Ecommerce: About time to press the ‘Shift’ key to Local

By Shabbir Husain

INTERNET penetration continues to grow globally and with it are constantly developing new business strategies to ride the platform. While Internet is getting firmly entrenched as part of the retail business, it will be interesting to look at the journey traversed so far and the possible way forward.

Like the classical product diffusion curve, Internet economy will also have its innovators, early adopters, early majority, late majority and laggards. The innovators and early adopters have already taken their place in the system. These are products/services which are in many a sense low-hanging fruits wherein additional benefits have accrued to consumer without him/her having to move out much from the convenience zone or purchase mindset. Examples to innovators would be standard products like electronic items, books, DVDs wherein the standardization of the products took out the inertia of trying out the virtual buying avenues. Expectedly, early innovators are still the categories that are contributing the most to the revenue of ecommerce firms (about 40 per cent of Indian Retail Ecommerce Sales contribute by digital products and books, Accel Partners est.).

Apt examples in the services sector here, would be standard airline bookings, premium hotel bookings etc, for the same rationale. Illustrations to early adopters would include lifestyle products (Fashion, Footwear & Accessories contribute to some 35 per cent of Indian Retail Ecommerce Sales, Accel Partners est.) where standardization may be missing but the risk of going wrong is not too taxing.The credibility (about the product quality) in this space has taken some time to come but the torrent of positive customer feedback (an exceptionally powerful tool in the digital space) has paved the way for the space to grow.

While the first two stages have been dominated by cases where consumers have reached out to companies, the next stage will entail companies having to reach out to the consumer territories.This is also the stage that will involve consumers moving out of some of their convenience zone/mindsets (e.g. online grocery). This wave of 'Early Majority' will also have a localization buzz around it and will be driven by the following attributes:

• Localized Products: Products with a limited shelf life (e.g. Food items), Convenience Shopping (Groceries, Snack foods, Toiletries)

• Localized Services:Services requiring local presence (e.g. Cab services, Plumbing, “Find a maid!”)

• Proximity Transactions: Products that require both buyer and seller to have proximity would fall in this category (e.g. Real estate, Classifieds).

• Omni-channel Reach: With Omni-channel marketing expected to be the end-state of the offline/online retail battle, localized experience and presence will be a hygiene competing requirement.

Both Kunal Bahl (Founder CEO, Snapdeal) and Pranay Chulet(Founder CEO,Quikr) have at different platforms, voiced the localization phenomenon of ecommerce as a logical step. A look at the recent funding pattern in the VC space will also hint at the phenomenon. Bengaluru-based food delivery startup SpoonJoy has raised an undisclosed amount of funding from founders of Flipkart, Tracxn and Delhivery. Funds have also been received by BookMeds (ordering prescriptive and non-prescriptive medicines as well as surgical & medical products), Ola/Uber/TaxiForSure and many more.

From a marketing/communication perspective, Internet marketing has started evolving in the localization space. Geo-targeting is being used by companies for recommendations and offers depending on the current location of the user. For e.g. notification about an offer could be made to a user as soon as he/she comes in close proximity of a mall. The almost ubiquitous prevalence of mobile phones is the key driver behind this.

E-commerce started as a platform that took the world to people's fingertips. The tide will not reverse, but now ecommerce firms are all set to reach out to those fingertips by going local. It is time to move away from the ocean into the feeding rivers!

(The author is Manager, Corporate Relations at IIM-U. The opinions in this article are that of the author and CyberMedia does not necessarily subscribe to the same)