The State of B2C e-Commerce Have we ignored customers or overvalued markets? E-commerce firms are going through a rough phase of their business cycle. Falling valuation, manpower spurning, bootstrapping and revisiting business models as now talk-of-the-industry.
India has 5th largest start-up ecosystem in the world with 10000+ start-ups (in tech start-up we rank 3rd globally) and industry is an outcome of it. As per Sector Outlook report by Innoven Capital, 11% of respondents feel the sector is overhyped compared to 1% who still feels it is under-hyped. Does stats and spends reflect market potential? In Sep’16, India has overtaken US to become worlds’ second largest internet market with 333 million users. Around same time we became the 2nd largest smartphone market in the world with 260 million mobile broadband subs. These stats reflect huge market potential, but then where is the mismatch? While the smartphone subs make only one-fourth of the total mobile subscription in the country, we need to factor in multiple connection along with smartphone held by young kids and housewives who may or may not have spending power as individuals. The experience of those customers who can afford is also not good as we can’t ignore the fact that we rank 105th (improved marginally from 114) in terms of average internet speeds globally at 4.1 Mbps, among lowest in Asia-Pacific as per Akamai. The growth was witnessed with heavy ATL promotions by leading e-commerce players focussing on building brand and customer base. Front pages of all leading newspapers were splashed with round of festivals celebrated by e-commerce firms irrespective of actual festival apart from burning prime time in television media. Outdoor were screaming the rise of new B2C players in other business spaces. Raining discounts brought more customers; purchases from remote towns like Agartala in Tripura to Tier II towns of Rajkot in Gujarat raised hopes of the sector. (Mis) Understanding Customer While everyone focussed on acquisition and burnt money on subscriber acquisition, we ignored the powerful indicators and behaviour demonstrated by customers despite digital medium equipped with world-class business analytics which offer better insights into customer behaviour compared to traditional retail. “Free” is a powerful world. Dan Ariely in his book Predictably Irrational have described the power of Free with Zero Price Effect which says when a product is advertised as ‘Free’, consumers perceive it as intrinsically more valuable. Jio became the world’s fastest customer acquisition machinery with 100 million customers in 170 days realising the power of the word “Free”. Globally 30% of apps downloaded from appstore are paid while in India this may be as low as 10-12%. In-app purchases volumes are dismal. The gadget which we call Smartphone serves as a medium of entertainment (music, gaming, chat) more than utility to enhance productivity for Indian consumers. The inclination is to keep the operating costs low with free content downloads including illegal songs and movies, limited in-app purchases in games and even downloading content in free networks (Wi-Fi) with free GB’s loaded by telcos during current data price war. Today’s e-commerce or B2C firms either bring aggregators through apps creating a customer comfort or bring physical store offerings online. The need of the hour is to create something meaningful with utility beyond discounting (price game). The consumers once feel value will pay. Education, FinTech and Healthcare are sectors apt for it. Apart from customer acquisition they need to find ways and means to broaden the customer base through educative initiatives including BTL activities which shall not only be restricted to metros but should include tier II and tier III towns. It will help to create a bigger and sustainable market place. Even the market place in these cities will not be confined to the people at the top of pyramid but will include the ones at bottom where potential of country like India lies. The industry seems to be standing at the crossroads. Even if it could have grossly overlooked the consumers behaviour; inflated their hopes with discounted pricing or over-estimated the market potential, the industry need to carry on as digital is the future and they have a greater role to play on.
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A working professional with 19+ years of experience in Sales, Marketing, Strategy and Operations, I am an avid reader and quizzer.
My areas of interest are Business Strategy, Marketing, Customer Management and Digital Media. With my blogger mission as "Learn, Think and Share", I would love to share my thoughts on business strategy, leadership, management, marketing and business quizzing. If my blogs help you out in your professional growth or my quizzes provides a perfect match of infotainment, then I will consider my little attempt as rewarding. - Sunil Singh Rana ABOUT AUTHORArchives
December 2018
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