The Digital commerce, Online
Purchases & Payments for Goods or Services, is showing tremendous growth
and holds vast potential in time to come. Days are not far, where a young and
upwardly mobile population will drive the 1st phase and I believe,
the next two phases will be driven by value seekers (price and convenience) and
the under banked/unbanked population gaining access to payment capabilities
over electronic media.
To borrow some statistics, the
growth of the e-commerce market is driven by 2 key factors, showing healthy
growth trends - Total number of consumers transacting online (online shoppers) and
revenue per online shopper. Quoting 2010, there were around 8 million internet
users expected to go to 385 million by 2015 and 8-10 million online transactors/customers
expected to go to 38 million by ’15 with hours spent on internet expected to
increase from 15 hours now to 22 hours by ’15 on monthly basis. The no of
payment options is also, on average, a healthy, more than five – cards,
internet banking, mobile, IVR, prepaid cards, gift cards, and cash on delivery,
offered by more than fifty percent players today.
The most significant challenge, in
addition to internet penetration, payment options, adoption rates, is, how one
perceives the customer experience on offline channels (retail stores) and is
able to improve them in online world.
The brick and mortar retail stores
have a no of advantages. They offer reasonable array of products, provide look,
touch and feel experience, enable interaction with a retail assistant to know
latest offers, make available instant payment & reasonable delivery
timeframes and present a face, one can remember, if there are any problems, one
comes across later. Through a customer care desk, they also offer exchanges,
replacements and substitution options, if needed, to take care of post purchase
experience and finally, they (the stores) are not going anywhere in a hurry.
The e-commerce players also offer
some significant advantages over retail store or chains. They can host millions
of SKUs online, provide with feature and price comparisons, offer bundled deals,
enable convenience (buy anytime, from anywhere), bestow ease of delivery and
present variety of purchase options, usually more than five. Additionally, they
offer, online customer support (virtual agents), even call centers and well
defined policies/built-in systems to handle post purchase experience.
Does that mean they have significant
advantages over retail stores/chains and will be able to score over them in
future?
Let’s look at some observations on
the growth of e-commerce. The e-commerce market is growing in triple digits
year on year, scores of online players are mushrooming, offering anything from
advice, well diversified products and services portfolio, convenient payment
and delivery options, apart from exchange policies/systems. The penetration of
broadband (mobile and wire line), PCs and smart devices, no of online banking
customers, online shoppers and time spent on internet, all is growing at a good
pace.
All this points to a significant
market share being captured or to be captured by e-commerce players. If that is
the case, then, retail stores should start winding up before falling
traffic/margins forces them.
But is it happening? The no of
retail stores continue to grow and organized retail in India is estimated to
grow in double digits as policy liberalization takes effect, people spend more
time in malls & shops (entertainment value, need to connect and retail
therapy inducing happiness in a stressed world), disposable income grows,
credit culture finds acceptance and shift to better living happens.
So what is it that is important from
a strategic point of view - Co-exist profitably thru strategic alliances
(combining online/offline) or try to score over retail stores/chains?
The answer lies in taking customer
experience to new heights, profitably, and building a brand, reflecting trust
in a website, which only has images and words on it.
There are three important aspects
the online space can look at to grow and to capture a market share, which can
hold them in the long run, in a good stead.
The e-commerce players have to build
the pre-purchase experience - look, touch, and even smell. The interactive web,
3D technologies and virtual reality (try the new hairstyle by uploading your
photo), can help build an experience comparable to physical visit to stores, if
not better.
They need to invest in building the
supply chain infrastructure, so sorely needed, to be able to cut down on
delivery time (same day delivery) to counter the advantage the retail stores
have. The warehouses, the Couriers (logistics), the replacement capability
(return or same day pick-up) can take care of the need for early delivery. The
payment options need to be as many as needed and India
Finally, in online world, brand
(read trust, visibility, experience with website) is most important and
e-commerce players, if they want to improve the purchase value and frequency for
all the assortment they have to offer, right from a photo printing service to
travel services, to mass e-tailing to niche sectors to utility sectors to
finally high value brand shopping online, they need to invest in marketing and
advertising and build a connect with the customer at emotional level and not
only at transaction level.
The e-commerce players, who will own
and master these important aspects, will be the biggest gainers and someday,
will rival retail chains like Wal-Mart, Tesco, Carrefour, just to name a few as
examples, and I believe, its not a distant future but a, reasonable few years
ahead, reality.
To sum it up, who owns customer
experience, will own the customers and rewrite future, be it the Brick and
Mortar Giants or Digital Warriors, the clock is ticking.
Note - The views expressed are author's personal views and for any feedback, he can be contacted at rajnishkhare@gmail.com
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