Although online retail currently contributes only 3 per cent to total retail volume in India, the figure is quickly increasing as last year online retail registered a mammoth growth of 35 per cent. Although organised retail like Future group’s Big Bazaar, Tata’s Croma is able to survive and give competition to the online business with their high cash burning capacity and strategic move; the fact of the matter is that organised retail accounts for only 10 per cent of the retail sector. The rest, a massive 90 per cent of the retail sector is still unorganised and is suffering because of the rapid technological advancements and eCommerce penetration.
The various developments that are taking place in the online retail sector can be understood from the following angles:
First, the high smart-phone penetration is impacting the consumer’s behaviour in the big way. At Zepo, we have experienced that close to 50 per cent of the traffic on the platform is coming from mobile devices. Mobile technology is quickly gaining relevance and the rat race between marketplaces to increase their app installs among customer base is a reflection of the same trend.
Secondly, there is a monopoly of big players in the eCommerce space. Without an iota of doubt, poster boys of eCommerce are killing the interest of local businesses. Evidently, the top three players of eCommerce handle more than 50 per cent of the entire traffic. These players are spending millions for acquisition and retention of customers. With their cut throat pricing, mega assortments and COD, they are doing the same to SMBs. . .what Big Bazaar did to local Kiranas. . .or what Barnes and Noble did to local book sellers.
The massive technological development and growth of marketplaces is changing consumer behaviour and disrupting the retail sector in the big way, gone are the days when shopping essentially meant going to the shop and making a purchase. Now, the shop is coming to your phone, tablet, PC, anywhere - wherever and whenever you like to shop, without once fearing for the lack of choices. However, that is not to say that SMBs are crippled on the face of adversities. The easiest and best way in which the SMBs can tackle this is by participation and not by isolating themselves from the changes and continuing with the traditional system. They can take advantage of this trend by implementing an Omni-channel strategy. Further, while big players, as stated, have the low price, COD, large assortments to their advantage, they cannot compete with SMBs with their ability to give their customers the touch-and-feel facility.
A significant instance of the benefit of Omni-channel strategy is that one of our clients has been selling across all the portals: on all the relevant marketplaces, on social media and her own mobile responsive web-store. So, although her business has to lose some cash in the form of overhead charges to the marketplaces, it has brought down the price while selling on its own store, thereby creating a win-win situation for both itself and the customers.
SMBs cannot stay aloof from the ongoing developments. They have to rather focus on the strategy to up-sell and reach out to wider audience through marketplaces. Investing in mobile technology is an expensive affair, however with the availability of several enterprise class SaaS solutions available, SMBs can too capitalise the eCommerce technology at reasonable rates.
So essentially, gone are the silos methods of retailing. The meaning of shopping has fundamentally changed today and SMBs have to align accordingly and make themselves present where their customers are.
By Nitin Purswani, Founder, Zepo
Author brief: Nitin is a commerce graduate from H R College of Commerce. He comes from a modest business background and ventured into entrepreneurship right after his graduation. He started as a printed tees manufacturer and although the business fared good it couldn’t scale forcing him to shut. He later started an internet company called bijness.in which doomed way sooner than it was even born. Zepo is his third attempt at entrepreneurship.