Commerce set to go digital in India with D2C brands and sellers adapting tech
Access to e-commerce is the buzzword as smartphone penetration is increasing in India. Any industry expert will tell you that it is the next billion consumers that a startup has to go after.
A select panel consisting of founders from Sugar Cosmetics, Deal Share, and Niki spoke about changing consumption in India with increased tech adoption by the next billion consumers, at an event organised by TiE Delhi. They said India is aspiring for new brands and developing vernacular apps. Also, digital revolution includes sellers who are using social commerce platforms to increase their sales.
While Amazon and Flipkart got the first 100 million internet users in the last decade to transact on their apps, there is a whole opportunity for startups to go get the next billion Indian consumers.
“When Walmart acquired Flipkart, it was the day we started. India is still 90 percent unorganised in retail. I grew up in Jaipur and even today I don’t see much change. Only thing is everyone has a smartphone and they have WhatsApp. We believe this is the interface for many innovative business models to come about”, said Vineet Rao, co-founder of DealShare.
He added, “Connectivity has changed everything in retail. Today we sell groceries on social media platforms. Startups should not focus on tech as much as the business itself. We onboarded a lot of businesses to sell locally and we want to make local brands big. They can do D2C (Direct to Consumers) with very little branding. Our app shows deals and we do more than 5,000 orders a day in Jaipur alone.”
According to BCG, India’s retail is a $750 billion business opportunity. It will be a $1 trillion market by 2025.
With this number and the penetration of more than half a billion smartphones, there has been a rise in local brands like BOAT, Wow Skin Science, and Wakefit.
But D2C brands have the power to use data from the physical world, their apps, and the ecommerce companies to plan their product strategies.
What has worked for D2C brands
“What has worked for us is content. 93 percent of cosmetic consumption happens in retail. We learnt early on that content will be part of a strategy. We can create a product for Indian skin tones. We have micro influencers. Women ask questions and then buy the product,” said Vineeta Singh, founder of Sugar Cosmetics.
“Adoption in metros is high where women discover us online. A woman in smaller towns needs a lot more hand-holding in local languages. This is a battle for Bharat and a premium metro-centred brand must go through physical retail. This works,” added Vineeta.
According to IBEF, the retail market in India is estimated to reach $1.1 trillion by 2020 from $840 billion in 2017, with modern trade expected to grow at 20 to 25 percent per annum, which is likely to boost revenue of FMCG companies.
According to IBEF, revenue of FMCG sector reached Rs 3.4 lakh crore ($52.75 billion) in FY18 and is estimated to reach $103.7 billion in 2020. FMCG market is expected to grow at 9 to 10 percent in 2020.
But for this to grow, commerce on digital platforms has to go vernacular. India apart from the 100 million English language speakers has one billion people who speak local languages and that’s why startups have to focus on local needs.
Working with vernacular apps
“We realised that people who are older and not educated cannot use the online platform. They can be businessmen who don’t know how to use apps but use WhatsApp and YouTube. They do not speak English and feel helpless when they buy online and end up buying from physical stores,” said Sachin Jaiswal, cofounder of Niki.
Sachin added, “Such people don’t mind standing in queues and do not trust online yet. These people need assistance and apps today don’t empower them. This is what we are solving and looking at categories that relate to them. Groceries and monthly bills are a use case that we have brought in.”
The same applies to users and merchants. There are more than 50 million SMBs in India, according to Niti Aayog, and most of them will have to transact digitally if their customers go digital.
Says Prateek Agrawal, VP of International Business, Meesho. “At Meesho we have resellers and their customers. The insights we have show how social commerce has evolved. In our previous avatar we were solving shared commerce. We realised people were selling on WhatsApp and Facebook. People sourced from different clusters and then got their clients to buy their products.”
“We realised that we need to solve problems for resellers. We decided to solve access to products, market, price, and quality. They were looking for an opportunity to show their entrepreneurial instincts. Meesho provides these sellers an opportunity,” added Prateek.
Edited by Javed Gaihlot