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The ecommerce market in the country is growing not only in size but also in the diversity of sellers and buyers. The year ahead will unveil many new dimensions of the next phase of India's ecommerce journey

Indian Ecommerce 2.0: Bringing the bazaars home

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  Illustration: Sameer PawarA striking part of the Indian ecommerce industry in 2018 has been the rapid emergence of buyers from India’s tier II and III cities. Consider this: Beard trimmers were one of the hottest selling items in 2018. And it wasn’t just the metrosexual men from big cities buying them. The orders came in fast and steady from remote parts of Odisha, Bihar, Jharkhand, Assam and Haryana. This growth of ecommerce into India’s non-metro cities will accelerate in 2019 and over the next few years, for some obvious and some emerging reasons.The single biggest factor for this growth has been the sharp drop in data prices (down by nearly 90 percent in the last two years), and a sharp surge in data consumption (up nearly 10x in the last one year). This, in turn, has led to a huge demand for affordable smartphones (there are ample choices below ₹7,000 now available across all online platforms).The numbers reveal the foundation for this growth. At the beginning of 2019, India has more than 330 million smartphones and nearly 226 million users are connected to social media networks. The number of current online shoppers in India is about 100 million. This is a largely homogeneous segment—English speaking, relatively high-income, mostly metro buyers and voracious internet users. These consumers have good brand awareness and are motivated by deals and convenience. Most importantly, they have the disposable income to make discretionary purchases when tempted by discounts on branded products, including smartphones, electronics and fashion (apparel, footwear, cosmetics etc). While these early adopters will continue to grow the market, the next 100 million ecommerce buyers are also now entering the online markets and they are a very diverse set. A majority of them live outside India’s biggest cities, and while online buying for them is an aspirational start and brand awareness is on the rise, the ability to pay brand premiums is restricted due to limited disposable income. However, given their sheer numbers, the online markets are quickly adapting to their requirements. This explains the rapid expansion in the value segment for online marketplaces. Mixer-grinders are one of the first few home appliances that households buy. More than 2,000 mixer-grinder options, priced below ₹2,500 are available online. Consumers in Majuli, Assam, while browsing through Facebook, now see the latest fashion trends that Ranveer Singh and Deepika Padukone flaunt. And in a matter of days, they are able to buy fashion products inspired by such trends and listed online by quick-moving local brands. Thanks to the Jio- and Airtel-led 4G revolution in India, ecommerce is seamlessly connecting the agile and fashionable value brands to value-conscious, fashion savvy consumers. Another lens to examine the value proliferation is the emergence of online-only seller brands, which match well-established brands in terms of features, finish and range—all at a fraction of the price of national brands. To illustrate, Laurels is a fashion brand that the offline shoppers may never find in a store, but is a very popular brand that is available at all leading online platforms and sells fashionable wrist watches, wallets and sunglasses at great value. We have now entered a multi-decade transition of unbranded goods, currently sold in the bazaars of India, moving online. The reason for this is that the next 500 million ecommerce buyers will place a greater emphasis on the functional aspects of the product rather than brand attributes. This will lead to more salience for emerging seller-branded products, where value-for-money is the primary purchase enabler vis-a-vis the flaunt value of the brand. Driving this transition of the online buying experience is the expansion of internet bandwidth. A few years down the road, consumers will look back and laugh about the time they bought products online by looking at static photos. The unfamiliar, seller-brands will be key beneficiaries of the online video revolution: While they could never afford to showcase their products on television ads, they can now do so at next to no cost, given the smartphone camera and high velocity of traffic on ecommerce platforms. Today’s online seller-brands will become national, potentially international brands of tomorrow, coming out of India.This rapid onboarding of new brands will require a different model of logistics, with extremely cost-effective warehousing-as-a-service becoming a standard enabling facet of this industry. The inventory-led model of ecommerce will struggle at this and will incur still more losses in centralising an ecosystem whose natural state of equilibrium is to be decentralised. It is easy to stock the top 20 brands of the top 1,000 products, but a different ball game to cater to 60 million products.Financial credit for these sellers will be a key enabler for their growth and an incredible opportunity for financial services companies. With every passing day, these sellers with unestablished brands are building a credit history through their transactions on ecommerce platforms. Every transaction is creating tremendous amount of data—consumer ratings, return rates, repeat rates, conversion rates, among others. All of these and other factors will make access to capital abundant for the outperformers and difficult for the laggards.  Nearly 90 percent of India’s retail is unorganised and thrives in the bazaars of India, which offer interesting insights for expanding the online markets. This new audience of ecommerce buyers will spend more time on browsing and discovery, rather than intent-based buying. Thus, the experience will need to be expanded to include ease and friendliness of discovery, rather than only efficiency of enabling high-intent purchases. The buyers will want their online buying experience to be fun and engaging, rather than sterile. Indian consumers love the melange of visual, colourful and musical stimuli when they are out shopping—they want masti. There is a vast opportunity in bringing India’s bazaars online and using technology to make the experience more productive and efficient for the sellers. We will see more startups emerge that will enable the ecommerce transformation for these sellers, through simple yet effective warehouse management systems, catalogue enhancements that use artificial intelligence, inventory planning tools using machine learning, accounting tools, among others.The expansion of the market is a very good opportunity to ensure that sellers from smaller cities also benefit from the growth. The government is aware that the historical non-implementation of norms has allowed structural imbalances to be created. This deepening of the market is a good opportunity to correct this and help create more enterprises and jobs, especially in the smaller cities of India. Onboarding sellers from diverse regions is also crucial in order to have the most relevant merchandise for buyers from all non-metros. While the digital revolution started in metros, consumers in smaller cities feel that now their time too has come. We are still in the version 1.0 of Indian ecommerce and the landscape will look very different from what it has been till now, primarily because the new audience that is coming online to buy now will exhibit very different demands and behavior than the incumbent ecommerce consumers do. Ecommerce will now play an important role in helping the newly minted online consumers bridge the gap between first world aspirations and the developing market realities.-The writer is the CEO &amp; Co-founder of Snapdeal

Indian Ecommerce 2.0: Bringing the bazaars home

The ecommerce market in the country is growing not only in size but also in the diversity of sellers and buyers. The year ahead will unveil many new dimensions of the next phase of India's ecommerce j

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Indian Ecommerce 2.0: Bringing the bazaars home

The ecommerce market in the country is growing not only in size but also in the diversity of sellers and buyers. The year ahead will unveil many new dimensions of the next phase of India's ecommerce j... Read More

Latest News

On Everyone’s Radar

The ecommerce market in the country is growing not only in size but also in the diversity of sellers and buyers. The year ahead will unveil many new dimensions of the next phase of India's ecommerce j