Going by short medium term trends, the Indian e-commerce wagon gathering speed seems to be the case and that too on an optimistic note. However, this may not remain the case in the long run if certain changes in terms of restructuring are not carried out by leading e-commerce players in India.
There is also the apparent need of re-positioning some e-marketplaces in terms of categories. since their general positioning of ‘everything to everyone’ may not work for too long. In simple terms e-commerce players need proper segmentation.
The saving grace in the sluggish growth that has been 2016, has been the festive season, which registered an all-time high growth in the financial year reflecting a surge in discretionary spending after several quarters of dull demand for both online and offline retail channels.
Then there is the fact that the number of consumers who purchase online is expected to cross 100 million by 2017-end with retail market likely jumping 65 per cent on year in 2018, according to an Assocham study recently released.
The study also hints that the recent demonetization and an emphasis on cashless transactions by focusing on money wallet transactions and apps launched by the Government – eg: BHIM – may leverage growth exponentially by creating opportunities for the Indian e-commerce sector. Keeping all this in mind, by the end of 2018, Indian e-retail segment is expected to touch $17.52 billion.
It is imperative to mention that this online surge is also happening simultaneously with growth in the number of brick-and-mortar stores in the organized sector showing resurgent sales.
Future Group, Lifestyle, Gap, Arrow, Puma reported a 9-20 per cent growth in same store sales over the year-ago period, while top consumer electronic brands including Samsung, LG, Panasonic and Videocon said sales grew 30-35 per cent in brick-and mortar outlets.
The growth has also not come only from metros but also from Tier II & III towns. An increase in discretionary spending has witnessed a major upsurge in appliances and white goods sales and it is expected that the so far sluggish FMCG sector may see some boost in the last quarter of this financial year.
Another important trend is mobile commerce or shopping via the smartphone. In 2017, m-commerce will become more important with companies shifting their core business to apps.
Smartphones already account for 30-35 per cent of e-commerce sales, and this share is estimated to reach 45-50 per cent by 2017. With almost 40 lakh smartphones and 80 lakh feature-based phones in India, most online shopping traffic will likely emerge from mobile and a majority of these shoppers will be first time customers.
Also, banking apps – which are supported by feature-based phones – are now enabling consumers to buy from new locations, not simply from metro cities.
Will this trend continue in the long run? Perhaps not, if major players like Flipkart, Amazon and Snapdeal do not have profitability ratios that they can be proud of. Too much consolidation may not hold well for the future.
Innovative logistics strategies for e-commerce in India will pave the way for this growth and survival in future, with many startups coming up in the space, and investments flowing into them.
Online marketplaces such as Amazon, Flipkart, Snapdeal, and Paytm have already shown a lot of improvements through innovative strategies in logistics and supply chain management.
Finely segregated Customer Segmentation hybrid channels may also define the future of online and e-commerce companies in India.