he has ordered for himself an Angry Birds labelled tee from Myntra.com, a pair of Puma floaters from Jabong.com, and a pair of Red Tape boots from Bestylish.com. Mathur today symbolises the kind of equality that online retailing has brought about amongst shoppers in large cities and small towns; what one living in a metro city like Delhi can buy, he too can!
The internet revolution has done much to lead the buyer crowd to the water. Actually, if you judge by the manner in which penetration in the country is growing (41 per cent CAGR as per Assocham and comScore), there is much to happen still. As the Internet and Mobile Association of India (IAMAI) and IMRB, the current number of Internet users in India stands at 150 million (divided in a 2:1 ratio between urban and rural India). This number as per McKinsey & Co is set to touch anywhere between 330 to 370 millon by 2015, giving 30 per cent of Indians access to online web portals that could guarantee huge cash flows for these portals. So how big are the potential revenues? As per McKinsey, this growth in Internet will boost India's GDP by over $ 70 billion over the next three years (to $100 billion by 2015). Of this pie, $34 billion will go to Internet portals by 2015 (in 2012, these portals earned a topline of $14 billion).
Though a couple of years back when online shopping was introduced to the nation, initial concerns were voiced over trust and security factors involved in the purchase process (related to quality of products and financial transactions), much of these concerns have disappeared today. This is evident from not just the fact that despite a cash-on-delivery option by portals, most shoppers use their debit cards (58 per cent; as per Assocham), but also from the manner in which visitor count to these online portals have risen in recent months. In October last, of the 67.86 million unique internet visitors, 60.2 per cent spent time surfing online retail portals (source: comScore). These are definitely encouraging signs for the online retail market in India, which still accounts for only over one per cent of revenues that the overall organised retail market makes. Brick and mortar still rules. But the equation is changing fast.
As much a party as Amazon, Flipkart, Jabong, Myntra, Indiatimes shopping, Snapdeal, Homeshop18 (the largest in terms of unique visitors since May last year) and others of their clan are having, there is a growing storm that brings with it a sign of trouble. Reality is, portals today are finding it hard to differentiate themselves.
Some choose to claim superiority based on volume – the count of brands in their inventories. Others have a price war going – giving the best at the least, a strategy that renowned strategy guru Michael Porter would not recommend.
Thankfully, a handful of the brains behind these portals do appreciate that promise on volumes (brand count) or prices do no good in the long run. It is the excitement that a particular portal can deliver in the form of consumer experience that really matters – whether it be to promote good word-of-mouth or to pump-up toplines. Rashmi Berry, CMO, Homeshop18.com agrees: "E-commerce is about user experience and hence referral. One needs to understand that a lot of growth is coming through an engaging experience and hence word of mouth." Then there are companies like Jabong that not only offer the quickest delivery time (it became the first one to promise delivery on the same day in H2, 2012) but are also enhancing experience of buyers, by offering personalised services with their 'Stylist on Call' for all round support to customers for making purchase decisions.
Rohit Mathur, one of the few thousands of teenage college-goers in the small tier III town of Bikaner (Rajasthan), in the past three months, he has ordered for himself an Angry Birds labelled tee from Myntra.com, a pair of Puma floaters from Jabong.com, and a pair of Red Tape boots from Bestylish.com. Mathur today symbolises the kind of equality that online retailing has brought about amongst shoppers in large cities and small towns; what one living in a metro city like Delhi can buy, he too can!
The internet revolution has done much to lead the buyer crowd to the water. Actually, if you judge by the manner in which penetration in the country is growing (41 per cent CAGR as per Assocham and comScore), there is much to happen still. As the Internet and Mobile Association of India (IAMAI) and IMRB, the current number of Internet users in India stands at 150 million (divided in a 2:1 ratio between urban and rural India). This number as per McKinsey & Co is set to touch anywhere between 330 to 370 millon by 2015, giving 30 per cent of Indians access to online web portals that could guarantee huge cash flows for these portals. So how big are the potential revenues? As per McKinsey, this growth in Internet will boost India's GDP by over $ 70 billion over the next three years (to $100 billion by 2015). Of this pie, $34 billion will go to Internet portals by 2015 (in 2012, these portals earned a topline of $14 billion).
Though a couple of years back when online shopping was introduced to the nation, initial concerns were voiced over trust and security factors involved in the purchase process (related to quality of products and financial transactions), much of these concerns have disappeared today. This is evident from not just the fact that despite a cash-on-delivery option by portals, most shoppers use their debit cards (58 per cent; as per Assocham), but also from the manner in which visitor count to these online portals have risen in recent months. In October last, of the 67.86 million unique internet visitors, 60.2 per cent spent time surfing online retail portals (source: comScore). These are definitely encouraging signs for the online retail market in India, which still accounts for only over one per cent of revenues that the overall organised retail market makes. Brick and mortar still rules. But the equation is changing fast.
As much a party as Amazon, Flipkart, Jabong, Myntra, Indiatimes shopping, Snapdeal, Homeshop18 (the largest in terms of unique visitors since May last year) and others of their clan are having, there is a growing storm that brings with it a sign of trouble. Reality is, portals today are finding it hard to differentiate themselves.
Some choose to claim superiority based on volume – the count of brands in their inventories. Others have a price war going – giving the best at the least, a strategy that renowned strategy guru Michael Porter would not recommend.
Thankfully, a handful of the brains behind these portals do appreciate that promise on volumes (brand count) or prices do no good in the long run. It is the excitement that a particular portal can deliver in the form of consumer experience that really matters – whether it be to promote good word-of-mouth or to pump-up toplines. Rashmi Berry, CMO, Homeshop18.com agrees: "E-commerce is about user experience and hence referral. One needs to understand that a lot of growth is coming through an engaging experience and hence word of mouth." Then there are companies like Jabong that not only offer the quickest delivery time (it became the first one to promise delivery on the same day in H2, 2012) but are also enhancing experience of buyers, by offering personalised services with their 'Stylist on Call' for all round support to customers for making purchase decisions.
For More IIPM Info, Visit below mentioned IIPM articles
Professor Arindam Chaudhuri – A Man For The Society….
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
| ExecutiveMBA |
No comments:
Post a Comment