E-Tail or Omni-Channel: The Future of Retail in India

By April 14, 2016 Retail

As it evolves, digital retailing is quickly morphing into something so different that it requires a new name now days called as, “Omni-channel retailing”. The name reflects the fact that retailers will be able to interact with customers through countless channels—websites, physical stores, kiosks, direct mail and catalogs, call centers, social media, mobile devices, gaming consoles, televisions, networked appliances, home services, and more. Unless conventional merchants adopt an entirely new perspective—one that allows them to integrate disparate channels into a single seamless omni-channel experience—they are likely to be swept away. The “mobile first” wave of buying is further aggravating the sales through quick and convenient hand held devices. The generation which buys everything online at better – deals, offer, discounts and services is not to be blamed because the proposition is unbeatable.

Earlier in 2014, 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 fundraiser 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 online retail firm, into it. Similarly, one saw Japan’s SoftBank make a commitment in October 2014 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 centers. Not to be outdone, the US-based Amazon said it will invest $2 billion in India’s online retail space.

Data on Internet penetration in India backs the scales of operation of these e-commerce giants. 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). Today, thousands of women are gaining financial independence by selling products across categories. The reasons why sellers are drawn to this platform is the low set-up cost, work-life balance, nationwide audience reach, financial independence and better margins. It’s an easy rational solution to small time entrepreneurs who want to earn but at the same time do not have enough money to set up shops. This is revolutionary in an empowering way!

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.

Still, India’s e-tail businesses face several other challenges.

  • Fewer than 12 per cent of Indians have credit or debit cards, meaning that to expand, Amazon, Flipkart and Snapdeal have had to accommodate cumbersome cash payments.
  • Cash-on-delivery is very important. It’s a very Indian concept, but that is inefficient and expensive for companies.”
  • The companies must also develop logistics and distribution systems in a country notorious for creaking infrastructure and inefficient transport.
  • Price wars, though from a consumer perspective, it means better days to come.
  • Even with the latest encryption algorithm implemented, hackers still manage to find a way to steal the data
  • Some people are resistant to change and may not want to embrace e-commerce due to lack of knowledge about the process or a general reluctance to purchase an item they cannot physically examine
  • One of the disadvantages of online shopping is you can’t really know for sure what you are buying is really want you want to buy
  • Targeting the older generation is still a challenge for e-commerce, thus the products remain focused on the current generation of buyers

With all the trends in front of us the shift appears to be towards an omni-channel experience, what is being termed as Convergence of Online, Mobile and Bricks (COMB) retailing. The three models are not meant to be competitors, but to ultimately provide a seamless retail experience. In the long run, new retail will come from the intersection of experience & technology- using technology to gauge customer intent and accordingly providing personalized recommendations, shopping support and education to eventually fill people’s carts while making them feel good about it. The transformation of retail may mean new formats like small stores attached to big warehouses providing local delivery or sparsely-staffed experience centers (with no inventory) where you check out the goods and end up purchasing on your mobile phone through QR codes. Eventually, the question will not be “Where” but “How”: The companies should expect to compete mostly on the basis of customer experience and not the channel. Finding new ways to combine e-commerce and retail, providing convenience and personalized experiences is the only way to win, or even stay competitive in this match.

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