E-buss_blog entry_3

Dear Sir

Here is my third contribution to your blog.

B2C E-retail industry will measure at $56 billion in 2023, says Technopak. In 2013, $500 billion is the value of retail industry out of which only $38 billion is modern trade. However, 10 years hence, retail industry would be $900 billion industry and modern trade would account for $200 billion. This means that yes there will be growth in terms of GDP, economic value, etc but from where will the space for opening new malls will come? How will the money for rent, licenses, permissions, inspections, etc would be managed? Hence, this increases the demand for E-tailing.

The options available to the retailers would be to join the existing marketplaces like e-bay, amazon, etc. The skills required would be in the area of IT, content management, and integration which is the backend work. However all these top e-retailers are focusing only on the line and not the bottom line approach. As a result, all are running in deep losses, funded by venture capitalists. The only difference is that the retailers who are spending heavily on marketing are in less losses as compared to those who are not investing much in marketing. Snapdeal, groupon, flipkart, all are providing heavy discounts to their customers thus increasing the footfall but not the customer loyalty.

There are basically four models that are working in India at present.

·         Standard model – which focuses on every product that a customer is looking for, like flipkart.

·         Deal based model – websites that provide only discounts and other offers to the customers, like snapdeal, groupon.

·         Club based model – in which the customer pays to enter the shopping mall

·         Market places – number of sellers come together and sell through a single supplier, like ebay and amazon.

But how will these models sustain? Is it only through cost leadership and product differentiation? No. there are many other things that needs to kept in mind.

·         Target group can be tier II and tier III cities also since the penetration of internet is increasing and awareness among them is increasing.

·         Multiple payment choice should be provided to the customers so that the trust building exercise takes place.

·         Integration with offline shops should also take place to take the advantage of local knowledge

·         Focus on easy returns and profits, and then quit the business.

·         Last but not the least, retain the customers as long as possible by various strategies.

 

Thanks & Regards

Astha Gupta

12DM-041