8/31/2014

Whats Next :
Breaking the Clutter
in Indian E-commerce

Table of Contents

Introduction ........................................................................... 2
Big Data in E-commerce ......................................................... 2
Market Place Model and Future of Inventory Management
in India .................................................................................... 3
Consolidation in the E-commerce Sector .............................. 3
Bharat online: E Commerce beyond metros ......................... 4
Innovations in Last Mile Delivery .......................................... 4
Role/Impact of couponing ..................................................... 4




















Introduction

India is currently witnessing a Dot-com boom. Dozens of B2C e-commerce portals popping
up like wild mushrooms, left and right, selling this and that every month. These portals are
either powered by Angel/VC Investor or by their own Manufacturing houses. Flipkart,
Myntra, Yebhi, Yepme, FreeCultr, Fashion&You, Deals&You, Lenskart, Healthkart,
BharatMatrimony, ClearTrip, Yatra are some of the e-tailers that have come up recently and
are doing exceptionally well in the Indian market. There have been 69 deals in the
ecommerce space in the last 18 months according to Venture Intelligence. Will this continue
or dry up soon?

Big Data in E-commerce
The biggest challenge for most e-commerce businesses is to collect, store and organize data
from multiple data sources. Theres certainly a lot of data waiting to be analyzed and it is a
daunting task for some E-commerce businesses to make sense of it all. Big Data paves the
way for more organized data and enables business owners or marketing managers to track
and better understand a variety of information from many different sources (i.e. inventory
management system, CRM, AdWord / AdSense analytics, email service provider statistics,
etc.).

Data-Driven Decisions
Perhaps the most powerful impact that Big Data has on businesses is that it allows merchants
to make more informed decisions. Since these choices are based on data insights, as opposed
to mere hunches or incomplete information, business owners can take the guessing out of
these decisions and prevent unnecessary spending, expensive trials, or even mistakes.
Personalized Offers
Big Data also lets e-commerce businesses create more personalized offers and
communications. Big Data enables merchants to track each users behavior and connect the
dots to determine the most effective ways to convert one-time customers into repeat buyers.
Apart from personalized recommendations, real-time analyticsresponding to a customers
action in real timeis gaining the attention of online retailers as the primary use case where
analytics could be deployed.







Market Place Model and Future of Inventory Management in India
Indian e-commerce market has just begun with many companies sprouting in last 5-6 years.
Organized retail still forms about 15% of the entire $500 billion retail industry in India. And
e commerce is also a part of that chunk. Off late many companies have shifted to a new
business model that is Market Place. It all started when Junglee.com, Indian vertical of
amazon.com entered the market and created a buzz. Many companies like Buytheprice,
Tradus, Pepperfry have already launched their own marketplaces. According to some experts,
the only real surviving model that has a bright future in Indian e commerce market is the
marketplace where e-tailers have tie ups with various vendors/manufacturers/suppliers and all
the inventory, warehousing, logistical activities are taken care by the vendors but not the
companies themselves. It effectively puts the companies in no risk zone while the vendors
also gets a chance to expand their business by getting exposed to customers all round.
While the picture looks rosy, there are some significant disadvantages that the companies
have to face. Using a third party for all the warehousing, logistical needs could also prove to
be a tough nut to crack. With burgeoning economy and rapid growth of retail sector, the
demands for more products with high quality and on time delivery has put the suppliers in a
fix. They have not been able to cope up with this surge of needs to fulfil the demands of such
e commerce companies. More so, they dont have the required facilities, know how, skills,
money to handle the complex operations of inventory, warehousing, logistics. It results in bad
service being provided which effectively keeps the e commerce companies at high
risk, because customers hold these companies responsible for any mismanagement.
Consolidation in the E-commerce Sector

It is expected that about 70 percent of venture-funded Indian e-commerce companies will
disappear over the next six months, as the local industry undergoes significant
consolidation. India's online shopping market is saturated and growth can only be driven by
increasing average revenue per user. This would limit a market player's ability to raise
follow-on funding, commonly referred to as a Series B round. In calendar 2012, the key deals
were horizontal e-commerce players acquiring category firms. In 2013, the emerging trend
was Tier-2 players merging and raising funds to compete effectively against leaders. This
clearly indicates that investors are eyeing mergers in order to salvage their ventures in the E-
commerce segment. Also the entry of e-commerce giant Amazon in the Indian market has not
only spurred heightened competition, but has also increased the pace of consolidation in the
countrys e-tailing market.



Bharat online: E Commerce beyond metros
While it's a fact that e-commerce is growing in India, the scope is much larger in non-metro
cities, which are slowly becoming exposed to it. The exposure is attributed to increasing
internet and broadband penetration, access to gadgets, disposable income and improved
logistics. In addition to this, the payment modes have also undergone a change with
customers having the choice to pay either online or at the time of delivery. Interestingly, out
of the 4,306 e-commerce hubs in India, majority being in Andhra Pradesh, Tamil Nadu,
Maharashtra and UP (in that order), 3,281 are 'Bharat' or non-metro hubs like Surat and
Coimbatore, among others. Awareness, access, affordability and aspiration - as long as all
these are together, non-metros will continue to grow rapidly in e-commerce segment.
Innovations in Last Mile Delivery
The gist of online shopping is set to see greater heights in coming years, not just because of
Indias increasing internet consumer community, but also due to recent alterations in the
supporting ecosystem. Innovations in Logistics, e-commerce models, social media marketing,
online advertisement, M-commerce and online retail system have been the major growth
drivers for e-commerce in India. In order to ensure last mile delivery in a complex market
like India, continuous innovation in business models and delivery systems is critical. Few
structural changes like a steady shift from mere websites to mobile apps for a particular
product or service the provider offering with a more personalised approach are happening at a
rapid pace. Also, dissolution between physical commerce and electronic commerce would
also be a reality in near future.
Role/Impact of couponing
It is so important to measure the effectiveness of any e commerce store, and allow visitors to
tell (and some cases show) you how they are interacting with the site. This information is
critical to the site success and can mean the difference between failure and success online.
Used correctly, coupon codes can increase conversion. Instead of using a standard coupon
box, giving the code directly on the page or sending a promotion on customer e-mails is more
effective in purchase conversion.
Following are the key findings with respect to the impact of couponing:
Online coupons and promotion codes drive incremental business. Online coupons and
promotion codes generate new users and increase overall user spending.

Online coupons and promotion codes positively influence the purchase cycle. Online
coupons and promotion codes improve conversion rates, reduce shopping cart
abandonment, and improve brand loyalty and reputation (as long as promotions stay
fresh).

Visitors to coupon websites are an especially valuable segment of shoppers. They
spend more money, make more purchases, and respond more favorably to online
coupons and promotion codes than the average online shopper.