31 May 2017
Understanding India’s E-commerce Ecology
As India’s overall retail sector continues to expand, opportunities are flourishing in the online retail space driven by an increasingly modern consumer base. For tech-savvy Indian consumers, convenience reigns supreme in a market that is diverse both geographically and culturally.
Home-grown online marketplace Flipkart has become one of the largest players in India’s e-commerce market. Jagjeet Harode, Flipkart’s Director & Business Head (Home), attributes the company’s success to its keen understanding of the diverse consumer bases and the ability to adapt its services to match India’s technological development. Mr Harode offered his insights on the Indian e-commerce sector at the “Trends on E-tailing and Consumer Market in India” seminar held during the HKTDC Hong Kong Gifts & Premium Fair in April.
What’s the current state of India’s online retail environment?
To give you context, if you look at the last five years of India’s e-commerce market, it has grown 500 times and will likely continue this growth because it’s still at a very nascent stage of penetration. The second wave of growth will depend on how much innovation is brought onto the table and that’s expected to happen in the next stage of four years when we will reach around US$60 billion to US$90 billion in retail market size.
What types of products are of interest for online consumers in India?
Firstly, things that are not easily distributed offline. So if you think of brands that are not readily available in the traditional retail market, these tend to sell very well online. Second are a whole host of products, which is the mass market, because we are able to do things at scale. We are saving a huge part of the value chain, which we then pass on to the consumer. Because the consumer is getting better value online, they are buying. Finally, online does provide you with a huge selection that is not provided in a small retail set-up. When you have hundreds of designs to choose from, it’s much easier and the consumer is getting a lot more [from the online experience]. So those are the three big parts driving online growth.
What’s unique about India’s online consumer behaviour?
Consumers are sensitive about price points. They have a specific budget in mind when shoping. Often times, you are investing some time and energy in going to a store. Online, that energy or that price is not there, you just go online and check things out directly. So people are more sensitive about the price point or the budget that they have. People also tend to believe in [seller] portals now. Because it is a huge, unorganised market, the portals themselves along with badges have become synonymous with quality assurance for the consumer. People are looking for better quality and look for those badges that assure the quality of a particular product.
What would be your advice to companies interested in breaking into India’s online consumer market?
You have to be very sharp with your prices. But at the same time, if you are really providing some significant value that also works very well, in that case you also have to communicate that to the consumer. So for a starting point, you need to look at your vertical price point where you are operating and see if you are really adding value to what’s available in the market. In many cases, Hong Kong has a lot to offer, so folks who think that they can provide that value should jump into the market right away.
What opportunities are available for Hong Kong businesses to work within the Flipkart model?
We are leading the e-commerce wave in India. We are around 60 per cent to 70 per cent of the market in most categories, and we are extremely open to onboarding new selections as well as new value propositions for the consumers. One model is that if it is a proven concept and you are providing better value or a lower sourcing price point, then Flipkart can buy it for its own [seller] portal. Second is to latch onto large sellers already on the portal. So if someone wants to start out and see for themselves what the traction is, they can contact one of the sellers and root themselves to that. Third is if you want to be a seller on the portal, that is also totally possible and you can just get in touch with the seller on-boarding team and we will help you.