10X in 10 years: Preparing for the rise of value e-commerce in India
Thursday September 16, 2021,
5 min Read
Anyone who has ever created products for the Indian consumer knows how heavily value underscores purchase decisions in India.
As India’s retail industry evolves, a growing number of value-conscious online shoppers are reshaping India’s e-commerce landscape. Buyers from this cohort focus on finding affordable products that meet their needs of quality, durability, and trendiness. The distinctive shopping behaviors and needs of these consumers have led to the rise of value e-commerce - differentiated business models optimised to serve the needs of online value-buying customers.
At a recent conversation with YourStory, Saurabh Bansal, Chief Merchandising Officer,and Manoj Muthu Kumar, Principal, Kearney, spoke about how value e-commerce was the next big leap in India’s retail market, and how e-commerce players should solve for it. Here are a few excerpts from the conversation.
The incredible value e-commerce opportunity
India’s growing number of value-conscious online shoppers is reshaping its e-commerce landscape. In fact, a recent report published by Kearney reveals that a $40 billion market is shaping up as India’s value-conscious buyers go online, with shoppers set to reach 350 million by 2030 growing with a CAGR of 26 percent.
Speaking about how India is a very value-conscious market, and the potential for e-commerce, Manoj said, “70 percent of Indian retail is what we call ‘value buying’. As we emerge out of the pandemic, we expect the value segment to go from around 90 billion to about 215 billion.”
“E-commerce penetration is pretty low as of now – at about 4 percent or so, but we expect that to hit about 12 to 14 percent by 2026 and nearly about 18 to 20 percent in a decade,” he said, adding that many brick and mortar players as well as well as online players are in a unique position to seize this immense opportunity.
As India's largest online marketplace, with the widest assortment of 60 million-plus products across 800 categories, delivering value is key to Snapdeal’s growth strategy.
“For us at Snapdeal, value is about building an assortment that is relevant to the needs of the buyers and fulfills the criteria on affordability, desired quality and alignment with their aspirational trends. Simply speaking, commerce is about offering users merchandise at affordable prices without any trade-off between price and quality,” Saurabh said.
“For example, we work with manufacturers directly and ensure we are able to provide a good quality shirt without charging the premium of a brand – at a 40 to 50 percent lower price than a branded shirt. We even ensure that if customers buy more, they save more on the same product. For example, if a customer buys one shirt for Rs 399, he will be incentivised to buy two for a discounted price of 549. This is how we essentially define our value proposition in this space,” he added.
Reinventing for value proposition
Referencing e-commerce in India – which was focused largely on selling to the English-speaking urban audiences over the last decade, where it was either quality and branded goods on one hand versus relatively low price and low quality items on the other – Kearney’s Manoj spoke about how e-commerce was reinventing its strategies to cater for the value proposition.
“The market today has grown bigger and deeper, and is much more layered with smaller markets in Tier II and III cities and towns. There's also immense diversity in terms of language, education, income, and consumption priorities. The needs and aspirations of the segment of customers are also very aspirational, while at the same time, driven by affordability and quality,” he said.
“The last few years have been very sharply focused on the value e-commerce segment and are building our business for this segment,” Manoj added.
Short and long-term strategies for the value segment
With a focus on quality—the first stopping point to build trust with the value lifestyle consumer—Snapdeal has continuously churned out products and sellers with lower ratings to enhance availability of highly-rated and consistent-quality products, even with a large base of sellers. Talking about refining their strategy to deliver on the value proposition for an expanded base of customers, Manoj said, “Users love simplicity. And when it comes to value, If they see a certain price point on a product, they should get it at that price only and participate with no conditions attached. The delightful price discovery should not get diminished through hidden or adept charges.”
Expanding on the strategies for e-commerce players, Saurabh added, "What's going to be important going forward is, players having a very sharp, value-focused value proposition and able to communicate that in a very cluttered market to the target consumer. There are many vertical-focused companies that are focused on value emerging, but being able to communicate very clearly to the consumers is going to be a powerful differentiator."
"Finally, consumers are going to largely focus on few players that engage them with relevance. So how to continually engage with these consumers, how to use the consumer data, to give them relevant recommendations and be able to meet the specific needs even after a sale, is going to shape up this market and ensure which player is going to capture the big share,” he said.
Watch the full conversation here https://yourstory.com/video/10x-in-10-years-preparing-for-rise-of-e-commerce-in-india/amp