Last year Amazon entered India. The entry wasn’t with as much fanfare as most would have expected but it caused quite a big bang in the e-retail sector. After all, we are talking about a company that, in its twenty years of existence, has become well-known for its aggressive and high-investment business model. And it entered India with pretty deep pockets considering the company has a market cap of USD 143 billion. (Forbes India)
But what did this entry mean for other e-retail players? Has it actually changed things? Yes! And how! The single biggest signal of things having been shaken was the acquisition of a prominent fashion retailer by India’s biggest home-grown e-tailer for an estimated USD 370 million. (The Economic Times) And according to consulting firm Technopak, the consolidation process is only going to continue, with players with common investors looking at mergers, and niche and specialty players being acquired by bigger e-tailers. (Indiaretailing.com)
With its marketplace model, Amazon has very smartly avoided huge inventory costs and now the e-commerce market as a whole is undergoing quite a transformation. There is an increased improvement in logistics and infrastructure. Amazon was the first e-commerce company in the country to introduce ‘guaranteed delivery’. They also offer next-day delivery on almost 2 lakh products in 20 cities and same-day delivery in select cities. Other top e-tailers, not to be outdone, also offer similar services with one top ecommerce company offering two-hour delivery as well. (Forbes India) According to experts studying the industry, Amazon’s experience in the e-tailing business also means that fake and sub-standard goods will be weeded out of the market.
E-retail portals are also reaching out to tier II and tier III cities in a bid to crank up sales and reach areas where products are not available in brick and mortar settings. And the strategy is paying off with top retail sites reporting almost 50% of their sales from lesser-marketed-to areas. (Business Standard)
But in a market known to be more focussed on the next best deal than vendor loyalty, getting customers to bite the bait can still be a bit of a task. And this is where business with huge funding and strong leaders will emerge as market winners. With portals posting losses in millions and the anxiousness to acquire customers rising, the ecommerce market is volatile and will witness a lot of changes in the coming months.
One thing that the e-retail war has made clear in the past few months though, is that as these sites battle it out to come tops, the customer is reaping the benefits. His position as king is cemented and there is no doubting that.
Sources: Business Standard. 50% of business coming from tier II & III cities. 26th March 2014, Forbes India. India's E-Tail Battleground: Amazon, Flipkart and Snapdeal Fight for Top Slot. 24th June 2014, Indiaretailing.com. Amazon India Entry has Raised the Consolidation Pace in E-commerce: Technopak Report. 14 July 2014, The Economic Times. Flipkart acquires Myntra, gears up to take on Amazon. 23 May 2014