Why eRetailers need to transit from a discount-driven to a product-driven ecosystem

Playing on discount will keep the industry in lull and every company will end up burning huge cash year after year.
Indian eCommerce Industry

Indian eCommerce industry is worth about USD 24 billion now which is a meteoric rise in 7 years from USD 3.8 billion in 2009.

India has an internet user base of about 375 million and despite being the second largest userbase in world, only behind China (650 million, 48 per cent of population), the penetration of eCommerce is low compared to markets like the United States or France, but is growing at an unprecedented rate, adding around 6 million new entrants every month. With this increasing internet user base, India's eCommerce market is likely to touch USD 38 billion mark in 2016, a massive jump over USD 23 billion in 2015. On the other hand, m-commerce is growing rapidly as a stable and secure supplement to eCommerce industry.

Being in this industry for long, I have seen that one of the biggest factors which lower the profitability of the eCommerce firm is that they have done nothing to stop this indutry from becoming discount driven which actually hurts the seller and these firms too. They should work on making this product driven industry rather than discount driven. Many things can be done from their end since they are the one who are dealing with the end customers, like providing them future trend analysis in advance, working on curation of the products, providing sellers with the analysis basis on their products and its performance. Such kind of close monitoring will not only help in increasing volumes but will also help in lowering down the return percentages which also is a factor that hurts pockets of such firms.

There are many marketplaces that are operating only on fashion category such as Jabong, Myntra, Limeroad, etc., name me one category which has been able to run successfully a complete marketplace on its own head. According to many studies, every 3rd search on Google is related to fashion, so there is no doubt that this is one of the fastest growing sectors in Indian online market. Even marketplaces which sell various categories including fashion apparels, their advertisements are majorly focused on fashion. Online market in India is driven by discounts, offers and heavy promotions. From sellers point of view, it becomes important that they take full advantage of these promotions with active involvement and being regularly updated both presence and fashion wise, so that when an end consumer reaches these platforms, they are present their at the right time with right kind of products.

Online apparel is one of the most popular verticals, which along with computers and consumer electronics make up 42 per cent of the total retail eCommerce sales. Some established brands like Arvind are now creating clothing lines just for the eCommerce markets. Foreseeing the growth, investor circle is very positive on putting their investments in this category. Apart from big VC firms, there are many small NBFCs and investment firms like Pinnacle Group, Capital Float, etc., who assist small apparel e-retailers with funds based on their product performance. Their customised financing services suits eCommerce environment and helps merchant and e-retailer in achieving the desired volumes. These kinds of easy loans helps eRetailers grow their business. They can get fund in hands in almost no time to invest on growth (eg. expand production capacity or to pay for raw materials on time, etc.).

Latest technological innovations in the Indian eCommerce industry like ‘Big data technology’ to solve sizing issues and create virtual fitting rooms, ‘Supply chain optimisation’ using technology by seamless integration of various systems and ‘Technology to perform predictive analysis’ while designing new collection has changed the face of the market.

Betting on these above mentioned facts and findings, Indian eRetailers should focus more on providing consumers a seamless shopping experience. Playing on discount will keep the industry in lull and every company will end up burning huge cash year after year. Today Indian consumers are well aware and exposed to international lifestyle trends. With rising disposable income and ease of digitisation, a customer doesn’t mind paying a little extra, despite if they get quality products and a joyful online shopping experience. Today’s fast running life has made it possible for consumers to take out time and go to a physical store for all of their big and small shopping needs. eRetailers of the country have got a golden chance to tap upon the same and make eCommerce the mainstream option. 

Authored By: Neeraj Choudhary, Co- Founder, eShopbox

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