Being fully aware of the
disputable term “3rd World”, Wikipedia is confirming the same for
India, but the business world might call it emerging Market and the locals
would rather refer as THE biggest democracy in the world. But this is not the
topic of today. Today I would like to throw some light on how I perceive the booming
ecommerce market in India.
In the Social Media world, India
has already emerged as a leader and counts the second largest user group on
Facebook, only behind the USA. On Twitter, Instagram, Pinterest, LinkedIn etc.
the situation does not look much different. A true case of leapfrogging
demonstrates also the maximum use on mobile devices, rather than computer.
The main strategy of all
ecommerce players in India seems to be identical, to grow active customer base,
which in turn will increase their valuation! So far so good, investors, venture
capitalist and private equity is flocking as there was no tomorrow. Articles appear
daily to report foreign investments, only in multiple of $ 100 million per investment
round. The majority of these funds are used to discount products and attract
more customers to increase customer base and therefore the valuation of the
company.
At the same time investments into
a sustainable business model seems to be entirely absent. The platforms /
applications are below par from a user experience perspective. Product searches
often land in a jungle of similar products offered by multiple vendors and
delivery preferences are not welcome. Given the consumer friendly option of
cash on delivery is adding fuel to the return rate. Here an example: A Rs 200/-
($ 3) pair of socks will be delivered overnight on cash on delivery. If the
customer is not at home (or doesn’t carry cash), second delivery will be
attempted. If the customer does not like the socks, they will be returned
immediately without payment. This is a very expensive approach and the cost of
the transaction is for sure higher than the product value. Given the big number
of such players fighting for customer base, the customers are not loyal and
only go for the kill. Often the products are of substandard quality, maybe used
or defective and Social Media is reporting many cases of counterfeit or hiked
prices to allow bigger discounts (which would be illegal in India).
I do remember very well the
dot-com bubble from 1997 – 2000 in the western world, where investors would not
ask any question and beg entrepreneurs to take their money as investments for
internet based business models. The bubble burst during 1999 and 2001. My
memory is well intact because I graduated from my Executive-MBA in New Media
& Communication, which was later re-named Media & Communication.
Keeping the entrepreneurs in
mind, their model has already worked as they became rich overnight. Keeping the
investors in mind, their model will work, as long as they exit before the
burst. He that comes last makes all fast.
Unfortunately offline retailers
seem not able to fill the gap of quality and service oriented shopping and
therefore retail experience remains an issue rather than a pleasure in India.
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