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eRetail Innovation In India: A steep Climb, Two Steps At A Time

With a rapidly expanding market and a young consumer base, India is the perfect laboratory for experimentation

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India has been behind the curve in matters of technology and innovation for as long as we can remember. However, we are catching up at an accelerating pace. Two main phenomena are enabling this change - Globalisation and the Internet. Indian entrepreneurs can now intimately study the evolution of their industry in countries like USA and China. Along with this, the internet places the industries of different countries, both developed and nascent, on an even keel. Both have equal potential of using the internet to evolve their businesses. With this levelling, Indian business are evolving within years to reach a stage that took businesses in other countries decades in the absence of the internet.

eRetail in urban India is an apt example of this. In the United States, decades of mail order catalogues and home shopping via TV channels facilitated the shift from traditional to online retail. Back home in India, we largely bypassed this phase, perhaps with the exception from the cult classic Telebrands (remember them?). Even within eCommerce, we have transitioned much faster to mobile commerce - 50-60% of transactions of major eRetailers in 2014 were via mobile devices, as opposed to under 5% in 2013.

With a rapidly expanding market and a young consumer base, India is the perfect laboratory for experimentation. It is conceivable that, difference of scale notwithstanding, Indian eRetail will bridge the technology gap completely in the next 5-10 years and possibly emerge as the world leader in eRetail innovation. We believe three innovations will shape the future of online retail in India.

1. Omni-Channel Retail

There is a reason why India is considered the most exciting region for retail growth - 90% of retail in India is still done in the unorganized sector. There is ample scope for both competing eCommerce firms and brick & mortar retailers to expand rapidly without needing to undermine each other.

Pure-play eRetailers have, till now, been far more successful than hypermarket chains in their eRetail pursuits. It is mainly due to deep discounts and sales by pure-play eRetailers. It gives them a significant price advantage, at least in the short-term. A venture capital fuelled gambit for capturing market share, this strategy is likely to go down in intensity in the coming years, when the shift to profitability cannot be delayed any further.

Brick-and-mortar hypermarket chains, though currently fledgling online, have reason to be optimistic. They have an established network of stores and warehouses, possibly wider and better located than their eRetail counterparts, especially in major residential areas. Brand value and consumer trust is also much higher than eCommerce. By applying good omni-channel strategies, they can harness this network and build large-scale and profitable eRetail practices.

Big Bazaar Direct and My247Market are two prime examples of such successful omni-channel strategies. My247Market is a joint venture of Tata-owned Star Bazaar and British retail giant Tesco. Iksula built their online portal that integrates with their in-store ERPs, providing real-time inventory status to stores. We also devised a hyperlocal delivery mechanism, which handles delivery slot allocation and fulfillment at the store level and facilitates same-day delivery. Big Bazaar Direct (BBD) came up with an initiative to reach out to semi-urban and rural consumers who are not internet users, by enabling local kirana stores to become franchisees and sell on the behalf of Big Bazaar using tablets loaded with the BBD app. Iksula built this custom eCommerce app, which was highly optimized and capable of working offline. We also built a mobile wallet mechanism, using which franchisees could pay Big Bazaar, while receiving cash payments from the consumers.

2. Content-centric and social fashion experiences
The default tendency of retailers and brands, is to sell online in the same way they sell in physical stores. Discounts, combos and limited-time sales form the crux of their selling strategy. The strategies do not provide any differentiation or advantage, but reduces the value of the business practice to mere pricing game. However, the brands and retailers need to realize that eRetail is a lot different. Easy access to competitors, availability of reviews and lack of physical touch put a product, shown on a page, in a rather tough race for success. Moreover, as a buyer is not physically present in front of different products, at a single point of time, the possibility of impulse buying gets heavily curtailed.

Strategic advantage can only be gained by building an experience, which fashion eRetailers are starting to recognize. Gurgaon-based Koovs has incorporated elements of fashion magazines, with editor's picks, curated brand edits, celebrity fashion reviews and style stories. The #koovsxyou Instagram campaign keeps buyers engaged with the brand, and offers a perspective on how their outfits look on people. Myntra, too, has added social elements to its app with social profiles, collections and follow options. FreeCultr - an Indian premium apparel brand - has FreeCultr Express, a community for designers and artists to interact and display their art and merchandise directly to consumers. Iksula built this community portal, where anyone can open their own T-shirt store and simply upload their designs, while FreeCultr handles the printing, payments and fulfillment of orders.

3. Big Data powered micro-decisions and marketing automation
With the advent of the internet, consumer behaviour and buying patterns have become much more complex. Internet-influenced purchases already form a big chunk of brick-and-mortar revenue, which is rapidly increasing with the smart phone and internet penetration in India. Online browsing and content consumption patterns are deeply intertwined with the traditional buying patterns in modern consumers. All this makes inventory optimization, assortment management and marketing that much harder. The only way to effectively account for so many variables is Big Data. It paves way for better organization and analysis of data, which otherwise might overwhelm. Instead on anecdotal observations, decisions are based on data insights to provide a clearer picture of the consumer landscape.

Big Data capabilities will also encourage companies to widen their data collection net. In the US, marketers already can get real-time data from cable companies about current viewing status of consumers; this helps in setting up targeted ads at the right time for the right audience. Sophisticated location tracking tools like iBeacon enables geo-targeting of consumers for offline and omni-channel purchases. Increase in capability and affordability of data collection tools will only boost this data trend. With Internet of Things (IoT) on the horizon, investments in Big Data capabilities will provide massive value to online and offline retailers in the years to come.

Behind the Brand

Iksula specializes in providing end-to-end solutions for Internet and direct commerce companies worldwide. Our solutions span the entire spectrum of eCommerce services, including Consulting, Technology, Marketing, Merchandising, Competitive Intelligence and Big Data Analytics. Today, Iksula has grown to a 650-strong company with established practices in all eCommerce verticals and clients spanning five continents.

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.


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Samarjeet Singh

The author is CEO and founder, Iksula

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