HIGHLIGHTS OF E-COMMERCE INDUSTRY IN 2014:

# US-based Amazon commits $2 billion in India’s e-commerce space

# SoftBank invests $627 million in Snapdeal, $210 millin in Ola cabs

# Flipkart gets $1.7 billion in funding, taking valuation to $7 billion

# Reliance Group exits Yatra.com with 12-fold increase in original investment

# Footfalls during festive season drop in shops in favour of e-commerce

# Physical retail segment demands level field, regulations vis-a-vis e-retail.

E-COMMERCE SALES SHAKE UP PHYSICAL FORMAT IN RETAIL SPACE

It’s still a small component of India’s Rs.38 trillion ($600 billion) overall retail trade industry. Yet, the e-commerce format with sales of Rs. 1 trillion ($16 billion) managed to create a buzz in 2014 like never before – not just with mega promotions but also with mergers, acquisitions and some crazy valuations.

Earlier in December, the Anil Ambani-led Reliance Group sold its 16-percent stake in Yatra.com, a leading consolidator of travel products, for an eye-popping 12-fold jump in initial investment made in 2006, to value the portal at $500 million.

This was followed by a $700 million fund-raiser by Flipkart, that came over and above the $1 billion the company had raised in July – that had taken its valuation to a whopping $6 billion overnight. Flipkart also decided to merge Myntra, another leading e-retail firm, into it.

Similarly, one saw Japan’s SoftBank make a commitment in October to invest $627 million in SnapDeal, a major player again in the Indian e-commerce space, and pick a $210-million stake in Ola that offers car rentals in 19 Indian cities through its mobile platform, web site and call centres.

Not to be outdone, the US-based Amazon said it will invest $2 billion in India’s e-retail space.

Data on Internet penetration in India backs the scales of operation.

There are currently some 250 million Internet users in the country. As per various estimates, the e-commerce industry, now valued at $16 billion, is growing at 30-40 percent each year and will top $100 billion in the next five years.

To serve them, there are some one million online retailers — small and large — which sell their products through various e-commerce portals, according to a report by the commerce ministry-promoted India Brand Equity Foundation (IBEF).

The year, however, did not pass without some hiccups.

Flipkart had to face much embarrassment when its “Big Billion Day” Oct 6, meant to attract online shoppers with steep discounts, crazy deals and lucky draws on a range of products, boomeranged as its website crashed and social media was abuzz with allegations of cheating against the company.

Flipkart apologized to the people for the inconvenience. But it also announced that it had got a billion hits and sold products worth $100 million (Rs.600 crore) that day including some 500,000 mobile phone handsets, an equal number of clothes and some 25,000 TV sets within minutes of starting sales at 8a.m.

This set the regular retailers thinking and fuming as well.

The Confederation of All India Traders, an umbrella body for regular retail trade industry, cried foul and urged the commerce ministry to regulate the e-retail business, look into their trade practices, which they alleged were not exactly as per rules, and create a level-playing field.

But some leading industry chambers cautioned against over-regulation and the matter died down.

Going forward, experts expect several developments in the e-retail space.

Besides logging a 40-45 percent annual growth, they feel huge investments will flow into logistics to overcome the challenges of last-mile reach. They also expect large retail chains of Reliance Industries and the Aditya Vikram Birla Group, among others, to go online.

“The coming year will be more dynamic. A lot of niche e-commerce players will emerge. We expect to see a good number of traditional businesses also leveraging this channel in both the B2B and B-2-C space.

Experts also predict some initial public offerings in the near term not just because existing investors will seek to realise value but also since the e-retail industry will need funds for infrastructure, logistics and warehousing — estimated at $500 million now and 1.9 trillion by 2017.

 “We will see more consolidations. Public issues will also happen. The industry is keenly awaiting the GST (goods and service tax) to get cleared. It will help in seamless movement of goods among states. It will give the e-commerce industry wider operations and a major push.”

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6 Key Areas essential to any Retailer’s Transformation Strategy as Retailing continues to change rapidly because of digital technology

In the midst of the extraordinary change being driven by online retailing, major retailers worldwide are continually adjusting strategy to create value. But competing priorities and distractions can lead retailers to forget perhaps the most important underpinning of all strategic imperatives: customer empathy. The irony of this, and the appeal, is that based on this simple frame of reference – putting yourself in your customers’ shoes – most retailers already know how to win.

In the name of innovation, many retailers often implement new systems that are intended to reduce cost, improve sales and be good for customers, but, in fact, if they had listened to their customers the retailers would have learned they wanted something different.

Although all industries are still in the midst of digital transformation, other industries, such as travel and banking, aren’t as fixated on channels and haven’t fallen into this trap. They have learned to deliver seamless, convenient, non-intrusive, enabling experiences. Retailers that do the same have the best chance of balancing returns on investment and increasing share of wallet with delighted, brand-loyal customers.

Bottom-line takeaways in six key areas essential to any retailer’s transformation strategy: mobile, social media, personalized marketing, cross-channel integration, loyalty, and digital shopping.

1. MOBILE - Mobility is perhaps the most important channel of all. Retailers need to adopt a “mobile-first” model for deployment to shoppers and associates given the inherent rapid change and ubiquity of mobile interaction. The vast majority of shoppers are now connected almost every waking hour of their day. But retailers haven’t caught up.
2. SOCIAL MEDIA – Although shoppers are very active on social media, it’s their platform and they really don’t want the noise that many retailers generate: more than 60% of surveyed shoppers said their purchases are not influenced by social media.
3. PERSONALIZED MARKETING – Personalisation runs hot and cold. Retailers understand the power. Shoppers are hungry for more relevant, customized experiences.
4. CROSS-CHANNEL INTEGRATION – Customers want it all – the convenience of online shopping with the comfort and immediacy of the in-store experience. And they want to use their devices to research and price check while in stores. The tip of the Omni channel spear is “buy online pickup in-store.” It’s the most tangible, proven way to engage and identify customers across channels. 
5. LOYALTY – Loyalty programs, when done well, are good for retailers and their customers. But retailers are not leveraging loyalty anywhere near as well as airlines and hospitality companies. Shopper satisfaction with retail loyalty programs is generally low. Although retail loyalty programs do create loyalty, and shoppers are enrolling (92%), impact could be substantially increased by improving perceived value and ease of use.
6.  DIGITAL SHOPPING – Digital shopping (Web and mobile) continues to be an important – and threatening – channel both for transacting and influencing in-store purchases. More and more shoppers are looking to brand Web sites, e- tailers and other online competitors. With increased price transparency and expectations for faster, lower-cost delivery also comes increased threat to the bottom line. What do shoppers want? A collective experience online! No single feature is more important than the rest.

Shoppers want robust information, easy access to service, a variety of payment options, stored profile information, and real-time offers. Retailers must rely on their online experience, price and product selection to differentiate themselves from the competition.

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