With more and more people buying products and services online, the digital commerce market in India has risen exponentially. Experts believe that the rise in smartphone usage, internet penetration and ease of payments has given rise to digital commerce.
Out of which, mobile commerce has become a primary channel for digital commerce in India. Companies have been rolling out apps for consumers to provide hassle free transaction. As per the Gartner report, over 40 percent of digital commerce transactions came from mobile devices in 2014, which is likely to exceed 50 percent in 2015.
However, the report also mentioned that digital commerce is at a nascent stage in India. Presently, it accounts for less than 1% of total retail sales as of 2015. Despite this fact, the country is also one of the fastest-growing digital commerce markets in Asia/Pacific – growing at more than 40% every year with B2C commerce leading the race.
According to the report, India represents $7 Bn market, growing at more than 40% every year with B2C commerce leading the Indian market. Where on the other side, B2B commerce is limited to organisations that drive online sales while trying to cut costs in dealing with their partners and distributors.
Gene Alvarez, managing vice president at Gartner said, “There is a lot of hype due to the high growth and high expectation of the market, and many companies are fast expanding to grab market share and increase visibility, but the fierce competition is pushing up costs while the average order value remains low. Players need to execute on the basics to ensure the growth is sustainable.”
According to the report, it’s imperative for Indian digital commerce players to focus on the following 5 factors to sustain and drive the growth:
Customer Experience: An important differentiator of a digital commerce service as price becomes transparent across sites. Providers that can design a compelling user interface (UI), personalise landing pages, search results and product feeds based on the shopper’s behaviour, and effectively engage shoppers to make them loyalty customers, will win over those that cannot.
Product Range: Due to the nascent nature of India’s digital commerce market, product range and choices are still quite limited even on major marketplaces. Providers will need to expand the product ranges to make the service attractive to shoppers through organic growth and partnership. Focusing on a few categories, such as consumer electronics, fashion and grocery can also be the right strategy to deeply penetrate a product segment and become the go-to site for that category.
Delivery: This is a key challenge in India given the less developed logistic infrastructure and the lack of last-mile connectivity in remote areas. Providers will have to partner with multiple logistic providers to leverage their strengths in national, regional and local delivery, as well as with retail stores like pickup stations to offer reasonable delivery speed and costs. They also need to consider putting in place reverse logistics for returns that significantly impacts the customer experience.
Payment: Payment has a big impact on the conversion rate, and a frictionless payment process greatly helps increase digital commerce sales. India has relatively low credit card penetration, most of digital commerce is done via cash-on-delivery. Despite regulatory challenges, digital commerce providers should work with payment providers to offer a frictionless payment experience.
Customer Service: Besides offering immediate help on site and via the contact centre, and making processes & cost information transparent, digital commerce providers should think carefully about their return strategy. A generous return strategy encourages sales especially for categories such as fashion and consumer electronics.