Why e-commerce companies will eventually become m-commerce entities?
Saturday July 12, 2014,
5 min Read
With 190 million internet users in the country, Indian e-commerce market pegs at $13 billion. Over the past five years online shopping in India has caught up in a big way and growth of e-commerce ventures like Flipkart, Myntra and Jabong among others outline the immense potential of the sector.
While considering the annual rate of growth 41-43%, India is expected to cross 375 million unique internet users by end of 2015 (source: IAMAI), it’s pretty possible for m-commerce to become even bigger than e-commerce in the future especially in a country where there are over 930 million mobile subscribers (including approx 100 million mobile internet users).
A few months ago, Flipkart’s CEO Sachin Bansal said in an interview that the company which has a GMV of $1B will be largely a mobile commerce company in the next two-three years. Recently, Snapdeal claimed that nearly half of its orders come from mobile, clocking a 20X growth over previous year.
The above numbers signify emergence of mobile as a transactional channel rather than traffic driver only. Proliferation of 3G/4G networks and improved user experience have been driving users to transact via mobile.
“Currently, 25% of traffic comes from tier II and III cities whereas 50% of our Scrapbookers are from smaller cities. From our consumer studies, we know that women share a computer with the family or get access in office. However, the mobile is personal, free and at hand all the time,” says Suchi Mukherjee, Co-founder of women focused etail store Limeroad. The company launched its mobile app 45 days ago and amassed close to 100k installations.
Gurgaon-based marketplace ShopClues does 40% of its business through the mobile platform. “With the recent launch of our customer-facing Android app, we expect to get about 25-30% of orders via mobile by the year end,” says Radhika Aggarwal, Co-founder Shopclues. The Nexus Venture-backed company plans to launch a feature phone/smartphone-friendly shopping experience soon.
For Paytm, majority of transactions come from the mobile phones. “About 60% of our order (mobile, DTH, and data recharge etc.) comes through mobiles,” reveals Vijay Shekhar Sharma, Founder of Paytm.
What’s driving users to shop on the go?
High speed/stable internet bandwidth (with relatively cheap 3G/4G tariff) is step one towards enabling people to shop in the first place. Mobile phones can also take advantage of your location and share targeted offers and services.
Another reason, especially in India, is Cash on Delivery (CoD). People can browse for their favourite items and add to the cart and get it shipped. The online payment experience especially on mobile is still not super smooth (with redirects to payment gateways etc.). “On the other side, organisations have figured out things like product availability check, delivery tracking through SMS and mails, more sophisticated courier services and 24*7 customer care etc. which help in the overall shopping experience,” points out Sonaal Bangera of Effect Works.
Is freebies driving app download?
Who doesn’t love freebies and discounts? “As mobile experiences keep getting better and better, organisations are confident of pushing customers through their mobile channels by giving better discounts or freebies if they use their mobile apps,” says Sonaal.
This is one way of reducing the learning curve of using the app itself plus the hope is that since they are now used to purchasing on the device they are more likely to do so in the future because of the anytime/anywhere availability of their mobiles leading to higher conversions. “I have seen such onboarding styles right from booking tickets to group buying and it works well,” he adds.
How is mobile user different from web user?
Consumer logging from a mobile is much more technology friendly as compared to a web user. “Today, 60% of women name their mobile phones as the most important devices in their lives, and they have it with them when they are out grocery shopping or waiting for their kids to finish with an art class,” says Suchi. Women typically spend approximately one-and-a-half hours a day socializing and shopping on mobile. According to a study, women install 40% more apps than men, and willingly spend 87% more money on these.
As a medium, the mobile is more similar to a TV than to a PC. “The mobile shopper is more likely to make impulse purchases while the PC user makes well-researched, meditated purchases,” reveals Radhika. This essential difference translates into the kind of products searched for and bought on mobile, as well as into the differentiated marketing approaches e-commerce companies take. “Also, the fact is that the mobile is a highly personalized device, and in India it has far greater penetration than the internet, especially in tier II and III cities which make up a bulk of our customer base,” says Radhika.
Challenges with going ‘mobile first’ means understanding the real estate of your mobile device and creating an engaging shopping experience in that limited space. “Importantly, user experience doesn’t end with the look and feel of your app or mobile service, it encompasses all the logistics, delivery and customer support etc,” cautions Sonaal.