Illustration: Chaitanya Dinesh Surpur
The Prime Minister in his address to Parliament laid out an ambitious plan to make India a $5 trillion economy by 2024. Articulating his confidence in India’s potential, he mentioned that while this was a difficult target, it was an achievable one. If India is to achieve this, technology and digitisation will play a key role. After all, two of the world’s largest economies have grown over the last 15 years on the back of the digital and tech industry. Digitisation and technology are going to play a key role in the growth of existing and new sectors. Affordable access to the internet has allowed the Indian consumer base to become well-connected with the marketplace irrespective of their location, while creating substantial opportunities for technology-based businesses that have significant economic potential.
While the model may look simple, online marketplaces remain extremely difficult to build. Entrepreneurs struggle with a chicken-and-egg problem: To attain a critical mass of buyers, you need a critical mass of suppliers—but to attract suppliers, you need a lot of buyers.
This challenge has indeed botched up many a marketplace. But once the marketplace reaches a critical inflection point, network effects kick in and growth follows an exponential, rather than linear, trajectory.
As more and more internet businesses in India start taking root, discounts that served as an important way to induce trial and lure consumers to move from offline to online will give way to more sustainable ways of achieving growth. We shouldn’t forget that the current ‘App Economy’ has been in existence for just 10 years, and has, in fact, touched India much later.
The competition for customers’ wallet, smartphone space and genuine brand loyalty is getting more intense, so it’s imperative for businesses to evolve the value proposition that will fundamentally change user behaviour. As we see ecommerce businesses gear towards building sustainable growth discipline, they will look beyond just customer acquisition and focus on customer retention, on ways to induce a behavioural shift towards buying online—not just for cashback and coupons but for the value that the platform provides. If only top-line performance is rewarded without looking at critical business metrics like retention, the discounts will do nothing for customer loyalty and businesses will just end up burning cash for expensive acquisition and re-acquisition.2010s: When marketing gained a human touch - BBDO's Josy Paul
That is why ecommerce businesses will have to be deeply invested in understanding customers’ product preferences, shopping habits and service expectations to ensure that they come back repeatedly. And this is where data dividends can be reaped to build sustainable business moats.
Building an ecommerce business remains hard and requires deep market localisation that mirrors the shopping behaviour of the masses. From personalisation to smoother payments to a seamless user experience to providing the best customer support, data will play an increasingly bigger role in the online purchase journey as ecommerce creates diverse need-based experiences. India’s consumer behaviour is on the verge of becoming data-rich, especially as the digital payments layer begins to take effect in the offline world. Instant access to EMIs and personal loans at the time of checkout can go a long way in enabling commerce in small towns. But truly instant access to credit will happen only once the window into the data collected from small town consumers opens up. With access to prior purchase patterns, online shopping behaviour and transactions, user authentication for payments or credit will not rely on a long history of credit-worthiness, but on data-backed segmentation basis their transactions on platform.'The 2010s were a warm up in gig economy': UrbanClap's Varun Khaitan
Going beyond discounts for category expansion and reinforcing the perception of convenience, ecommerce businesses will have to lead with a steely focus on brilliant basics. It will be a combination of convenience, choice and customer-centricity that will make ecommerce a mass market business in India. Indian consumers have enjoyed a deep discounts and cashback party but they will eventually seek and stay with the best product and consumer experience and that’s what ecommerce businesses have to gear towards.
The past decade has been a shining period for the Indian ecommerce and consumer internet sector in India. Factors that have fuelled growth are many; from increasing disposable income to deeper penetration of internet and smartphones; from improved digital literacy to adoption of digital payments, among others. We have already entered the next phase of growth. The ground has been laid and, in the next few years, companies will double down on enhancing the product and service experience of the customer and will focus on innovation on the back of rich data.
In the next phase, companies will be seen trying to convert all consumer engagements on the internet into real transactions; influencing customers to close the entire purchase lifecycle online. And one of the factors that will drive this conversion is access to data-driven personalised services. By empowering customers with choices mapped against their profile, buying behaviour, previous purchase history and current searches—companies will be able to cross-sell and up-sell for growth. On the back of technology, ecommerce players will continue to experiment and innovate with voice, chat bots and artificial intelligence solutions, taking the overall experience several notches higher. In the next ten years, we will see new business models emerge backed by technology that will monetise and organise latent consumption opportunities.
India has historically leapfrogged generations of technologies—the jump straight to mobile phones bypassing the stage of widespread landline connectivity is an example that is often cited. As most internet users will access the internet on their mobiles, it will unlock opportunities for location-based targeting and cross-platform shopping behaviour on an unmatched scale. Given the diverse preferences across income groups and the structural peculiarities of India, businesses will need to creatively solve and innovate for the ever-evolving Indian consumer. While so much has changed over the last decade since ecommerce became mainstream in India, I believe the best is yet to come. To read all the Forbes India Vision 2020 essays, Click Here
(This story appears in the 17 January, 2020 issue of Forbes India. You can buy our tablet version from Magzter.com. To visit our Archives, click here.)