Challenges In E-commerce Sector For SMEs
Let us have a look at some of them and how they can be resolved effectively
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India is going through interesting times today. It has recently overtaken the GDPs of France and the UK, only to emerge as the 5th largest economy across the globe. Well, this development has surely come riding on the back of rapid digitization – which has unlocked new avenues across all walks of life in India. For instance, the eCommerce industry of India is already a force to reckon with having about $50 billion[AV1] of market size. This figure is further expected to grow to $188 billion[AV2] by 2025.
The reason behind the eCommerce sector’s enormous success is attributed to the fact that it comes across as the fastest and most effective for retail purchases. It extends a win-win situation to everyone including both customers and businesses. However, SMEs are currently facing a number of challenges in this rapidly rising market segment. Let us have a look at some of them and how they can be resolved effectively:
In the world of closed marketplace eCommerce (such as Amazon, Flipkart, etc.), it becomes challenging for Small and Medium Businesses (SMBs) to build a solid brand identity. For instance, in the case of Amazon, sellers work hard to boost the sale of their product and consequently, this notable eCommerce giant takes all the credit for every successful sale. Although the product gets sold because of its quality, Unique Selling Point and reviews on the platform.
Vision 2020: eCommerce brands can overcome this challenge by decreasing their dependence on third-party eCommerce platforms like Amazon and Flipkart and selling D2C independently. This can be through their own website or their business profiles on social media platforms such as Facebook, Instagram, etc. It will be a great way to re-market products. They can take the help of tech-enabled third-party logistics providers like Shiprocket, which empowers SMBs to create their own branded website, list unlimited products for free and commence social selling operations. Similarly, to solidify the brand value, additional features such as branded tracking page, free SMS & Email notifications, COD orders and returns, etc. can be availed in tandem with simultaneous ongoing operations on large eCommerce platforms.
Returns and NDR
Non-Delivery (NDR) and Return to Origin (RTO) are real and problematic aspects of eCommerce operations for companies. Non-delivery of a shipment mostly happens when the buyer is not present at the mentioned address, or perhaps doesn’t have the cash for his/her purchase. At the same time, RTO mostly happens in the case of Cash on Delivery orders. Today, around 70% of the ECommerce transactions in India are COD. Hence, it is directly increasing the number of RTO orders for eCommerce vendors. Both of these situations are not profitable for the seller as they result in a cash-flow-related crunch, damage or loss of a product, an incremental cost of last-mile delivery, and so on.
Vision 2020: eCommerce companies will have to get on board the third-party logistics provider bandwagon. For example, Shiprocket empowers its sellers with 3 re-attempts via automated seller panel if their shipment is filed as undelivered. This approach directly reduces the NDR rates. Also, the seller gets an additional free feature called, Activate Buyer Flow, which is an IVR-based calling feature meant for customers. In it, a person can mention delivery failure reasons such as “Buyer not contactable” and “Customer refused delivery”.
Similarly, for RTO, the seller is provided with a real-time tracking page so that they can keep an account of their shipment whenever they want to. A CORE rating is also provided that recommends the suitable courier partner for a particular shipment. Regular shipment tracking and quick grievance resolution with the customer support team helps the sellers to take timely action when an RTO situation occurs. The more automated logistical infrastructure the eCommerce company has, the more they will be able to overcome the challenges of NDR and RTO in 2020.
With the introduction of 1-day, 2-day deliveries by deep-pocketed eCommerce players, small and medium ones are also expected to offer a similar ETA (Estimated Time of Arrival) in the market. A similar expectation comes in terms of delivery experience, which is quite difficult for SMBs to drive. Also, with the induction of hyperlocal delivery companies like Dunzo, Swiggy, Zomato etc. (that promise 30-minutes delivery for all kinds of products), the pressure to excel has intensified.
Another challenge in Tier 3 and 4 cities is that there is a huge infrastructural gap across these regions, which keeps the eCommerce services out of bounds for people living there. Most of the time, due to lower order volume and high cost of last-mile deliveries, small and medium eCommerce players refuse to add these remote PIN codes to their databases.
Vision 2020: In 2020, partnering with third-party logistics to make last-mile deliveries happen efficiently will be the norm. It will help sellers to reduce their cost of last-mile deliveries using end-to-end automation and proper route planning. The ability to track shipments in real-time and IVR calling is known to drive end-customer satisfaction vis-à-vis last-mile deliveries. This process helps the seller to reduce OpEx and hence, maximize profits.
eCommerce players can also overcome the challenge of Tier 3 and 4 cities by bringing the inventory closer to the customers. They can create fulfilment centres across strategic locations, wherein distant customers can come and collect their goods. Such points can even be kiraana stores or small shops in the locality which can store products and enable collection as soon as the order gets placed. The idea is to bring the inventory as closer to the customer as possible.
As India passes through interesting crossroads and realizes superior growth, it is imperative to resolve these SME-centric issues. Only this will ensure that all stakeholders reap the benefits of our burgeoning eCommerce industry. After all, the best is yet to come!
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.