By Vivek Paliwal
Co-founder & CEO, 99yrs Network LLP
March 25 2018: E-commerce in India is becoming bigger and better. The year 2018 would be a defining year the for e-commerce industry. With a 41% compounded annual growth rate (CAGR), e-commerce retail is poised to be a 69 billion dollar business by 2020. Although 2017 saw consolidation with Flipkart buying eBay and Jabong while there are players like Snapdeal, Paytm and Shopclues who are there to stay.
The major impact of e-commerce has been in the mobile industry. Brands like Motorola have relaunched through the e-commerce platform. One Plus, Asus, Redmi have all used e-commerce centric strategy. The other big major impact is for the SME and Regional Brands. Flipkart and Amazon are successfully able to deliver across 19000 pin codes in India for an SME or a regional brand, this kind of market penetration was impossible.
A total 130 million customers visit either Flipkart or Amazon regularly. This customer base makes them unique for brands. We need to divide these brands into 3 categories -
- Nation brands which are among to top brands in the category,
- National brands which are 2nd tier brands and
- Regional / Local brands.
For all three categories, e-commerce has a distinct and different relevance.
All national brands which are in the top slot have recognised e-commerce as one of the sales channels and have a clear strategy for the same. They balance product offering, price point and resellers in both marketplaces. They also have a challenge in balancing their offering along with general trade offerings. Any brand which is fighting for market share can’t afford to ignore Flipkart and Amazon. These two marketplaces uses these brands to get customer traction.
For tier brands, Flipkart and Amazon are the two marketplace which gives 25% to 40% sales and in some brands even higher. These marketplaces drive brands through deals. They are becoming much more relevant to these brands, hence monopolising the offerings. For brands, it is the cost-effective way to drive numbers. They need not spend on overheads for extensive distribution structure and offline promotions.
Regional and local brands have a very interesting opportunity through these two marketplaces. These brands get all India presence through Flipkart and Amazon. These brands are driven by profitability. Today, Myntra which is a part of Flipkart group is the first marketplace in India which would be operationally profitable in next few quarters. This is happening as they are balancing horizontal and vertical play where regional brands play a major role in it.
Today a reseller sitting in any part of India can sell its product globally without getting into complexities of exports documentation and process. It is called cross-border trade or CBT. There is an advantage of this business as a reseller you are selling to the customer directly. This also helps in understanding the customer buying behaviour and it is the cost-effective way of selling. The other big advantage is profitability for the reseller. E-commerce enables the reseller to sell directly to the customer. Hence, eliminating the middleman leads to better product pricing and higher margins for the reseller.
Global e-commerce helps in reducing inventory risk, ensure payments, helps in knowing the customer better, increases profitability. In India, you can use e-Bay and Amazon platforms to sell your products globally. CBT is been rapidly adopted by handicrafts, jewellery and fashion category.
Brands are now adopting an e-commerce centric strategy which includes product and pricing specific to e-commerce channel. There are a lot of regional brands which have made full use of e-commerce and it is up to brands how they align and strategies.
99yrs Network Pvt Ltd assists more than 350 brands in the e-commerce industry. They also associate with clients where they manage their panels, listings and promotions.