With e-commerce portals becoming as all pervasive as the neighbourhood chai-stall, there is a greater focus on shopping as a personal, rather than a familial activity. Sales are also becoming the order of the day, rather than a once-in-a-blue moon occurrence, leading to further changes in buying patterns.
Online retailers have taken a page out of traditional retail’s playbook, and done one better. Discounting, which is being used more as a marketing tool, is in today’s scenario, an anytime affair. Add to this, convenience, the fact that there is no need to step out of your home to ‘go’ shopping, and of course a wider range of products (including exclusive launches) available in the online space and all of a sudden online shopping makes a whole lot of sense.
The numbers are starting to reflect this change. According to the PricewaterhouseCoopers (PwC) Total Retail 2015 report unveiled at the Retail Leadership Summit (RLS) 2015, organized by the Retail Association of India (RAI); nearly half the respondents polled said they shopped online. While price was their primary consideration, the allure of a larger product range, savings in terms of time, presence of user reviews, etc. also played a significant role in their online buying decision.
According to the report, the retail paradigm is being disrupted, which simply means that online operators are using and redefining offline selling strategies in such a manner that consumers are being forced to sit up and take notice. Passing on savings of economies of scale and low real estate costs to the end consumer, timely delivery, cash on delivery and easy exchanges are not simply SEO-centric keywords, but mantras that the online players live by.
Traditional brick and mortar stores, while not in any immediate danger of obsolescence are definitely sitting up and taking notice. Even though online retail still amounts to just 0.5% of the total retail game, online retailers have garnered an astounding $5.3 billion in sales. The fact of the matter though, is that the former’s innovative marketing, growing reach and aggressive expansion strategies have caught the fancy of investors from India and abroad.
Disruption & Playing To Customers’ Advantage
Everyone is aware of the tale of David versus Goliath, and given the current state of Indian retail, this analogy is rather apt. The Indian e-commerce industry though still in a nascent stage, it is pitted against an age-old, well oiled machine in terms of traditional retail. For it to first, survive and then thrive, something had to give. That something came in the form of disruption, and what’s more, that disruption worked in favour of the Indian consumer. Here is a quick look at the disruption caused by online retailers that have worked in the Indian consumers’ favour.
Price: Retail has truly entered a golden age, at least as far as the customer is concerned. While most e-commerce players have gone the route of playing the price card, the timing and innovation on sales has been one of the single largest determinants in the success and efficacy of the online shopping space in India.
No more is a sale associated with a festival or a ‘season’ per se, as Snapdeal, Flipkart, Amazon, Myntra, Jabong and others have illustrated. The mantra is an anytime sale, which engages customers and induces purchases. Flash sales at unexpected times has worked brilliantly for e-dotcoms and brick and mortar retailers are now coming to terms with the mounting challenge these online stores are mounting.
Exclusivity of Products: Creating demand for a product is a difficult proposition, especially in a space like mobile telephony, where innovation and standardisation go hand in hand. Ensuring exclusivity of products to one particular e-shop, and controlling the number of units made available for sale, is turning out to be a particularly sound strategy for e-commerce players. Snapdeal, Flipkart, Amazon and other players have used this strategy to great effect and have ensured that the products in question have become a desirable and coveted item for the consumer.
Greater Convenience To Shoppers: With same day delivery (at a nominal charge of course) being offered, that dress, or that phone a customer covets can be in their hands in a matter of hours. Nearly 69% of all polled respondents in the survey showed willingness to pay for same day delivery. This is as close as online shopping will ever get to an in-store purchase, and instant gratification being the mantra of this generation, whoever offers greater convenience to the end consumer will end up benefiting hugely.
Mobile And Evolving Technologies: With mobile phone penetration growing at 150%, year on year, internet penetration growing through this, and the reach that awaits, it is safe to say that e-retail has only just begun to skim the surface of possibilities. The launch of exclusive site based apps, offering convenience, the entire site catalogue at one’s fingertips and exclusive in-app discounts has further fuelled the growth of the industry.
Evolving Nature Of The Retail Business: The business of retail in India is undergoing a sea change. With e-tailers disrupting the existing order, brick and mortar shops are finding it difficult to maintain their hegemony. Then there is omni-channel marketing, where traditional retail brick and mortar stores are also looking at getting online and on mobile. What’s more, the nature of the business itself is fickle, and price disruption cannot last forever. Simple economics dictates that while the valuations of online players may have skyrocketed, so has the pressure on them to start showing profits. And in business, discounting does not always lead to said profit. Online brands therefore are now trying to develop their brand propositions and turn themselves into quality hubs or centres of exclusivity, rather than simply discount havens.
What Consumers Want?
The golden age of the consumer is well underway, and with everything the retail industry does geared towards benefiting the consumer, it begs the question, “What does a spoilt for choice consumer truly want?” According to the PwC Total Retail 2015 report, the consumer is still undecided. Yet standing at the crossroads, it seems like he is going to take his time to decide what is it that he wants. In the interim, the following customer wish lists are testament to the bright future in store for e-retail:
- Better designed websites, that are easier to use and mobile friendly
- A wider range of products available online
- Easier return and exchange facilities
Everyone, including the consumers realises that discounting cannot last forever, the clearest indication that the consumer is ready for the next phase of more structured, thought out promotions is evident from the fact that the insights thrown up are from a more qualitative, experiential perspective, as against a purely price-oriented one.
What is evident is that consumers are drawn in by the lure of discounts, offers, promotions and the like, but remain loyal through the overall brand experience. However, considering the sheer number of e-commerce portals, vying for the same customer, consumer loyalty cannot be taken for granted. It is therefore time that e-tailers worked on improved customer relations, customer satisfaction and delight. Along with, easier returns, a courteous and efficient backend and constantly evolving products in terms of value-adds, advice (on more sophisticated products), content and of course better service. After all, one positive experience can generate astonishing goodwill. And word of mouth awareness is something no amount of marketing budgets can purchase!
The Future’s Bright, If Played Right!
The evolving nature of India’s retail market, in addition to the ever increasing penetration of mobile and internet on mobile, is bringing to light a whole new market across geographies in the country. Brick and mortar stores too are realising the importance of an online presence and are in the process of shoring up their digital footprint. With more and more Indians willing to transact online, the online space is set for a good season, with growth numbers to be seen in three figures. The best part though is the tremendous growth potential. For the future to be profitable however, the following steps will be vital:
Using Big Data Well: Understanding the customer mindset and tailoring offers and content relevant to the customer is an excellent way of ensuring that consumers engage with the brand. In this effort, email-marketing, SMS, WhatsApp, social media and other avenues need to be tapped.
Omni-channel marketing: Just as brick and mortar stores are seeking to get into the online space, the time is also right for online stores to make their presence felt in the offline space. Investing in shop-in-shop, kiosks and other innovative retail formats will enable online retailers to reach out to a wider audience, and enable and empower consumers to explore the online space as well.
Mutually Beneficial Tie-Ups: The relationship between online and offline retail needs to be a symbiotic one, based on mutual benefit and the exploration of newer markets and opportunities. With mobile penetration and internet consumption on the increase, the number of territories, hitherto unexplored has also increased exponentially. This is true especially of Tier II and III cities, making it difficult, if not impossible sometimes for online players (or sometimes even offline players) to reach out to those consumers.. In such a situation, the best bet is to partner with one another in a way that enables the opening up of a new market and exposes both partners to newer (and in many instances, more profitable) audiences.
The future of Indian retail is bright. The Indian market is expanding at a mind-boggling rate and opportunities abound for both traditional and new age retailers. It is a matter mainly of catering to the customers’ needs and in turn converting them into brand loyalists.
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