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Guest Column: 2014, a year of online salebration: Gaurav Sood

Guest Column: 2014, a year of online salebration: Gaurav Sood

Author | Gaurav Sood | Monday, Jan 19,2015 8:56 AM

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Guest Column: 2014, a year of online salebration: Gaurav Sood

It has been a great year – everyone rejoiced. It witnessed a paradigm shift in the buying behaviour of consumers – the ‘I’ll touch, feel and then buy’ buyer announced that s/he would make a purchase on the basis of a snap of merchandise.

The year 2014 saw the coming of age for the e-commerce sector, which swept all – be it e-market operators, logistics/ supply chain companies, vendors selling online or customers. The sector also ensured an action-packed year, in terms of unprecedented fund-raising by online players such as Flipkart, Amazon.in, Snapdeal, Jabong, Myntra, Bigbasket and Urban Ladder, among others. Overall, 2014 marked the celebration of sales.

In fact, this ‘sale’bration bonhomie was so alluring that even business veterans like Ratan N Tata and Azim Premji could not resist jumping the bandwagon to be part of this e-commerce growth story. Tata invested in Urban Ladder, Bluestone and Snapdeal, while Premji in Myntra and Snapdeal. Infosys co-founder Narayan Murthy announced that he would partner with Amazon India to create a joint-venture 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 e-commerce to total retail is approximately 1.5 per cent vis-à-vis 5.8 per cent in the US) mainly on account of low internet penetration due to poor infrastructure. Even then, the e-retailing market in India has enjoyed a phenomenal growth in the past five years. The e-commerce ecosystem has finally started falling in place.

A considerable rise in the number of internet users (30 million new users have been added since January 2014), growing acceptability of online payment, favourable demographic profile (75 per cent of the internet users are aged between 15 and 34 years), limited geographical reach by brick and mortar model, increasing smartphone usage and declining data charges offer high market potential for e-retailing in India.

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

The online shopping trend is set to scale greater heights in coming years not just because of India’s rising internet population (projected at 302 million by 2014-end, up by 32 per cent from a year ago), but also due to changes in the supporting ecosystem. Of 278 million internet users in October 2014, 177 million were from urban India -- a number that would have touched 190 million by 2014-end and is projected at 216 million by June 2015. In rural India, the number of internet users rose by 39 per cent to 112 million by 2014-end and projected to be 138 million by June 2015.

Players have made intensive efforts to upgrade areas such as logistics and payment infrastructure. Further, the Indian consumers’ perception of online shopping has undergone a drastic change -- and only for the good. The maturing of consumers, in acceptance with various payment options such as net banking and prepaid wallets, has helped tremendously. It is increasingly being perceived as a safe option. However, of the 200 million credit/ debit cardholders, just 5 per cent transact online, indicating a huge untapped market.

Business booms for e-players

Flipkart's eventful Big Billion Day indicated that it sold goods worth Rs 600 crore ($100 million) 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. Amazon too has been growing robustly since it came to India 15 months ago. ‘Sale'bration indeed!

Business goes off line for physical retailers

Online discounts and sales dictated pricing in India during the last year festival seasons. While customers benefitted from reduced pricing and increased convenience, physical retailers were affected the most. Offline retailers clocked 30-40 per cent less sales than 2013 during last year’s festival season.

Retailers stumbled as the traffic diverted 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 authorised resellers, while Nikon had made a blog post, stating that Flipkart and Snapdeal were not their authorised partners or dealers.

Times of flux – the only way out is brands, online and offline retailers come together to make it a win-win situation for all.

New Year assures increased participation, new jobs

The year gone by offered a salebration time for online stores, inducing disruption in the Indian retail sector. The New Year will see a 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 e-commerce marketplace model. Flipkart is hiring 20,000 employees, while Amazon 8,000.

Mobiles to bridge buyer-seller gap

Mobile commerce (60 per cent of net access mode) will play a crucial role in bridging the gap between sellers and customers. People from the most remote parts of the country will be able to shop online with the help of their cellphones, which will have superior supply chain facilities and payment options. Moreover, 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.

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

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