Over the past 5 years eCommerce has grown at double the rate of retail sales to touch 1 trillion mark. However, if you consider the proportion of commerce over retail sales it is minuscule - only 8% in US, 10% in EU, 6% in china and 0.1% in India. The primary driver for explosive growth of eCommerce are:penetration of web-enabled mobile devices; and more and more brick and mortar stores opening online channels. As online shopping is becoming more and more widespread the strategy adopted by online players are constantly changing and becoming mature. Some of the new ways by which online players are adding value to shoppers are:
Overnight Shipping - As the penetration of eCommerce increases customers have started demanding faster delivery schedule. This is no longer a delight feature but a hygiene factor
Retail Like Experience - Shoppers are expecting sites to behave more like retailers - follow a retail promotion calendar, offer regular deals and discounts and advertise like retailers
Great Value - People prefer to shop online to get good deals. The expectation of customers is lower price for products, shipping discounts, and coupon & reward point that are easily discoverable
International Shopping - Online shoppers no longer want to be restricted to their resident country. Some online players facilitate shoppers to buy from across the world in a trusted way. Buyers are also given the option to shop in their local language and currency
Head Category vs Long Tail - Instead of spending efforts in building the niche and smaller product categories many eCommerce players are focusing on increasing their depth in head categories (e.g electronics, fashion, home and garden etc) where there is biggest bang for bucks
Personalization and Curation - Shoppers don't want to be overwhelmed with high content volumes. Many online players have started recommending products that are curated and personalized to the needs and taste of the buyer
Social Endorsement - In a social media age people are guided in their purchase decision either by friends and family or product experts or enthusiasts. A lot of online sites are increasingly leveraging the social graphs to drive conversions
Multi Platform Access - Technology advancement has changed the way people access internet and shop online. Today's consumer want to shop from anywhere - web browser, tablets at home, smart phones in the car. So online sites have started diversifying their attention from building a pure web only experience to multiple platform
Local Merchant Selection - Brick and Mortar merchants are slowly building their online presence to attract footfalls to their stores. Many eCommerce players have started leveraging this opportunity to on board inventory from local merchants and thereby building scalability, trust, convenience for their customer.
The double digit growth clocked by eCommerce industry in the last 8 quarters is unlikely to abate in near future. Ecommerce is well poised to become the next frontier of globalization after industrialization, regional pacts among nations, and evolution of transportation and communication technology. The future growth of eCommerce will emanate from the following dimensions
Global Platform - The real power of a ecommerce site is it's global reach. Players who are able to tap this opportunity will see exponential growth in future. The scope here is in automatic converting the product description and price into the buyers language and currency; and providing a faster and low cost international shipping service.
Local Inventory - Players can scale up their business quickly if they harness the local business network effectively. As online more and more brick and mortar stores are opening their online channel ecommerce players can intermingle the local inventory with national and international inventories. The scope here is real time on boarding of the merchants inventory and facilitating buyers to pick up in stores or order the delivery of the item through a valet service.
Mobile Devices - The mobile platform presents an unique challenge in terms of scarcity of real estate space. So when thinking about mobile flows players need to ruthlessly prioritize their features. At the same time mobile devices are more personal to users and this means it is great medium to push personalized offering. Also mobile devices can be leveraged to extract the location context of the user which can be used to improve product recommendations.
Social Media - The explosion of social media means that in future user will leverage their social networks in their purchase decisions. The opportunity here is two folds - enable buyers to share the items they are interested in with their friends and family; curate items that product experts and enthusiasts purchase or closely follow.
Digital Content - There is lot of opportunity in ownership, streaming and download of digital content. Products like books,music, movies and games are rapidly going digital. Players need to divert their attention from owning hardware devices to widening the selection of such content in digital mode. Today very few players dominate this space and there is significant scope to scale up the market by creating an eco system that accommodates pricing variation, re-sale, digital rights management.
Retail Like Experience - Shoppers are expecting sites to behave more like retailers - follow a retail promotion calendar, offer regular deals and discounts and advertise like retailers
Great Value - People prefer to shop online to get good deals. The expectation of customers is lower price for products, shipping discounts, and coupon & reward point that are easily discoverable
International Shopping - Online shoppers no longer want to be restricted to their resident country. Some online players facilitate shoppers to buy from across the world in a trusted way. Buyers are also given the option to shop in their local language and currency
Head Category vs Long Tail - Instead of spending efforts in building the niche and smaller product categories many eCommerce players are focusing on increasing their depth in head categories (e.g electronics, fashion, home and garden etc) where there is biggest bang for bucks
Personalization and Curation - Shoppers don't want to be overwhelmed with high content volumes. Many online players have started recommending products that are curated and personalized to the needs and taste of the buyer
Social Endorsement - In a social media age people are guided in their purchase decision either by friends and family or product experts or enthusiasts. A lot of online sites are increasingly leveraging the social graphs to drive conversions
Multi Platform Access - Technology advancement has changed the way people access internet and shop online. Today's consumer want to shop from anywhere - web browser, tablets at home, smart phones in the car. So online sites have started diversifying their attention from building a pure web only experience to multiple platform
Local Merchant Selection - Brick and Mortar merchants are slowly building their online presence to attract footfalls to their stores. Many eCommerce players have started leveraging this opportunity to on board inventory from local merchants and thereby building scalability, trust, convenience for their customer.
The double digit growth clocked by eCommerce industry in the last 8 quarters is unlikely to abate in near future. Ecommerce is well poised to become the next frontier of globalization after industrialization, regional pacts among nations, and evolution of transportation and communication technology. The future growth of eCommerce will emanate from the following dimensions
Local Inventory - Players can scale up their business quickly if they harness the local business network effectively. As online more and more brick and mortar stores are opening their online channel ecommerce players can intermingle the local inventory with national and international inventories. The scope here is real time on boarding of the merchants inventory and facilitating buyers to pick up in stores or order the delivery of the item through a valet service.
Mobile Devices - The mobile platform presents an unique challenge in terms of scarcity of real estate space. So when thinking about mobile flows players need to ruthlessly prioritize their features. At the same time mobile devices are more personal to users and this means it is great medium to push personalized offering. Also mobile devices can be leveraged to extract the location context of the user which can be used to improve product recommendations.
Social Media - The explosion of social media means that in future user will leverage their social networks in their purchase decisions. The opportunity here is two folds - enable buyers to share the items they are interested in with their friends and family; curate items that product experts and enthusiasts purchase or closely follow.
Digital Content - There is lot of opportunity in ownership, streaming and download of digital content. Products like books,music, movies and games are rapidly going digital. Players need to divert their attention from owning hardware devices to widening the selection of such content in digital mode. Today very few players dominate this space and there is significant scope to scale up the market by creating an eco system that accommodates pricing variation, re-sale, digital rights management.
I think that eCommerce players should also concentrate on second grade cities in India as I see online shopping and internet utilization are rapidly increasing.
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