ecommerce

The Brick to Click Evolution

Brick and mortar stores are losing their sheen as consumers are increasingly using online platforms to buy products. As the eCommerce  industry readies itself for hyper growth, technology vendors are basking in the warmth of India’s new sunrise economy

With a slew of mergers, acquisitions and some record funding, the Indian eCommerce industry had a blockbuster year in 2014. To put this growth in perspective, let us take a look at a report by industry association, Assocham, which states that the Indian eCommerce industry is likely to clock a CAGR of 35% and will cross the $100 bn mark in
value over the next five years.

One look at the online space and you can see this space exploding with offers ranging from
travel, apparel, entertainment, and even day-to-day groceries. From a buzzword,
eCommerce has turned into a reality— successfully transforming the way people
transact.

Firms that only have a physical presence need to do some serious thinking, as gradually, online sales will assume a larger percentage of overall sales. A recent report by Google India and management consulting firm Bain & Company corroborates this fact. The report states that the Internet would influence a third of the total sales in the Indian FMCG sector in the next five years.

“One of the main factors that have contributed to the growth of the eCommerce industry is increase in number of Internet users in India. Overall, the Internet literacy of the urban as well as rural population is increasing with the government’s focus on Digital India. This coupled with availability of cheaper smartphones and expanding penetration of broadband connectivity has led to an enhanced market for the eCommerce industry. Market leaders are consistently increasing their funding on aggressive marketing campaigns, in order to encourage the Indian audience to adopt the Internet. These efforts, coupled with competitive prices across the industry have led to an accelerated growth of the market,” says Shashank Mehrotra, Business Head, BigRock.

The demographic structure of the Internet users is also an important factor, as around 75% of the Indian Internet users are in the age group of 15 to 34 years. This segment has been experiencing rising incomes with career growth. This bunch of the population has huge aspirations, is fashion-conscious, brand aware, and tends to shop more online. In the near future, as Internet penetration rises in rural areas, it will further drive the eCommerce business.

“Over the last few years, there has been heavy investment in logistics and warehouses. This has resulted in increasing the reach of online retailers to remote locations also. This is set to improve further in the coming years and would make it possible for eCommerce players to expand their reach even more because of the lack of physical stores and footprints for many brands in these cities and towns,” says Purushottam Purswani, Chief Architect of Business Technology and Innovation Center (BITC), Atos.

“The youth across the country aspires to use the best brands across categories. In smaller cities and towns where these may not be easily available, eCommerce bridges the availability gap, allowing youngsters to access the same brands as their big city brethren,” says Satayakam Mohanty, CEO, Ma Foi Analytics.

So fierce has been the growth that traditional retailers have been forced to launch their own online avatar.This growth also means big business opportunities for traditional IT firms. Every eCommerce firm is investing heavily in creating the right IT infrastructure for taking advantage of this growth. From big players like IBM and Amazon who are wooing eCommerce players using their infrastructure or cloud solutions to players like SAS who are targeting eCommerce firms for using their analytics solutions, the opportunities are truly huge.

“Competitive pricing is one of the prominent features of shopping online. Lowered anxiety barriers with features like cash on delivery and easy returns account for significant growth of eCommerce businesses. Shopping online accommodates easy comparisons to make an informed buy,” says Rajat Shikhar, Practice Leader, eCommerce, ThoughtWorks.

THE OPPORTUNITY FOR VENDORS

The market dynamics are changing in terms of technology, economy, and business demography. Today disruptive technology innovations are transforming the world around us in unpredictable ways. A new era of ‘Digital Consumerism’ is radically changing the way customers shop for products and services, which in turn is impacting the business–consumer ecosystem.

“Bigtree Entertainment has employed Oracle RightNow Cloud Service as it was the perfect solution for their growing entertainment ticketing business. It gave them a consolidated view of customer information and the ability to provide better service and improve their customer experience. With Oracle solutions, Bigtree Entertainment implemented a centralized contact database, accelerated response time by 30%, and improved customer experience,” informs Niraj Kaushik, Vice President, Applications Business, Oracle India.

To cater to today’s tech-savvy digital consumers, eCommerce players will have to redesign their IT delivery mechanism and leverage various disruptive technologies. This can be only possible with the help of technology vendors that are catering to the unique needs of eCommerce firms, with customized solutions.

As eCommerce firms operate in the online space, they are faced with questions such as—does our site allow customers to quickly and easily locate the products they need? Is the inventory readily available and in stock? How fast can we add or delete products in our site as told by industry experts? This is where analytics solutions come to the rescue, and help firms unearth key issues.

For example, a study by the Baymard Institute has revealed that more than 60% of eCommerce site visitors will abandon their shopping carts. One of the main reasons for abandonment is poor usability.

Can analytics help? Vendors have capitalized on this issue, and have launched solutions to help eCommerce firms address this critical issue. For instance, Oracle has a solution called Endeca which helps eCommerce firms address this challenge by providing companies with easy-to-use self-service tools to internally manage site search, navigation, and the overall shopping experience.

It allows the provider to cross-merchandise and recommend products to consumers. Oracle also has a solution called Oracle Web Analytics, which empowers managers with insights to deliver superior Internet campaigns and drive profitable customer interactions.

Flipkart, for example, uses a solution from QlikView to manage inventory and optimize stock levels and lower costs associated with excess stock. By using this solution, Flipkart has improved its inventory utilization by 5%. QlikView is not the only firm, and almost every major player in India has a dedicated analytics offering for eCommerce firms.

THE FUTURE

The country has witnessed an impressive spurt in the number of Internet users. The government too has doubled its efforts towards enabling the population to get online through its national e-literacy and Digital India initiatives. The Indian eCommerce industry is on the cusp of a major wave, which in turn, will lead to huge opportunities for IT vendors specifically in the area of cloud and analytics.