“E-commerce (or electric commerce) refers to the buying and selling of goods and services via electronic channels, primarily the Internet. Online retail is decidedly convenient due to its 24-hour availability, global reach and generally efficient customer service” (http://www.mashable.com/). E-commerce is one of the sectors that have seen a rapid growth in previous years. If we talk especially about 2014, the growth of the sector has been unprecedented. If we want to name the major factor that has brought such development, we would name technology among top. All the adoptions that led to this development are definitely by the technology itself. It is known that increasing use of electronic devices and their easy accessibility is responsible for this change. Devices such as smart phones and tablets are in every educated hand. This is not limited to the urban areas only these devices are being used by the rural people as well. They are using the Internet regularly. They are active on social media as well. Most of the people using the Internet has their online profile. And this is possible with the access to the all because of the Internet. We use the Internet through broadband and 3G, 2G connections.
Many studies tell that online consumer base is increasing. Demography is also changing. People’s preferences are also changing. Their demand as a consumer is changing with the time. They are very active in selection. They are choosy. Consumer behavior is also changing.
The market has changed completely. We have seen different patterns and trends of market though this would be a very rigid to think about the barter system. From then the human civilization and their market has reached on touch keypad now. Such terms of highlights and the unprecedented growth resulted by indigenous players. We don’t even need to name them. They have become synonymous to e-commerce. First few most successful names are - Flipkart and Snapdeal.
According to an article, the companies attract huge investor interest. Because of this these companies are displaying great potential in the market. If we talk about some international giants, there are some big names such as Amazon and Alibaba. Though they are trying to compete with the indigenous players but they have not arrived at that level as the Flipkart has made its place in the Indian market. International players came with deep pockets and the patience to drive the Indian e-commerce market. This is common to know that they already have strong domain knowledge and great experience in international business practices. With their international experiences they have been gaining additional profits and orientations. Indian companies have realized this thing. Therefore, Indian companies are setting a goal to continue their orientation majorly on expanding their sellers and picking and using their own platforms. They are using innovative ideas on multiple consumer touching elements. They are also providing faster delivery services direct to home. These e-commerce companies are experimenting with different ways to attract customers and simultaneously increase online traffic.
Major Developments in Last Year
In this regard, Indian government’s ambitious Digital India program playing a very vital role. With this the modernization of India Post will also affect the e-commerce sector.
Digital India is an initiative to integrate the government departments and the people of India. It aims at ensuring that the government services are made available to citizens electronically by reducing paperwork. The initiative also includes plan to connect rural areas with high-speed Internet networks. Digital India has three core components. The project is slated for completion by 2019. The public-private partnership model is being adopted for this project. The Digital India project aims to offer a one-stop shop for government services that will have the mobile phone as the backbone of its delivery mechanism. The program is also giving a strong boost to the e-commerce market as bringing the Internet and broadband to remote corners of the country.
For India Post, the government is interested in developing its distribution channel. With this distribution channel other e-commerce related services as a major revenue model are also going ahead. A report tells that India Post transacted business is worth of 280 crore INR in the cash-on-delivery (CoD) segment. This is only for the firms such as Flipkart, Snapdeal and Amazon.
Both these developments will have significant impact on increasing the reach of e-commerce players to generally non-serviceable areas. Hence the expected growth is no more a vision only. India is leading towards it.
Another report says that India’s overall retail opportunity is substantial, and coupled with a demographic dividend. The major target in this segment is young population. India is the youngest country in the world. They are also raising standards of living. The upward mobile middle class and its rising Internet penetration is one of the factors that can bring smile on the faces of every interested business giant of this particular sector. Everywhere it is being said that strong growth in e-commerce sector is expected. From an investment perspective, the market is a primarily minority stake market, with maximum traction in early-stage deals. With such strong market prospects and equally upbeat investors, we look forward to many more e-commerce companies from India entering the coveted billion-dollar club.
Today, there are two major outlooks that suggest the advantages of e-commerce and they are: mobile marketing and re-marketing ads. As we see, today more and more people are consuming information on their mobiles. The time they spend on using their mobile phones and surfing the Internet is increasing as the people as they are becoming more dependent on these devices. Thus, the concept of mobile marketing came into being and it will get bigger. Seamless integration that will allow customers to click on an ad on the mobile and complete a transaction without any issues will usher in the next level of instant gratification.
We have also seen larger both e-commerce players starting official channels. They are also using social media platform such as Facebook for this. On mobile chat platforms like Line and WeChat to both share promotions and content and this is expected to grow as well.
A report emphasizes on this concept regarding e-commerce in India. It stresses that everyone jumped on the re-marketing bandwagon. This is because this space is going to see even a higher uptake in 2015. It puts more light on it and observes that when we visit a product on a website. It's going to follow you everywhere. This ability of the product and the brand to keep itself right in front of the customer is very effective.
It also gives an example of Facebook. It observes that Facebook is bringing its Atlas advertising platform into play. This is a concept in application that is only going to become much more effective. The reason is as it would enable a more accurate cross-device advertising. This will also help in tracking opportunity for advertisers. With one of the functions, Facebook's mobile reach and active user base, this will also lead to an increase in mobile conversions.
Meeker's 2015 Internet Trends suggest that 41% of India’s e-commerce sale is from Mobile.
What Giants Say About It?
“The rise of such digital activities and resulting data is the stimulating factor for formulating e-commerce strategies, thus affecting the business model and driving growth for e-commerce players in the Indian market”, - Divyan Gupta, Founder and CEO, Artanddecors.com
“Social Media has served as a good engagement medium for e-commerce industry. It has not been a significant revenue driver as compared to other channels such as search or digital ads”, - Mr Sachin Oswal, Co-founder, Infibeam.com & Member, ECAI.
“I guess it is apt to allow 100% FDI in e-commerce as this will ensure customers get a fair choice of best products across the world as well initiate healthy competition which will ensure that customers get the best rates and services in India. Ultimately all policy should be evaluated considering the customer in mind”, - Mr. Manish Kalra, MakemyTrip.com.
“E-commerce has been witnessing fairly strong top line growth and, hence, has attracted strategic and financial investor interest”, - Pramod Kumar, managing director and head of advisory at Barclays.
This phenomenon and its stage have been set for a while now. E-commerce organizations today continue to make an impact in terms of the digital shopping experience. As technology continues to grow rapidly, e-commerce players are adopting newer techniques to facilitate both sellers and buyers. The objective is always to sell and buy online more efficiently.
More recently, a flash sale has been introduced. Daily deals from various companies, e-commerce has brought forward technology and innovation in the retail sector. Nothing has surpassed the power of innovative e-commerce companies, which have proved to be as successful.
“The rise of such digital activities and resulting data is the stimulating factor for formulating e-commerce strategies, thus affecting the business model and driving growth for e-commerce players in the Indian market”, – Divyan Gupta, Founder and CEO, Artanddecors.com.
According to a news report, 2015 is going to witness an acceleration in the shift towards inbound techniques rather than outbound. The e-commerce industry and online shopping trends in India are set to witness greater heights in the coming years, not just owing to the increasing Internet population, but also due to the changing dynamics of the supporting ecosystem. There are some key trends. These trends will enhance branding and customer growth. If we name some, these are as follows:
- Content Marketing. Content marketing is a trend that is gaining prominence. The target is on producing original and informative content rather than generic content. A report highlights the example of Google Search engine. Google gives more importance around original and unique content. It ranks them higher in search results. Therefore, businesses will need to revisit their content strategy. Customers are starting to demand more detail when purchasing. Along with this great navigation and ease of paying will prefer brands that give them the knowledge of the product that they seek to acquire.
- Search Engine Optimization. Popularly known as a process, in SEO Search engines like Google continue their push to provide the most relevant content to the consumer. This is within their interest as well as it impacts online advertisement rates. For the marketer this will mean paying a very close attention to having great content that is relevant and is shared by their consumers -- a brand advocacy focus that has not been really cared for till now. With most brands trying to move away from the discount-led sales model to developing consumer loyalty, content and social signaling will play an important role in attracting more customers at a lower acquisition cost.
- Social Media Marketing. In present a majority of e-commerce brands are using Facebook to drive a bulk of their potential customers. Facebook is going to treat newsfeed pushes, marketers will have to start investing more time in other platforms while investing more money in Facebook itself to continue driving traffic that they were seeing before the changes.
- Pay for Exposure. This particular trend is likely to see a higher adoption by other social media platforms like Twitter, Instagram and Pinterest etc. As these platforms start monetizing their networks. For brands, it means that they won't be able to depend on just one/limited channel for traffic and will have to therefore diversify their networks.
Major Indian e-commerce giant Flipkart raised fund of $1-billion in July 2014. This was led by Tiger Global. According to a news report it was the 10th largest deal in 2014. Mergers and acquisitions (M&A) deal table tells, other large deals in e-commerce included the $700-million fund-raising by Flipkart in November. Other than Flipkart, Snapdeal got a $636-million investment. Other than this, Unitech IT Park SEZ got $563-million investment by Brookfield Asset Management. Canada Pension Plan Investment Board had invested $373-million in Kotak Mahindra Bank. The $4-billion Sun-Ranbaxy merger was the largest deal.
This report has attempted to look at the current outlook of the e-commerce landscape in India and industry concerns. With this it is also the interpretation of the industry’s key drivers and challenges. This report also suggests efforts which will be helping e-commerce companies accelerate and sustain growth.