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E-tail: Go Carting On The Online Track
Discount offers combined with consumers’ enthusiasm to shop online is boosting India’s e-commerce industry
Photo Credit : Shutterstock
Four years ago, the e-commerce landscape in India was primarily about selling products in a few categories like electronics to predominantly urban shoppers. On 5 June 2013, online retailer Amazon launched its site in India and started serving customers few million books and some movies offered by around 100 sellers, shipping to 10 cities. “These were small beginnings but we had a bold vision – to transform how India buys and sells,” says Manish Tiwary, VP, Category Management, Amazon India. “Remaining strategically patient and tactically impatient in pursuing this vision, we have been investing in infrastructure, technology and India-specific innovations to improve our core customer experience inputs of selection, value, and convenience,” adds Tiwary.
Hence, this year too, Amazon India has continued to see tremendous momentum with an overall growth at about 85 per cent in Q1 and 88 per cent in Q2 in 2017. “We are seeing growth not only from increased reach and customer penetration, but also from increased purchase frequency from existing customers driven by better experience. Infrastructure investment has brought more sellers and customers from tier 2, 3 and rural geographies,” says Tiwary, whose recently concluded sale saw maximum participation across different categories.
Unyielding debates on low turnout due to GST impact on the e-commerce industry or demonetisation that pushed consumers towards making digital payments have not stopped the cash registers ringing. The festive season has continued to be pocket-friendly as e-tailers such as Myntra, Amazon and Pepperfry continue to offer discounts, marketing strategies and activities to lure consumers.
Suchi Mukherjee, Founder & CEO, LimeRoad, explains how the slowdown in the industry has been triggered by the fact that players who earlier relied solely on self-funded discounting to grow, have reduced the level of discounting and the focus has shifted to profitability. “We have focused on discovery more than discounts and that’s why we outperformed the industry growth rates for 10 consecutive quarters,” says Mukherjee. “Post demonetisation, when online business recorded a 30-plus per cent decline in sales, our sales were flat relative to October 2016 figures and continued to grow in December 2016,” she says. Hence by offering new styles every 30 seconds, the brand has been able to engage the consumer with newness in categories, rather than offering discounts.
Ananth Narayanan, CEO, Myntra and Jabong, feels the GST impact was quite significant and methodical in July. “Post GST, we had two months to make a good start to the festive season. We were festive-ready by August and with Durga Pooja we could roll out a range of offers to meet their demands and woo customers across sectors.”
Big ticket heavy items like furniture brands have found many takers this festive season. For instance, Pepperfry’s bouquet of new services like rentals, new marketing campaign ‘Happy Diwali Sale’ and sofa trials for discerning consumers, has found many takers.
There is high degree of seasonality in the sales that has been seen in the furniture market: for example, H2:H1 (second half:first half of the year) sales is 2:1 and within H2 the Diwali shopping month garners almost a third of the sales. “Furniture purchases are similar to shopping for consumer durables where a sizeable amount of sale concentrated around Diwali season,” says Mihir Kulkarni, Head, Brand and Retention Marketing, Pepperfry, who sees an upswing in the number of consumers visiting and buying on the site, targeting high growth this year.
Pepperfry has doubled its efforts to step jump consumer engagement through various channels and understand the pulse of changing consumer needs by offering a convenient and economical solution that will fuel the new future economy. “The marketing campaign has a total outlay of Rs 15 crore and will be promoted across all mediums in key cities. We already have a high traffic share of 60 per cent + in the online home and furniture segment and our efforts will help us to jump our consumer engagement,” says Kulkarni.
India’s e-commerce market is expected to reach $50billion-55 billion by 2021 from the current $6 billion-8 billion, according to a recent report by Retailers Association of India and Boston Consulting Group. The e-commerce penetration would be maximum in sectors such as consumer electronics, apparel, homeware and furniture, luxury, health, FMCG and food and grocery. For instance, Narayanan feels that the customers demand has been changing across categories, “From an ethnic wear, it has now changed to western and semi-casual.” Amazon’s Udaan points get unprecedented footfalls during the festive season. Udaan footprint this year has expanded three times to 6,000+ stores in 21 States. “More new customers in newer towns and cities experienced Amazon shopping with 85 per cent new customer acquisition in tier 2 and 3 cities across categories,” says Tiwary.
A recent report by industry body Assocham says that online sales may surpass Rs 30,000 crore in festive month. “There has been a five-fold increase in ordering through e-commerce as compared to last year,” says the report. Now that’s music for the e-commerce players.