2014 – An year of online SALEbration


2014 – An year of online SALEbration

It has been a great year – everyone rejoiced. And what a paradigm tectonic shift in buying behaviour – the I’ll-touch-feel-and-then-buy buyer boldly announced she would buy basis a visual snap of the merchandise. The year 2014 saw coming of age of the e-commerce sector. And all touched were on toes – be it the e-marketplace operators, logistics / supply-chain companies, vendors selling online or the customers. The sector also ensured an action-packed year in terms of unprecedented fund-raising by players like Flipkart, Amazon.in, Snapdeal, Jabong, Myntra, Bigbasket and Urban Ladder, among others. Exciting eventful year that – celebrations of sales.

In fact, this salebration bonhomie was so alluring a temptation, that even business veterans like Ratan N Tata and Azim Premji couldn’t resist jumping the bandwagon to be part of this e-commerce growth story. They picked up stakes in some of the entities, even if small lots. Ratan Tata, invested In Urban Ladder, Bluestone & Snapdeal, Premji in Myntra & Snapdeal, while Narayan Murthy announced that he would partner with Amazon India to launch a joint venture to create a new e-commerce entity for the Indian Market.

E-retail sees phenomenal growth

No fret the e-commerce industry in India lags far behind various developed and developing countries (share of ecommerce to total retail is approximately 1.5% vis-à-vis 5.8% in US) mainly on account of low internet penetration due to poor infrastructure. Even then the e-retailing market in India has enjoyed phenomenal growth in the last five years. The e-commerce ecosystem has now started to fall in place. Good pointers towards the same. The considerable rise in the number of internet users (30 million new users have been added since January 2014 alone), growing acceptability of online payments, favorable demographic profile (75% of internet users are aged between 15-34), limited geographical reach by brick & mortar model, increasing smart phone usage & declining data charges offer high market potential for e-retailing in India and have led to an ever-increasing number of “netizens.”

According to Nielsen’s global e-commerce report, the e-retailing market in India was an estimated Rs. 5,513 crore in FY13. However, e-retailing in India constitutes a miniscule 0.2% of the total retail market and a mere 2.3% of the organized retail in India. Today’s consumers, nevertheless, are increasingly pressurized due to paucity of time as well as lured by convenience and increased use of plastic money – all are leading towards online shopping growth.

The trend of online shopping is set to see greater heights in coming years, not just because of India’s rising internet population (projected at 302 million by end 2014, up 32% from a year ago), but also due to changes in the supporting ecosystem. Of the 278 million Internet users in October 2014, 177 million were from urban India, a number that would’ve touched 190 million by 2014 end, said to be 216 million by June, 2015. Alongside, in rural India, Internet users have risen 39% to reach 112 million by 2014 end, projected to be 138 million by June, 2015. Not much lag there.

Players have accordingly made intensive efforts to upgrade areas such as logistics and the payment infrastructure. Furthermore, the Indian consumer’s perception of online shopping has undergone a drastic change, and only for the good. The maturing of Indian consumer in acceptance for various payment approaches such as net banking and prepaid wallets has helped tremendously. It’s increasingly perceived as a safe option. However, of the total 200 million creditand debit card holders, just about 5% people transact online, indicating a huge untapped market.

Business booms for e-players

Flipkart’s eventful Big Billion Day just indicated that it sold Rs. 600 crore ($100 million) worth of goods within 10 hours of starting its sale. What a festive day that was! Snapdeal and Amazon also benefited from Flipkart’s aggressive advertising. Snapdeal indicated that it clocked Rs 1 crore a minute. If that rate had been sustained for 10 hours, Snapdeal would also have reached Rs 600 crore. Flipkart and Snapdeal have touched the Rs 6,000-crore revenue mark, and even Amazon has been growing robustly since it came to India 15 months ago. ‘Sale’bration indeed!

Business goes off line for physical retailers

The fact is that online discounts and sales have come to dictate pricing in India during last year festival seasons. While customers benefit from reduced pricing and increased convenience, the physical retailers are affected the most. The off-line retailers have clocked 30-40 % less sales than last year during the 2014 festival period.

Thus retailers stumbled as the traffic flew to e-retailing sites. Earlier in 2014, many brands had in fact taken steps to encourage people to buy products offline. Lenovo had warned buyers that Amazon, Flipkart and Snapdeal were not authorized resellers, while Nikon had made a blog post stating that Flipkart and Snapdeal were not their authorized partner or dealer. Times of flux – the only way out is Brands, online & offline retailers come together to make it a win-win situation for all.

Online SALEbration

Meanwhile it was literal SALEbration time for the online stores for inducing disruption in the Indian retail sector. Further, 2015 will see large scale growth in the Indian e-commerce sector with increased participation from people across the country. This industry will continue to drive more employment opportunities and contribute towards creating more entrepreneurs through the e-commerce marketplace model. Flipkart is hiring 20,000; Amazon 8,000.

Next, Mobile commerce (60% of net access mode) will play a crucial role of bridging the gap between sellers and customers. People from the most remote parts of the country will be able to shop online through their mobiles – ably backed by superior supply chain facilities and payment options. The year 2015 will be the deciding year for Indian e-commerce, which will see a rapid growth along with a dynamic shift in the Indian shopping behaviour. Freak out.

Gaurav Sood is a brand communication professional, brand educator & brand research scholar, with a two-decade long practice creating strong brands. 

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