Ecommerce: It’s More Than Just a ‘Good’ Service

It’s been all about Ecommerce since 2007 when the buzzword started showing up across all medias and since then we haven’t looked back. Analyst studies shows that our net populations are increasing and ecommerce is the perfect choice for a population wanting “convenience”,“access” and “choice”. Millions of dollars have been invested in setting up some ambitious ventures trying to offer the customer a differentiated offering. As an ex-VC, I used to use two terms regularly when evaluating businesses: “a nice to have” and “a must have”.

Convenience: The Indian customer has been pampered since the very beginning when it comes to service. Having tasted different kinds of service across the world, I can vouch that India stands out and this has followed in our ecommerce industry as well. Today, Indian ecommerce startups offer some of the best services possible to help a customer in making a purchase i.e. “Free Shipping”, “Cash on Delivery”, “Cash after Delivery”(that's really unique), “Try before Buy” etc. and some of these services will be a precedent for other countries thinking of distinguishing service factors. But is that enough to make a sale and retain a customer? Many of these services are a nice to have.

Access: E-commerce offers a fantastic distribution model as it allows more destinations than ever before to receive goods, which were impossible to envisage earlier. With the growth of courier networks we are all able to ship across any location in India and this is an awesome feeling. At as well we have already shipped to over 160 locations across India some being extremely remote and it's extremely satisfying to see such happy customers. With the new generation couriers as well, the overall industry will be even better service levels to the customers as well as better reaches, so good going so far… This is a definite must have!

Choice: This golden word is a definite must have for every ecommerce merchant to grow his business. If we look back at the offering in the market, choices have drastically increased and every merchant is trying to offer more brands with ever more styles to offer the ultimate selection! However, the big question is how “differentiated” is his choice in offering compared to the competitor? Similar offering in products by two competing portals can only lead to price wars and this is what Indian portals are currently noticing.

Ecommerce in India has seen growing customer acquisition costs, lower margins and high op-ex costs. This is an unbalanced equation for long terms survival unless one keeps pouring in the investor dollars. When we setup in 2011, the buzzword was flash sales and everyone we spoke to about setting up a full price ecommerce model though we were crazy. We focused extensively on our USP of a differentiated offering and I feel that the market has moved our way since then. Any entrepreneur needs to look at what is he doing unique and what is his unfair advantage in doing so? Only when we start with such a proposition do we see a sustainable businesses emerging. Portals need to differentiate on offerings rather than price wars as these lead to margin erosion and longer times to hit break even.

Nevertheless, we have begun to see change in the market now. In the last one year, I have seen phenomenal improvements in the interfaces of different portals making navigation really simple. Service levels are improving with new technologies being implemented whether it is to help a customer know the right size for him or to automate the COD process using IVRs. Businesses are now trying to compete on offering rather price and using unique marketing tactics to up-sell rather than only offer a discount. But this needs to grow further and I think that investors too will be raising the bar on this for their next bets.

In terms of logistics, there is a challenge in terms of reverse logistics. Specialized courier companies have begun to address this now, I see things changing over the next two years. Cash-on-Delivery will continue to be a norm in the market but merchants will need to find innovative ways to move this customer base to online payments to avoid cash flow issues. Even in terms of marketing, the message to the customer has begun to change and we don't see the discount messages flashing everywhere like they did before.

India is one of the youngest nations in terms of population. Those online businesses that will target this customer with unique quality offerings will see rise in volumes and revenues in the next 5 years…

Guest Author: Aashish Puri

He is the fellow co‐founder and COO of Aashish has been an associate and later a Principal at Partech International Partners, an early stage Venture Capital firm. Aashish has sat on the boards of various startups in the field of e‐commerce, social media and energy optimization technology companies in Europe and USA.


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