The recent upsurge in e-Retailer segment business attracted analyst as well as retailer to claim explosive growth potentials in said segment. The CXO’s level of most of the Indian companies came out with growth projections which reminds me Telecom VAS forecast that happened in 2007. At least, Telecom VAS forecast came out as dump and many investors which include both PE and equity holders in publicly traded companies suffered huge losses.
Last many weeks, most of the print media focusing on growth potential in Indian Online marketplace and potential higher adoption of Indian consumer space includes WEB and WAP user base. All cheered Flipkart achievement of $1 Bn revenue club in short period of time and ended up comparing with the likes of Amazon and predicted that Indian Online e-Business is going to achieve multibillion $ club in next few years.
The recent investment by PE’s in Indian Online e-Retailers cheered many and as a result many new e-retailers jumped in fray with focus on valuation. E- Retailers also projected that the exponential growth of Smartphone adoption in India is going to offer them additional opportunities to create business but seems they missed many factors on ground level.
Some Of Them Are As Follows
1. How many e-Retailers are profitable?
2. How many users are using their credit card?
3. What is the cost of user acquisition?
4. What is the conversion rates w.r.t consumer visits?
5. The cost involved in payment mechanism due to CoD?
6. What is the repeat user percentage?
7. How many Smartphone users are using devices to place order?
8. Did e-Retailers offer guarantee to maintain security and privacy concern around device to offer seamless secure payment mechanism?
9. Who would be responsible for data theft in case of wireless hacking?
10. And many more
All investors are rushing to invest in e-Retailer in hope that down the line the online market space will mature and they will make money out of it. In my point of view, that is over optimism as retailers must focus on innovative approach to attract user and offer secure solution. Creation of Mobility Applications as well as offering product at discount to attract user is not going to work in long run. They invest heavily in promotions but given the total internet user base in India, it’s not justifiable.
India is a place of organized retail market and if e-Retailers want to entrench that segment to attract user towards their platform, they must focus on platforms and delivery mechanism supported with extraordinary consumer support management. Post aggressive push by International players such as Amazon it would be extremely difficult for home grown players to match them as International players already crossed the teething problems and exactly know the consumer dynamics and nodal points which works with consumers. Hiring top grad is not going to work but viral connection with end consumer is going to work. Indian marketplace is Atypical where any new approach gets lots of attentions. Once consumer experiences any issues then it’s a lost customer forever.
In the mobility approach home grown retailers must recognize that the money they spend on Print can be used to acquire consumers in one or another way. It would bring better conversion probability compared to current approach. In my views, early growth attach to any new sectors are in exponential curve and subsequently in high single digit. We must learn this aspect with growth story of Telecom sector. I also believe that some of the players would come up with strategy which is going to crack the potential and consumer adoption but for that strategy needs to be completely out of box rather than copycat.
