So
Game of Thrones completed the airing of its 5th season last Sunday,
and speculations and spoilers have been on full swing regarding Jon Snow and
other characters. By the way, nothing to worry for you folks, there are no
spoilers here. Sometimes, I guess even the creator of the series, Mr George R R
Martin (affectionately or due to a long name, also referred to as GRRM) would
wonder at all the plot twists the TV show has, and the deviations from what is
there in the books. Halting this digression of our own about the GoT show, let
us turn our thoughts to another little game which has become equally exciting
over the last few years, with no clear leader in sight (leave alone thinking
about winning). This is the game of e-commerce in India.
The e-commerce space in India has been touted as one of the major frontiers to
conquer for many companies. All the major empires are leaving no stone
unturned to bleed themselves dry in order to catch hold of a bigger pie of
Westeros (the consumers’ wallet). The bloodbath in the name of discounts and
offers have been coming from all the players over the last few years, and
although the discounts have mellowed down a bit, there doesn’t seem a clear
change of strategy in order to capture the throne. Same as in the GoT series,
there are 4 major players in the Indian e-commerce domain, viz. Flipkart,
Amazon, PayTm and Snapdeal. Although Flipkart leads the market-share currently
(Lannisters?), none of the other players are too much behind. We also have
niche players, just like the smaller empires in the series, which occasionally
get acquired by a bigger player and in turn, add to the arsenal of the larger
empire. The 2 biggest of such M&As have been that of Myntra (by Flipkart)
and FreeCharge (by Snapdeal). Did anyone mention about Tyrells’ and Boltons’
closeness (or the lack of it) with Baratheons, Starks and Lannisters? And how can we forget
the dragons in this game as well. Any guesses?
I
was surprised at the parallels we can draw between the two completely different
subjects. I am sure a more creative mind can find many more connections between e-commerce and the hugely popular series, but let us also focus on what strategy
can the different empires undertake to win this game in India. And we need to
look no further than the creator of the series, GRRM. Let’s look at it in some
detail, shall we?
- G - Grocery: Ecommerce in groceries is not as easy as it sounds. Period. To state the obvious, this segment has not been really cracked by the 4 biggies. We do have a few successful models in front of us which have started on really well and are gaining some good traction in their home markets. Grofers and PepperTap have been working on 2 completely different models among themselves, the former ties up with local kirana stores and hence does not necessarily own any inventory, whereas the latter has been mostly working on an inventory-led model. There are other niche players as well like LocalBanya, BigBasket and AaramShop, among others. Amazon India recently launched its Kirana Now program in Bangalore and has been piloting different models to see what systems will actually work in India. A year or so earlier, Sachin Bansal had been quoted by some sources that Flipkart will not be entering into groceries and F&B ecommerce, however, it’s a known for a fact that even the market leader won’t be able to hold onto its position for far too long if it does not crack the groceries business. PayTm has been piloting grocery retailing in Bangalore for around a month and a half now, and this business will most likely be as a separate vertical for the Alibaba-backed company. Snapdeal already has a tie-up with Godrej’s Nature Fresh for retailing groceries and it is expected to extend the presence and deliveries to other cities very soon. It is very apparent that everyone wants to crack the code of this segment, which has been touted to grow at 25-30% per annum in the major cities of the country. The biggest challenge in groceries will be the perishability factor, and control over deliveries while keeping the costs down. As we have seen Game of Thrones, help can come from any quarter if you are in trouble. The same may well happen here as well. Did anyone mention Ola and Uber?
- R - Rural: Tier 2, 3 cities along with other parts of rural India has been witnessing phenomenal growth in smartphone usage, helped in a major part by improvement in internet penetration. Flipkart, Amazon and most of the Indian ecommerce companies have gone on record stating a major chunk of their sales happening in non-metro cities. Nearly all of them have separate teams working dedicatedly to connect India’s deep hinterlands with the commerce happening from the comfort of a shopper’s home. Amazon has warehouses on the outskirts of Bangalore, which cater to demands from towns like Belgaum and Hosur. They have employed local village entrepreneurs and assigned the task of deliveries in these towns, thereby greatly reducing the last-mile logistics costs. Snapdeal too has set up village kiosks where the company keeps its wares and locals are encouraged to order through smartphones or village desktops. The company uses this kiosks as pickup points as well, where villagers can come and receive their ordered goods, thus eliminating the last-mile connectivity in these cases. However, as much as the potential which these smaller cities and towns hold, they are still part of an unconquered frontier owing to lack of quality infrastructure and logistics in India. To succeed in rural India, companies will have to focus on simple, yet innovative, ideas. One such idea has been piloted by Amazon earlier (and now launched at full scale) is that of a tie-up with India Post. Amazon has a similar tie-up with US Post in US and has brought down the same idea to India. Flipkart and Snapdeal also have recently moved together with India Post and have begun to take advantages of nearly 500,000 post offices across the country for deliveries. The biggest beneficiary of this has been India Post itself, as this gives a chance to it to bring back its days of glory. Having strong networks and partnerships always helps, as Lord Baelish will gladly tell us.
- R - Returns: Returns and reverse logistics have always been areas of concerns for ecommerce companies and sellers, although they provide immense value to the end-customer, who can literally pick and choose the products s/he wants. Returns add a lot of cost to companies and it affects more severely the sellers, as most of the ecommerce companies are running on the marketplace model. Some companies have tried solving this problem in unique ways and there is a lot to learn from them. Apparel and accessories company YeBhi.com gives a choice of 5 dresses which a customer can order during purchases. The delivery person will bring the 5 dresses, which can be tried out by the customer. In the end, the customer can keep the one which is the best fit and the delivery guy returns with the other 4 dresses. This method reduces one complete trip for the delivery personnel, and at the same time, adds a bit of personalization as well. The same model, with some variations, is being followed by Lenskart.com as well, where in it brings some set of eye-wears to the customer’s doorsteps and the latter can pick and choose the one which gives the desired look. India’s largest mobile commerce company, Snapdeal, too has been working diligently on this front. It has already acquired a stake in the logistics company GoJavas and together they have launched a 90-minute return policy in 15 cities of India. That’s how e-commerce is changing how customers shop now, with same-day deliveries and 90-minute returns. Other players soon will catch-up and we might see reductions in pick-up times from 90 to 30 minutes.
- M - Mobile: We spend a lot of time on our mobiles. We might actually be looking at photos and people more on our screens, than lifting our heads and seeing actual people. Some of us might be watching the entire GoT series on mobile. E-commerce cannot be behind then, can it? Companies have already started shutting down their websites and going app-only. A lot of companies have been app-only since their inception and have little intention of marking their presence on a desktop as well. Mobile commerce is here to stay and companies like Myntra and PayTm may well be on the path to actually define how the game will be played in the near future. With PayTm applying for a banking license as well, mobile payments and virtual cards might actually make a few ATMs shut their shops. Even Lord Varys would have to agree that technology has been moving at a pace faster than birds’ whispers.
E-commerce
has been in India for quite some time now (with sites like IndiaMart etc),
however the real seeds were sown when Flipkart started up in 2007 and has been
the leader sitting happily in King’s Landing since. The competition has caught
up with it now, with 3 other major players vying for the coveted throne of "India’s biggest e-commerce player". From US to China (remember the Alibaba ‘Dragons’
we talked about earlier?), everyone is trying to gain a share of our (mobile)
wallets.
A
lot of bloodbath has happened through discounts and although things are a bit calm now, I believe the Indian pie
is big enough to accommodate these 4 players (and more) along with the smaller
niche ones. We certainly don’t want a 'Valar Morghulis' situation here, with each
one killing the other off, do we? The key to supremacy may well lie in #GRRM (just
like the TV series and the books). #GoT it?
Please
feel free to comment with your thoughts. Tweet to me @NishantSinha88.
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