Should Flipkart, Snapdeal & Paytm Be Worried About The Digital Desh Drive? A Report By NowFloats

The funding frenzy in ecommerce was based on the assumption that the market won’t have disruptions, and the folks dominating the market today will continue to dominate the market 30 years later too. Now Floats’ Digital Desh Drive report, titled ‘Inside the Internet of India’ indicates that may not be the case.

Early this year a team from and management consulting company Zinnov and NowFloats, a technology company enabling small & local businesses to get online, took a car ride from Amritsar to Kanyakumari to understand how small businesses are using the internet for growth.

The NowFloats team led by Prathibha Sastry and accompanied by the team from Zinnov & Inc42 covered 24 cities in 24 days, traveling a distance of 7500 kms. They met and interacted with small businesses and dug for insights on how small businesses were leveraging the internet.

The report released last month is a revelation. Not only are small & medium businesses, and local shops, adopting technology tools, they are doing so vigorously and innovatively to find, sell, service and engage customers. I am told that NowFloats, an Omidyar and Blume funded company which enables small shops and businesses to create an online presence and do local commerce with just an SMS (and the NowFloats Boost App), has got over 120,000 PAYING CUSTOMERS within two years of operations.

I think this report should sound a warning bell for ecommerce giants and investors who are betting big on the leaders of today. The funding frenzy in ecommerce was based on the concept of lifetime value of a customer. And that had an underlying assumption that the market won’t have disruptions, and the folks dominating the market today will continue to dominate the market 30 years later too.

However, over 120,000 small businesses across India creating web presence on NowFloats is perhaps a signal that the balance of power may shift back from etailing giants to brand owners who may be able to now engage more profitably with small local shops who will use technology seamlessly for customer acquisition, customer engagement and customer support, and for tapping into a global supply chain and logistics network.

The current ecommerce leaders have altered the retail landscape of the country, and changed the dynamics of the consumer durables and FMCG industry. However, we need to remember that etailing is only a ‘medium’ and NOT a sector. Flipkart, Snapdeal, etc. are retailers with an online presence. They will and do compete for consumer attention with other online as well as offline shops.

Current leaders in the online retail space grabbed consumer attention on the basis of discounts – a rational and functional value-proposition that does not, on its own, create any emotional connect between the platform and the consumer. Customers will stay with the platform as long as the price is lower. It could be for several transactions, or it could be for just that one transaction. Over a period of time, they may choose between a few favourite online players, but could switch if the price differential is higher at another venue – online or offline.

As online players move from discount as their key value-proposition and start establishing connect with consumers in the way traditional brand building is done, service quality, emotional brand appeal, brand personality, customer engagement, etc. – consumers will start evaluating and comparing options, including offline stores near them as well as online players. With what the Digital Desh Report and NowFloats’ sales figures tell us is that it is not a foregone conclusion that the ecommerce giants of today will continue to be the preferred choice of consumers tomorrow. I think the dynamics of the retail sector are in for a big change yet again.

Can few large logistics companies (distributed warehousing for local retailers) + consumer durable brands + NowFloats mess up with Nikesh Arora, Jack Ma and Lee Fixel’s plans for India?

If the report is an indicator of what’s happening in small town India, I think we are in for some exciting changes in the retail space in India.

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