E-commerce: What the past decade means for future buyers
5 min read 26 Sep 2019, 10:06 PM ISTFuture is in offering personalized, premium shopping experience from search to after-sales supportThe Indian e-commerce market is expected to grow to $200 billion by 2026 from $38.5 billion in 2017, as per industry estimates
PremiumThere is no vanity in claiming that India is the fastest growing market for e-commerce. Growing at an annual rate of 51%, the highest in the world, the sector has propelled unforeseen growth in avenues that perhaps several stakeholders in the ecosystem had not envisioned. The past 10 years were a clear testament to the fact that e-commerce as a sector did not just spring up from the need to extend what retail was offering, but built its own identity by solving problems for the aspirational Indian consumer, including from tier II and tier III cities.
The sector has transformed the way business is done in India. As per industry estimates, the Indian e-commerce market is expected to grow to $200 billion by 2026 from $38.5 billion in 2017. In the past decade, we have seen the digital landscape being spearheaded by platforms that grow beyond core silos and are able to win with customers holistically. Within that landscape, consumer tech players have been leading market value creation. While the US and China were having disproportionate innovation surplus; India was solving for here and now.
The growth of the industry has been prompted by increasing internet and smartphone penetration. The ongoing digital transformation in the country is expected to increase India’s total internet user base to 829 million by 2021 from 604.21 million as of December 2018, which gives us a sense of the scale of inclusivity. India’s internet economy as an extension is expected to double from $125 billion as of April 2017 to $250 billion by 2020, majorly backed by e-commerce.
However, what is essential is that the next 100-200 million users to come online will be very different from the current users, and platforms will need to continuously evolve to cater to their needs differently. The United Nations, earlier this year, released the 26th revision of World Population Prospects, and estimated that India will overtake China as the most populous country by 2027—this is a window of demographic opportunity that no one can deny.
India is expected to witness a surge in the consuming class that presents a significant headroom for further growth of e-commerce in India which, along with an exponential rise in per capita e-commerce spend, will move the Indian e-commerce industry towards an inflection point. It is perhaps a good time to pause and reflect to see what the sector has in store for the next decade.
Collective impact on ecosystem
Ecommerce can potentially create one million-plus jobs by 2022, while actively supporting and contributing to 20 million-plus businesses run by small and medium enterprises, entrepreneurs, according to leading consultancy firms. In our business cycle, we have been witnessing and been a catalyst to this aspect working closely with lakhs of seller partners and creating avenues not only within the platform, but beyond it also, to make the ecosystem more inclusive and beneficial.
Our partnership with National Skill Development Corp. (NSDC) is intended to certify the supply chain workforce in all aspects of product delivery and customer experience.
We envision to have a robust training programme along with Logistics Sector Skill Council (LSC). As also cited by the NITI Aayog, if the nation must grow at 9%, then e-commerce will have a major role to play. Technology-enabled innovations, such as digital payments, hyperlocal logistics, analytics-driven customer engagement and digital advertisements, not only create and fuel growth of sub-sectors, but also enable overall ecosystem growth.
Equal thrust on first mile and last mile
While the first 10 years saw most players in the ecosystem invest extensively on the last mile to reach their consumers, there is now a very conscious effort to build a robust environment and value chain on first mile (sourcing from sellers) connectivity. The shift of e-commerce towards m-commerce has further intensified the need to solve logistics and supply chain complexities that might arise there on. To do so, as a collective ecosystem, we need to work towards not only acquiring more sellers on a platform but also build demand in high and low volume markets and transform brick-and-mortar stores into distribution centres by, say, partnering with kiranas. Following this, last-mile attributes such as scale, reach, and after sales experience will kick in.
The role of technology and innovation
Catering to the next 200 million will be no easy task given their uniqueness. The ecosystem and players in a market like India need to bring about a renewed focus on how R&D can help solve for this. India has already made rapid strides in this direction. Diverse problems in governance, commerce, insurance, education, and healthcare, etc., are being solved through innovation and technology and delivered via the internet.
With the exponential advancements in technological trends, the face of e-commerce will continue to evolve. Today, sellers on e-commerce platforms, for instance, have access to real-time analytics software to understand their online shoppers, which enables them not only to provide personalized shopping experiences, but also use the data and insights to predict trends and prepare for them. Every unique purchase throws an enlightening customer journey that needs to be utilized to better inform the next sale. Smart predictive analysis will enable merchants to effectively manage the value chain. There is a huge opportunity that can be catalysed by further doubling down investments in R&D and technology.
A lot of emerging technologies are knocking the door of e-commerce customers and sellers alike, the key is to see how we can convert insights into action.
Enhanced experience for future online shoppers
Having established the industry in India and having brought the first 100 million customers online, we are now focused on bringing the next 200 million into the fold and expanding the network into more disconnected areas of the country, through the latest technology and our India-specific solutions.
The future of e-commerce is in offering customers a truly personalized and premium shopping experience in the entire value chain, from search to after-sales support. Part of this is innovating in the voice and vernacular spaces, allowing online shoppers to interact with the platform in their own languages and enabling voice commands across languages. These innovations will take e-commerce deeper to more customers.
We strongly believe that the next phase of our growth is rooted in loyalty, democratizing e-commerce and the country will continue to see more innovations that stem from our deep understanding of Indian consumers. The biggest catalysts to grow the market to reach the next 200 million customers is accessibility, affordability and value. We need to address all of these.
Realizing India’s potential for the sector will require national, state, and local level collaboration of the ecosystem, ability to adapt to the changes in the environment, and be effective and enabling, to make a billion dreams come true.
Kalyan Krishnamurthy is chief executive officer of Flipkart.
