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The e-commerce juggernaut —how the sector shaped up in 2016 and trends for 2017


From being a unique feather in the cap of a business to becoming an absolute necessity for survival, in recent years, the e-commerce platform has emerged as the default medium for brands to interact with their target markets. As 2016 comes to a close, let’s analyse the year that went by and how 2017, with a sudden push from the government to adopt a cashless economy, stacks up for the e-commerce segment:

Growth

The e-commerce market in the country is estimated to grow from Rs 1,25,732 crore to Rs 2,11, 005 crore this year, as per the Internet and Mobile Association of India. The sale of online fashion goods  reported a growth by 52 percent from Rs 4,699 crore in December 2014 to Rs 7,142 crore in December 2015. This segment is expected to reach Rs 72,639 crore by the end of 2016. Closely following this segment, fashion and electronic goods together amount to more than 60 percent of the overall spend in e-tail.

Credit : Shutterstock
Credit : Shutterstock

E-tailers, until recently, were trying hard to fight off cash transactions with 76 percent shoppers still preferring to pay by CoD. This tendency, however, received a body blow with the demonetisation drive. A call-to-action by moving towards a cashless economy coming in late into the year has revitalised the e-tailers to provide easy EMIs and additional discounts for online payments to nurture the cashless habit in Indian shoppers. And while this may have retarded their current pace of business, this move will prove highly beneficial for e-tailers in the long run.

Focus on profitability

E-tailers have shifted their focus from enhancing consumer base to increasing profitability in 2016. And the continued devaluation of established players like Flipkart by investors such as Morgan Stanley (27 percent devaluation) and T Rowe Price (15 percent) is quite questionable. Immediate or short-term slow business growth shouldn’t deter e-commerce players to focus more on enabling good buying experience and less on throwing discounts, as this is aimed at bringing stability and growth in the long run.

Future predictions: how the e-commerce industry will shape up in 2017

With big changes in communication technology taking place, the e-commerce industry is set for some significant developments. E-commerce players have many features lined up that they would need to implement in their business and stay ahead of the competition that is set to enhance drastically in the coming year.

From e-commerce to social commerce

With its affordable data packs, Reliance Jio will hugely disrupt the way Indians — from every stretch of the country — use the internet in 2017. With increased access to the internet, consumer buying decisions will largely be influenced on social media and content platforms rather than marketplaces and transactional platforms. Customer acquisition via heavy marketing spends isn’t sustainable in the long run. And 2017 will prove to be a real game changer here, with customers being acquired via genuine content and organic social media routes rather than blatant direct selling. Videos, reviews by real buyers, and social interactions will impact a major shift from need-based to inspired shopping. And influencers from bloggers to industry experts will influence purchase behaviour like never before.

Loyalty programmes and personalisation

Customer loyalty programmes will emerge in a big way and stress on the need to grow and retain key customers. With big data and predictive analysis emerging as the two fundamental pillars of online marketing, customers can expect to see a far more intuitive and individual customer-oriented marketing experience. The advertisement pop-ups will be far more relevant, and automated bill reminders, anniversary gifts, family vacations, etc. will be stored by e-commerce databases, and relevant products and services advertised accordingly. Also, since e-tailers receive their revenues from sellers, rewards programmes and deals for sellers will also be promoted.

Entry of private players and reducing liquidity

As the valuation of the e-commerce sector in India rises, more players will enter the segment, with retailers ramping up their private label strategy. Thus, a breakdown of consolidated e-tailers to give rise to specific platforms for different products is expected. Also, manufacturers will be hard-pressed to reduce their operating costs at least during the early half of 2017 due to a lack of availability in cash and the intensifying competition.

Virtual reality technology

The presence of VR gear such as Oculus Rift has enhanced the immersive experience of the internet manifold. For instance, if you are roaming around the streets of Paris virtually through the device and chance upon a really fine piece of sculpture, you will probably be able click on it and get the details regarding the price, weight, converted currency cost, etc. displayed then and there. This might also help blur the boundaries between e-commerce and brick-and-mortar stores, with online databases accommodating physical store information to provide a complete consumer experience.

Artificial intelligence

E-commerce is still a significantly click-oriented process, i.e., we do not see the presence of AI interactive software such as Siri to facilitate the transaction process. Also, Amazon’s Alexa is working on its own Siri. As competition intensifies, we can expect e-commerce players to incorporate such systems on their platforms to facilitate customers and for running evolutionary algorithms to micro-target individual buyers and find the optimum sales bundle. This method, however, is still a pipe dream and may not see implementation in the coming year or even in the next few years.

As we step onto the threshold of 2017, it can safely be assumed that the e-commerce ecosphere is set to grow, although investors are still unsure of its profitability. The recent demonetisation drive has infused a new breath of life to the sector, and it is time for the e-tailers to focus on enhancing sales and revenue during this period. 2016 saw a dynamic environment with increasing competition among established players, apprehensive investors investing cautiously in startups as well as the big guns, and a plethora of choices available for the Indian online shopper. As 2017 races in, the Indian shopper will continue to make merry, demanding a better, easier, and holistic shopping experience.

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)

About the author

Mayank Bhangadia is the CEO and co-founder at Roposo, India’s leading fashion social network, where he spearheads product development besides overseeing all other functions of the company as well. He is focussed on building features on Roposo that help the platform to grow on a non-linear basis and make content creation smoother and more seamless for users. After completing his B.Tech in Engineering Physics from IIT Delhi, Mayank pursued an MS in Management with a major in Finance from ESCP Europe and an MS in Petroleum Economics from IFP Paris. He began his career as a Management Consultant at Schlumberger Business Consulting. He worked here for about three years, prior to which he was interning with the Energy Division of the Planning Commission of India for a year. He then embarked on the entrepreneurial route to start Giveter, a gifting platform, and then co-founded Roposo.

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