Sunday, December 10, 2017

Future of eCommerce and Retail in India - The Perfect Storm

The online retail environment in India is eerily quiet. The overall online pie is still very small. Broadly speaking, Indian consumers aren't shopping online. The distributors or local vendors still look at the online channel as a drop in the bucket. New online retailers are slowly emerging - however Indian ecommerce just can't seem to hit its stride. What does this all mean? Is online retailing not for the Indian market? Are the cultural preferences of Indian customers so unique that ecommerce will never achieve a mainstream status? Although the current state paints a very somber image for eCommerce in India, it reminds me of the time when we went on a vacation to Florida, only to find out that the area was about to be hit by a category 3 hurricane. Standing in balcony of the hotel room, I could feel an uneasy quiet. Wind was calm however I could feel something big was about to happen. Two years later, I find myself standing on the verge of another perfect storm - a storm that will change the face of online shopping in India. It is not a mystery anymore that the retail industry is going through a significant organization in India. Some would argue that this opens up more exciting options for consumers to shop in a physical store, which would further impact the adoption of online shopping in a negative way. Fair argument, however, I would like to share some specific reasons why I strongly believe that a reverse phenomenon is inevitable - organization in physical retail will fuel an explosive growth of online ecommerce in India. Why has eCommerce adoption been slow in India? Before we look at the factors that will drive an explosive growth in eCommerce, it is important to look at why eCommerce hasn't taken off so far in India. Although there have been several debates on this topic, to me the most basic reason is that most Indian consumers still don't see enough value proposition in shopping online. They can't be blamed because over the past few years, they have heard a lot of horror stories about not receiving the right products, not receiving products in time, notwithstanding the issues related to cumbersome returns and cancellation processes when shopping online. On the other hand, we can't fully blame the online retailers because they have to rely on third party vendors, logistics partners who still haven't achieved enough scale and the level of technology automation to consistently meet the desired service levels. These issues really point to the lack of a mature eco system across the eCommerce value chain. The organization in retail will give a significant boost to this eco system, which will help build trust with consumers so that they can feel comfortable in shopping online.


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