Saturday, July 21, 2018

E-commerce industry truth

E-commerce industry truth

The festive season is here, and all the e-tailers have rolled up their sleeves to compete in the irately developing market, intent on pulling in more eyeballs and converting them into sales. Founders and investors both agree that it is not any more about GMV in the Indian e-commerce market. With the goal that just begs the question - What is that secret ingredient to building a solid customer base? Is it a huge range of products, a dynamic UI, penetration into untapped markets, excellent service or, maybe, the (in)famous go-to strategy of the business - Discounting? The real essence of business remains the same – gainfulness. Whether marking down is the approach to achieving that benefit is a question that really should be looked into. 

The great challenge 

There is absolutely no debate on reducing being one of the best instruments for turning eyeballs all around. Therefore, it is not the slightest bit astonishing that the e-commerce industry couldn't exclude itself from receiving this aggressive move. 

When the story started, rebates served as an approach to lure customers for whom shopping online was a whole new concept. At that time, it was for the most part about the "CAC-Customer procurement cost" and "Educating the customer"; customers who were unapproachable from the 'purchasing online' concept or skeptical, a considerable lion's share of the target market, must be given an incentive to come online. 

However, as the market began to mature, the players in the space received an uncomfortable surprise – rising competition prevented them from pulling back on the markdown front. The 'purpose of differentiation' became a giant challenge for every one of them. 


What's next? 

We have seen markdown offers going down over the recent years, and companies are currently framing strategic joint efforts with banks and brands to reduce the burden of marking down on their pockets. There is a parallel battle happening on B2B front also, where e-commerce players are attempting to rope in retailers/suppliers onto their stages through the offering of subsidies on their products. 

Undoubtedly, the industry has grown up and is hinting at development. Players have evolved to a certain extent and are emphatically relying more on memberships/dedication program to assemble and maintain a strong and faithful customer base. These initiatives are all up and ready to replace marking down as the prime instrument to pull in and engage users. 

Switching gears 

The rise the business has seen in sales figures amid the festive season from a year ago isn't due solely to their rebates and offers. A decent deal of credit goes to increasing mobile and internet penetration and selection the nation over. The developing customer base in tier 2 cities has led e-commerce players to heave a collective moan of relief. The broadening of the customer base foreshadows well for the business as a whole, and is sure to provide a degree of solace to nervous investors. 

Down the line 

The street, however, wouldn't get smoother. The brands with bigger pockets can manage the cost of playing the 'marking down' card, and will be forced to do as such, even if it's without wanting to! With sinking reserves and educated customers, e-commerce players have wound up under control. The temperature will take off further with investors becoming more picky with their investments. The concentration has now turned to making the venture profitable through capital enhancement and looking after edges. 

Marking down is not any more a great draw to generate more sales. While it can't be ruled out either, it shouldn't be used as a best bet. An ideal marketplace ought to be one where suppliers/retailers compete against each other to get the customer and offer rebates from their overall revenue. However, suppliers have wound up calm in the market, utilizing multiple stages to sell their products. 

The mammoths of the e-commerce world have locked horns in order to get a bigger piece of the pie. Going ahead, the real essence of the business will be on productivity, and the influence of reducing will be tempered, it being utilized similarly as a limited time contrivance.

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