Multi-channel retail a challenge
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A global retail CEO survey of over 400 retail industry CEOs, conducted by PwC for JDA Software, says as mobile commerce comes of age, one of the biggest challenges facing CEOs is managing the transformation to omni-channel retail. However, only 34 per cent CEOs consider the rise of omni-channel shopping to be an external threat, while 22 per cent said it will have a direct impact on their organisation.
“The rise of omni-channel is one of the most transformational shifts that has occurred in retail in recent times,” says Baljit Dail, chairman of the board and interim CEO, JDA Software. “Retailers who don’t understand the strategic alignment of their supply chain with consumer expectations are in danger of becoming non-competitive. There are several reasons why consumers prefer online retail. According to an Assocham survey online retail industry’s business is quite good. Heading out to shop on a day off in scorching heat, battling traffic, parking issues, and long lines for bill payment is a cumbersome process. This is the main reason for the shift.”
As per the majority of respondents, the business module is cost effective, easily accessible and profitable in many functional areas. Consumers and retailers both desire safe, simple and comprehensive online shopping that will realise the range of power of the Internet,” adds the ASSOCHAM survey.
With such a large market size, companies, right from retail shops to consumer goods, are entering the Web space to attract potential customers, it adds. The online shopping industry in India is fast catching on, not just in the larger metros but also in the smaller cities.
Assocham secretary general DS Rawat says, “Customer behaviour is changing dramatically. People are not only using the Web to book air tickets and movie tickets, but also do not hesitate in placing orders for apparel, cosmetics, mobiles, laptops and other electronics and home appliances,” the survey states. “Traffic, fuel prices and time management have made going to a mall a planned activity,” says Rawat. India’s e-commerce market was worth about $2.5 billion in 2009, it went up to $6.3 billion in 2011 and $16 billion in 2013. It is expected to touch a whopping $56 billion by 2023, which will be 6.5 per cent of the total retail market.
As per the survey, a majority of respondents are working and shopping at the same time between 12 noon and 4 pm on a working day. More than half the sales of web-stores come on Tuesdays, Wednesdays and Thursdays and dips on weekends, when buyers head to malls instead. Weekdays are busy for shopping online, while weekend traffic drops by 10-12 per cent, particularly on long weekends.
Most e-commerce companies are targeting 40 per cent revenue from mobile sales in 2015. Among the above age segments, 18-25 years of age group is the fastest growing segment online.
Kavya Arora, CEO, Femella, an online women’s wear brand, says, “Our focus is to give fashion and quality at the best price to our customers. We focus on latest trends and curate our collections accordingly. We have done backwards integration from running brick-and-mortar stores to reinventing the business model by going online. Investment in opening more stores is higher in comparison to the sales a brand is able to generate through it. Operations, rentals and running the stores which includes maintenance, salary, and other fixed costs can make it difficult for a price conscious brand to grow.”
Swati Bhargava, co-founder, CashKaro.com, says, “The e-commerce market is growing aggressively and is expected to reach $24 billion next year, a four-fold increase since 2011. With Flipkart snapping up a whopping $1 billion in funding and Amazon announcing its presence, it’s exciting news for shoppers. An even more interesting market is taking shape: coupons and cashbacks. We drive sales to over 500 e-commerce sites, including Myntra, Jabong, Amazon and Snapdeal.”
E-realty a reality
Online sales is spreading to realty also with Tata Value Homes tying up with Snapdeal. Manish Agarwal, managing director, Satya Group and secretary, CREDAI NCR, says, “We see it as a new beginning, an alternative medium and a sign of maturing of the real estate market. While it offers many positives such as saving of cost and time, both industry and customers should be vigilant about stray elements. It will take some time to ascertain effectiveness but the real estate sector has got a new channel to sell its products.”
Home bookings through non-real estate e-commerce portals is a new trend, yet if you are dealing with a combination of leading e-commerce portal and a trusted brand, you know that your bookings are safe. “Presently, we are using popular real estate websites to sell our inventory. About 10-20 per cent of our inventory is sold through online referrals. We are also doing our home work to tie up with non-real estate portals such as Flipkart and Snapdeal,” he says.
‘Cosmetics to air tickets’
Customer behaviour is changing dramatically. People are not only using the Web to book air tickets and movie tickets, but also do not hesitate in placing orders for apparel, cosmetics, mobiles, laptops and other electronics and home appliances.
