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7 Omnichannel Retail Predictions for 2015

The grocery segment will pick up pace in the coming year. Buying groceries online is not a new concept and we already have websites such as Big basket, Godrej’s Nature’s Basket and SRS Grocery who have established themselves in this developing segment.

By

Ashwin Krishna

4 Min Read

January 12, 2015

1. Categories

 

Internet is the new kirana shop

 

The grocery segment will pick up pace in the coming year. Buying groceries online is not a new concept and we already have websites such as Big basket, Godrej’s Nature’s Basket and SRS Grocery who have established themselves in this developing segment. However, these websites currently only serve Mumbai, Pune, Hyderabad, Delhi NCR and Bengaluru, covering only a fragment of the country. With all big honchos of retail realizing the importance of omnichannel retailing, the grocery segment in the country is soon to be crowded with possibilities. All major players in physical grocery segment such as Future Group, Aditya Birla Group, Reliance Retail, and Godrej Group have big plans for ecommerce in the coming year.

 

eCommerce is set to get more Indian

 

Ethnic goods will increasingly be sold on eCommerce platforms. Traditional and handicraft items are getting a push in eCommerce due to commitments from the government and interest from online marketplaces. Also, with India Post keen on empowering eCommerce business, weavers and artisans from the remotest parts of India will be able to ship their products. Association with eCommerce sites will let local artisan and businesses grow by giving them access to a large customer base.

 

High-value products: no longer online taboo

 

A move towards selling niche products online is seen as the eCommerce market is getting highly competitive and saturated. People are getting comfortable with buying touch and feel products online. High-value items such as housing and cars will also try to find their market through eCommerce. Tata housing launched their eCommerce platform, Tata Valuehomes which makes purchasing homes accessible to Indians across the globe.

 

2. Omnichannel Retailing

 

The decade belongs to omnichannel retail

 

2015 will be a milestone year in omnichannel retailing! All the retail stalwarts – Unilever, Reliance, Tata,Microsoft, Aditya Birla Group, Godrej, Future Group, Walmart, Shopper Stop – have all committed to going big on eCommerce. The big guns of Indian retail are getting smarter with their strategies; all are planning to take their brands to the omnichannel. The omnichannel revolution started with selling brands on marketplaces. Due to marketplaces, retailers have had a taste of the online demand. They have realized that having a brand website and an eCommerce store is important for brand and credibility building.

 

In a survey commissioned by Capillary, 34% of the respondents (CXOs of retail companies) said they have an eCommerce store and 45% of the respondents are launching their eCommerce store in 2015!

 

Big bang investments and projections in omnichannel

 

In an omnichannel retailing survey commissioned by Capillary, retail CXOs were asked to estimate what % of their sales will be “driven” from omnichannel in 2015. This included the direct and the influenced sales (order online -pick up in store, social media influenced sales and so on). A majority (39%) of the respondents are projecting that omnichannel Retailing will influence 6-10% of the annual sales.

 

53% of the retailers surveyed are looking to spend more than 25 Lakhs annually on online omnichannel technology and operations in the coming year. Retailers are willing to make investments in omnichannel as they have realised the potential of the channel. They believe that it impacts not only the direct sales but also leads and brand building

 

3. Payments

 

Multiple payment options – Credit Card, Debit Cards, Net banking, Cash on delivery, EMI, Mobile Wallets all facilitate online shopping. However, CoD is the preferred means of payment in the country with 60% of the deliveries going through cash according to Accel Report. CoD has been the key enabler behind the growth of eCommerce in India, by building trust in online shopping portals. However, the share of CoD based shipments will come down to 50% by 2016 (Accel Report).

 

Limited Card ownership no longer a barrier to online purchasing

 

Even Though COD remains the most popular payment option for online retail transactions, debit cards are becoming increasingly popular. The latest report (October 2014) from RBI reveals there are 441 Million Debit Card users and this number is growing month on month. The password requirement of any card transaction has created a secure environment for digital transactions. The number of card holders in the country is only to increase – The government of India has taken the PMJDY (Pradhan Mantri Jan-Dhan Jogna) to give banking access to hitherto unaddressed audiences.

 

Card on Delivery will meet the demand

 

Card of Delivery will considerable add to the growth of the industry. Mobile point of sales (MPoS) has allowed easy capability of cards being accepted on the delivery of the product. This will address inadequate cash availability during delivery. Customers will be able to access EMI facilities or pay by credit, right at their doorstep. Additionally, it will give customers peace of mind when paying for higher value items such as jewelry or electronics, as the payment will only be after delivery.

 

Pre-paid digital wallets and EMI to pave way in the future

 

The future and potential of pre-paid digital wallets is bright in India, however, the concept is still not been completely embraced by customers. Taxi companies such as Ola, Uber and Meru are slowly getting customers accustomed to pre-paid wallets. The Accel Report reveals, by next year the share of EMI transactions (out of all eCommerce transactions) will be 5% and share of wallet based transactions will be staggering 7% (currently its contribution is at less than 1%).

 

Easier payments to become reality

 

Making eCommerce payments is to become less cumbersome for the frequent buyer with the government planning to pardon the 2-step authentication during card payments for low cost transactions. The checkout time will considerable reduce for customers, allowing them to make impulsive purchases. Consumers are increasingly becoming comfortable storing their card information. 2015 might be the year when 1-click checkout might be reality, supported by favorable technology, consumer mindset and regulations.

 

4. Logistics

 

Heavy investments to help build logistics infrastructure

 

DHL recently announced that it has chosen India in the Asia-Pacific region to pilot its eCommerce business model and will be investing more than €100 million for creating infrastructure to do the same.Logistics – the backbone of eCommerce is graduating from being plain transportation to offering specialized and integrated services.

 

Ecommerce will be delivered by Post Men

 

India post has transacted business worth Rs. 280 crores in CoD alone! The public company is going through a complete revamp of its infrastructure and technology to gain a big chuck of the eCommerce logistics market share. India Post’s inherit services such as core banking solutions and robust money accounting systems prove as a bonus for cash ecommerce deliveries.

 

Ship fast, reliably.

 

With the competition heating up and consumers are looking for “gratification”, eCommerce companies are increasingly focusing on reducing the delivery time. In 2015, The top eCommerce players will continue to innovate with ideas such as Same Day delivery, Next Day Delivery and Drone based Delivery. Will drones come to India in 2015? We don’t think its a conducive time considering the fragile regulatory and backbone. More importantly, companies should focus on reliable delivery especially during festive seasons. Hopefully, 2015 will be a better year for logistics and there will be lesser reports on delivery delays and chaos.

 

5. B2B eCommerce

 

The coming of B2B

 

B2B eCommerce has completely changed the way business is done in developed countries; according to a recent Forrester study, India is to mime a similar change in B2B over the next 1-2 years. The hurdle for B2B commerce initially was that buyers were sceptic about online payments and did not trust online portals. Now that B2C Commerce is booming in India with 100% FDI allowed in the B2B eCommerce, customers have placed their trust on eCommerce. This model is gaining momentum in the Indian market with companies such as Walmart adopting it with open arms.

 

Competition and opportunity in the market

 

Brands matter in B2B commerce as a lot of trust goes into buying and selling in the hyper-informed markets of today. Despite this, B2B marketing companies still need to have a competitive edge- something that distinguishes them from the competition, to survive in the market. There is an upward trend in the acceptance of B2B eCommerce due to rising awareness among Small and Medium Enterprises through initiatives such as Indiamart and TradeIndia where businesses have learnt the power of online presence. Tolexo, eCommerce initiative by Indiamart is a testimony to growing aspirations of B2B eCommerce in India. Also, there is no FDI regulations in B2B eCommerce. This will pay for VC and Private Equity investment in this space.

 

6. Mobile

 

Smartphones are the present and the future

 

According to a recent study by Zinnov, Indians spend almost 3 hours on their smartphones everyday; which surpasses time spent on TV’s, PC’s and tablets. Affordable smartphones with regional language options are the present and future window of internet consumption in India. People who can’t afford or get access to computers are enabled by smart phones. The magnitude of this segment can be felt in the market as Micromax, an Indian budget smartphone brand, is on its way to dethrone Samsung as the country’s top mobile brand. Additionally, Google has come out with Android One, a phone software especially designed to run on low cost smartphones.

 

As a result, smartphones are increasingly becoming an essential part of the overall purchase process. Consumers are constantly searching and curating products and services they are interested in through their tablets and smartphones. 65% of Snapdeal’s orders have been placed through mobile devices; now that’s impressive!

 

A mobile optimized site is a prerequisite for eCommerce today. eCommerce giants are now focusing on driving their mobile apps to customers. Most of the Indian eCommerce app downloads are heavily incentivised with exclusive offers or credit points. The future of eCommerce apps will continue to be driven by heavy incentives in the Indian market.

 

7. Digital Marketing

 

The spark will grow as a fire!

 

In a survey commissioned by Capillary, Retailers who have an omnichannel roadmap invest more than 10% of their marketing budget on digital marketing for 2015. Retailers who are trying to build a strong digital presence are planning to spend 7% – 9% of their marketing budget, whereas retailers who do not have a focus on digital spend less than 4% of their marketing budget on digital.

 

According to a report by KPMG, digital marketing spend as a part of overall marketing budget is the fastest growing channel and it will attract 9% of the budgets from marketer’s kitty.

 

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Ashwin Krishna

An expert in all things Digital, Mobile, eCommerce and Online Retail, Ashwin Krishna has 13+ years of professional and entrepreneurial experience across India, Middle East, Africa and Emerging markets. His well-researched insights have stood the test of the corporate sphere.

Aauthor Name

Ashwin Krishna

An expert in all things Digital, Mobile, eCommerce and Online Retail, Ashwin Krishna has 13+ years of professional and entrepreneurial experience across India, Middle East, Africa and Emerging markets. His well-researched insights have stood the test of the corporate sphere.

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