outlook15

As a part of our #Outlook15 series, we asked heads of niche e-commerce companies – Myntra, Jabong, FashionAndYou, Urban Ladder and FabFurnish about their focus areas for 2015, and the challenges that the online e-commerce ecosystem needs to address. Answers have been shortened for brevity.

Which according to you were the top developments and roadblocks in the e-commerce segment in 2014? Why?

Ganesh Subramanian, Myntra

Ganesh Subramaniam

Mobile is increasingly driving the e-commerce revolution in India. We have witnessed phenomenal activity on the mCommerce front, with smartphones gaining prominence as the preferred mode to access and shop for fashion brands in the country. Significant increase in online purchases from Tier-2 and Tier-3 cities and now they also contribute a large majority of the e-retail pie.

Roadblocks: The market is still small due to low internet penetration, lack of understanding of e-commerce and addressing the consumer tendency to touch & feel the product before purchase.

Praveen Sinha, Jabong

The e-commerce industry entered an era of smart phones and we saw mobile apps for all the e-commerce websites across all operating systems.

Dynamic changes like next door delivery, open delivery and same day delivery for a whole range of products led to myriad of customer acquisition for the industry and garnered significant customer loyalty towards the brand. Due to such developments, we can now comfortably predict over 3-fold growth in the M-wallet segment in the next 5 years.

Online shopping is rising tremendously not only in the metros but also becoming a trend in the small cities, where people have aspiration and purchasing power to buy but do not have accessibility to the brands/products.

Aasheesh Mediratta, FashionAndYou

– Disruption in mobile space; almost 30%-50% of the transactions from mobile now

– Next leg of growth coming from tier 2/3 cities; more than 40% of the sales as compared to 60% from tier 1

– Customer spoilt for choice, especially in fashion and lifestyle space with almost all of the players offering huge number of brands/product lines at great price

– No customer loyalty still; overall customer experience besides product/pricing will be the deciding factor

– Offline players recognizing the need and announcing their arrival in e-space.

Challenges

– Last mile connectivity (less than 10000 serviceable pin codes ) – for players who don’t have fleet on the ground

– High dependence on COD as a payment option; majority of returns attributed to the same.

Rajiv Srivatsa, Urban Ladder

The year saw a lot of investments in the sector which is helping the industry scale up and attract talent from other industries. This year also saw e-commerce becoming way more mainstream and attracted a lot of talent on campuses as well. The media has been instrumental in making e-commerce a lot more mainstream with continuous coverage and interest in this sector. A lot of awareness has been spread about the medium because of the media.

Another major development has been the speed at which the e-commerce industry is operating and fulfilling customer demands. Be it instant deliveries, resolution of customer grievances etc. The e-commerce industry is establishing new benchmarks of putting customers first.

There has been a massive shift to the mobile web and the year saw a lot of new mobile apps and app only deals.

On the roadblocks – there has been no major movement on the regulations of operating in the e-commerce space. Also, the industry still needs a lot of investments on the logistics front.

Vikram Chopra, FabFurnish

Vikram Chopra

Top developments in the e-commerce sector for this year are:

– Sales of most niche e-commerce players have gone up by 3 times and that’s largely because of the increased number of customers.

– Social media has finally gained momentum in this sector in the last one year. It has not only helped us increase our website traffic and generate more revenue but also helped us build our brand image.

– Consumers from tier 2 & 3 cities have responded really well to the experience of online shopping this year.

– We have already created a widespread warehouse network to smoothen the surface transportation in India that is filled with bottlenecks.

Major roadblocks of this year were:

a) Touch & feel factor: Consumers are still conscious about the touch & feel factor and that is something hard to overlook. Whether it is home & furniture or fashion & technology, it is difficult to overcome the age-old trend of product display and buying products offline. To counter this, we have physical centres showcasing selected assortments.

b) Unorganized vendor base: There is a lack of structured process or manufacturing standards for most vendors and non-standardized products in the country. Termite, borer, expansion / contraction of wood, etc. are other common problems plaguing the e-commerce industry. Our approach is to ensure quality accuracy for our entire assortment.

What are the consumption patterns (online & mobile) that you observed in 2014?

Ganesh Subramanian, Myntra

– Today, close to 75% of internet traffic originates from a mobile device. 50% of all internet users access data only on mobile. Therefore we see mobile as a key driver to engage users.

– India is a cash driven economy and therefore cash transactions continue to rule with over 60% of shoppers who still prefer to transact using cash as their primary mode of payment.

– We also observed a healthy mix of traffic from metros and non-metros. Currently Tier 2 & 3 cities account for upto 60% of our traffic. This has largely to do with inaccessibility to brands in these cities in the offline world and growing penetration of mobile internet.

– We have also witnessed an increase in women shopping online, a trend that will continue to grow faster than the overall market growth rate. This is primarily attributed to the growing confidence of e- commerce as a trusted platform which offers unlimited styles from across brands at the convenience of their home or office.

Praveen Sinha, Jabong

Praveen Sinha

– We have witnessed an increase in the sales from tier II and tier III cities by 50-60%. 45% of the sales of the designer collection of Jabong Online Fashion Week are coming from smaller cities apart from the usual responses that we received from the major metros.

– International brands exclusive to Jabong like Dorothy Perkins, Miss Selfridge are doing exceptionally well. During GOSF, we observed an extraordinary leap with our revenue rising 4-5 times compared to our sales on any regular day. Brands that sold the most on Jabong this year were Dorothy Perkins, Sangria, Alia Bhatt for Jabong, UCB and Vero Moda.

– Mobile and site contributed to 33% revenues with our sale figure mounting up by 4-5 times every year. With such figures in the year gone by, we are hopeful for a brighter future in the year 2015.

Aasheesh Mediratta, FashionAndYou

– Increase in internet penetration; even higher in case of number of smartphone users.

– Majority of Indian population still impulse driven when it comes to buying online.

– Greater traction in fashion & lifestyle space.

Rajiv Srivatsa, Urban Ladder

There has been a massive shift to the mobile web and the year saw a lot of new mobile apps and app only deals. Today, almost 50-60% of all transactions happen on mobile.

Vikram Chopra, FabFurnish

– 30% of our sales come from tier 2 & 3 cities and the number is only increasing.

– There has been an increase in percentage of furniture sold which gets reflected in the increase in average order value. Consumers in metro cities are now moving towards mobile. Desktop still contributes a huge chunk of the revenue in e-commerce.

– The number of users present on mobile has rapidly increased in 2014. 3G connectivity, m-websites, apps and mobile wallets are some of the factors why the focus has shifted to mobile. The average transaction amount is low on mobile by about 30% than in the desktop. Mobile wallets have made it convenient for users to make mobile payments. Apps, as well, seem to be a good bet to reach consumers due to greater time spent by them on the mobile.

How has the sector changed from 2013 to 2014?

Ganesh Subramanian, Myntra

E-commerce has seen a remarkable transformation in the way India shops with consumer mentality and shopping patterns changing by the day. Shoppers are opting online channels over brick and mortar retail not only for daily consumption but for special occasions such as festivals and weddings.

Over the year, mobile consumption has skyrocketed as users carry this device at all times and are looking to consume content even when on the go.

The number of online shoppers has almost doubled to 35 million in 2014 and is expected to grow over 100 million by 2016. Therefore there is no denying the fact that the online shopping phenomenon is here to stay.

Aasheesh Mediratta, FashionAndYou

Aasheesh Mediratta

– A lot more capital raised in 2014; almost 5 Bn Dollars committed to the sector. Equal to the size of the current market.

– Consolidation which started in 2014, to continue in 2015.

– Leaders started emerging in / across various business models (marketplace, catalogue players and Flash sales) just like its global counterparts in US & China.

– More players to enter e-commerce but in differentiated space.

– Mobile to continue to play the key role in growth of the sector; will lead the same.

Rajiv Srivatsa, Urban Ladder

– While 2013 mostly belonged to horizontal players, 2014 saw the rise of vertical e-commerce players. Through the year, vertical players attracted investments and customers.

Vikram Chopra, FabFurnish

2013 seemed to mostly be about acquiring customers. 2014 was a year where more emphasis was placed on selling products to repeat customers to increase profitability.

Now we’re looking at targeting tier 2 & 3 cities for expansion as a huge chunk of population in metro cities is already an e-commerce consumer. More furniture vendors are selling their inventory to FabFurnish due to our superior logistics, reach, marketing and affordable pricing.

While consumers are still driven by discounts during festive seasons, more and more consumers are looking at the brand of the company and the quality of goods sold. This is necessary as only running on discounts is not a sustainable business model.

What sort of transition have consumers made from offline to online in 2014? Why? What are your observations?

Ganesh Subramanian, Myntra

We have observed that a lot of people buy from physical stores after researching for a product online while the reverse trend of buying online after gathering information from the store is also on the rise known as Showrooming. With the rise in Internet penetration and smartphone usage, we believe that both behaviors will merge increasingly as the customer will be empowered with information at his fingertips.

Praveen Sinha, Jabong

We have seen a dip in the offline customers after Diwali. Online purchasing is becoming more acceptable which is clear from the number of consumers increasing every day.

Offers like easy return policy, lucrative discounts have led to an increase in the average transaction value. Also, the COD % has gone down comparatively. Increasing broadband industry; rising standard per-capita income of the Indian audience; dearth of time for offline shopping ventures and a lifestyle swamped under the chase for superiority, today the only motive a regular working person has is crunching time for every possible activity he/she is involved in.

Aasheesh Mediratta, FashionAndYou

– Offline and online channels complement each other, with latter contributing ~3% of total retail sales.

– While online channel offers “convenience” as a key differentiator in tier 1 cities; its the“access” to wider offering which is the key in tier 2/3 cities.

Rajiv Srivatsa, Urban Ladder

Almost every category is shifting is now shifting online, even the ones with high ticket prices, thanks to good word being spread by early adopters of that category.

Vikram Chopra, FabFurnish

Even though Indian consumers are still hesitant to make an online purchase, they are definitely coming out of their cocoons. Consumers are more fashion-conscious than they were ten years ago and want to frequently keep on upgrading the look of their homes in innovative ways.

To make the process of selecting furniture easy, we have offered a thorough product display where a consumer can get a complete 360 degree view of any product that he or she is looking to buy. Apart from this, payment options such as cash on delivery, EMIs and part payments have instilled confidence in consumers about e-commerce industry.

How has your relationship with brands changed in 2014? What are your observations?

Ganesh Subramanian, Myntra

At Myntra, we have always had a deep relationship with our brand partners and we have taken this a notch higher in 2014. We were the first in the industry to organize our annual Brand Meet back in 2012 where all our brand partners were invited to exchange their thoughts and ideas on a common platform. Today, our partners eagerly look forward to this annual get together and are constantly involved while planning for the next season.

Praveen Sinha, Jabong

Jabong shared a very healthy relationship with brands in the year 2014 as we were fortunate to add to our brand count with more than 1500 on-trend international high-street brands, sports labels to Indian ethnic and designer labels. Jabong as a brand always strives to apprise its audience with global fashion and this year proved no different in bringing international brands on the table for our customers.

– International fashion giants like Dorothy Perkins, River Island, Mango, Miss Selfridge and G Star Rawcame on-board in 2014 and became the hot sellers. Such associations allow Jabong to have a very strong market position in the e-commerce sector.

– Jabong also appended ace designer labels like RohitBal, Gaurav Gupta and Krsna Mehta under its brand name, thus catering to the needs of an audience who otherwise have limited access to such international and designer brand names.

– Under sports e-commerce retail, Jabong added interactive sport components like Reebok, Nike, Adidas Puma Store etc. The year proved a year of great camaraderie between brands and Jabbing.

We also introduced brands like Dorothy Perkins, Miss Selfridge and River Island in Lakme Fashion Week and forayed into ventures like Jabong Online Fashion Week where the strict line between online and offline was blurred.

Today every brand has started trusting e-commerce and wants to go online given the prodigious growth they foresee for the industry. We are seeing bigger investments from brands in the upcoming year.

Aasheesh Mediratta, FashionAndYou

– As a flash player we offer a great platform to our trade partners to sell their surplus stocks at great discounts to the customer; even launch new ranges on inaugural discounts.

– The alliance also offers increase in visibility and access to newer markets.

How have the exclusive tie-ups with brands helped your company in 2014?

Ganesh Subramanian, Myntra

Exclusive tie-ups with brands like Harvard Lifestyle, Desigual, WROGN from Virat Kohli, Scotch & Soda, Rajesh Pratap Singh’s Mario de Miranda has helped Myntra not only by offering variety to customers but also create a strong connect and inspirational value for shoppers. Our ability to understand and cater to consumer demands ahead of time differentiates us from rest of the players.

Praveen Sinha, Jabong

Exclusivity was the flavor of 2014 when it came to online retail in India. Jabong is constantly adding brands under its banner; international fashion giants like Dorothy Perkins, River Island, Mango, Blue Saint and Miss Selfridge came on-board in 2014. Such associations allowed Jabong to further strengthen its market position in the e-commerce sector.

– Alia Bhatt for Jabong, where the starlet curated a line exclusively for the brand witnessed a lot of takers for the line since its launch. Ace designers like RohitBal and Gaurav Gupta came on-board and created exclusive collections for the brand. The response so far has been quite fruitful for Jabong.

– Jabong also managed to bring local flavors into the online space through Jabong Boutiques. The idea was born out of the desire to quench the needs of fashion discerning shoppers searching for fashion forward and trendy designer wear on a single platform, and at the same time, to provide a platform to the best boutiques to reach out to millions of customers at zero additional fixed costs. Jabong Boutique put the crème de la crème boutique labels on the national and global map and bring under one roof, up market and trendy boutiques which supply haute couture or ethnic and western fashion.

The responses so far for these exclusive tie-ups have been quite favorable and we have witnessed great sales for these brands during the diwali as well as the GOSF sale period.

What are the likely trends that you expect to see in 2015? Why?

Ganesh Subramanian, Myntra

We will witness exponential growth in the Indian e-commerce business in 2015. Some of the major drivers that we believe will make a big impact in the coming year are:

– Mobile will emerge as the preferred medium for all online transactions. Retailers will increasingly focus on investing in mobile technology and explore innovative ways to drive engagement and deliver a superior experience for customers.

– Global exposure and a stable economy, coupled with a young population with high disposable incomes, spell ‘good news’ for premium and international brands entering India in 2015.

– Online purchases from Tier-2 and Tier-3 cities are expected to significantly increase, thanks to the emergence of low cost smartphones. E-commerce will serve as a conduit to the growing aspirational needs in these locations.

– Exclusive brands to increasingly drive demand in 2015 as they offer differentiated products with great quality at fair prices.

– Bollywood will be one of the key drivers in the growth of online fashion shopping as celebrities and production houses are jumping on the e-commerce bandwagon.

Praveen Sinha, Jabong

In terms of fashion, we are likely to see a lot of prints and patterns, military and camouflage, 70’s inspired clothing, cut-outs and stripes trending over the year. Colors which might dominate this year are marsala and indigo.

– We further foresee innovation in delivery and payment methods. Customers today expect a hassle free and fastest delivery of their products and for the same purpose every brand needs to constantly diversify their offerings.

– In 2015, there will be an array of developments in the e-commerce sector. We have already seen how offline is aggressively taking the online route and this trend is only going to further elevate in the upcoming years. We strongly predict activation of people in rural areas, though we have already started receiving significant response from tier II and III cities but we also plan to create a brand name in every nook and cranny of the country. In order to embrace the rural population into the e-commerce realm, simplification of payment process will be seen in the near future.

– Mobile to play a very important role in the buying and selling. Mobile is driving a huge portion of the revenues and it is only expected to increase.

– As a part of on-ground marketing, e-commerce players are going to reach out to the customers to show that they physically exist and companies will more robust against their return policies for the people who misuse them.

– We definitely see an increase in CSR involvement of the e-commerce players. Also, a lot of these e-commerce companies might go for public funding in the upcoming years with global players entering the Indian market giving the existent firms a stiff competition.

Aasheesh Mediratta, FashionAndYou

In 2015, the leaders in their space will stay focussed on high growth, while the smaller players/verticals will find their own niche.

Rajiv Srivatsa, Urban Ladder

Rajiv Srivatsa

Mobile will continue to hold strong and grow further and mobile apps will get into augmented reality and visualization realms.

Also, instant delivery will expand to more categories including home decor.

Vikram Chopra, FabFurnish

– Mobile penetration: A substantial portion of consumers have now started using their mobile phones to shop online. Even today, phones account for a considerable percentage in the entire website traffic. The number hopes to radically increase by next year.

– Consumers are experimenting more: Customer preferences are constantly evolving because an average customer is exposed to so much nowadays. E-commerce firms need to keep a tab on their customers’ tastes & demands to deliver better.

– Social media commerce: Social media, particularly Facebook, is critical for many e-commerce players to scale. Despite increasing ad rates on social media, it is still a cheaper and an effective channel than content and display media options. Facebook has over 100 million active users in India which makes it a very effective platform to reach out to consumers who are primarily young and more prone to adapt to e-commerce. The focused audience targeting of Facebook is also very helpful in driving higher ROIs. Overall, Facebook is a powerful tool and will continue to play an important role in the coming year.

What are the challenges in the e-commerce segment that needs to be addressed in 2015? How do you think these challenges can be addressed for the growth of the sector?

Ganesh Subramanian, Myntra

Logistics is a key element in providing essential customer service, but remains a major challenge for all e-commerce players especially during peak seasons. Retailers will have to innovate and work closely with logistics service providers to constantly upgrade the logistics and distribution systems in order to provide flawless quality of service (prompt delivery, at the right place, and in the right state) to gain customer loyalty. Technology will be a key enabler in streamlining fulfillment processes and improving logistics to maximize efficiencies in inventory, service time and delivery.

Another challenge is the lack of data connectivity across smaller towns and cities which is hindering the growth of the sector. Improvements in network connectivity and data speeds will enable first time shoppers to experience the benefits of ecommerce sitting in remote locations.

Praveen Sinha, Jabong

– Learning from the roadblocks in logistics during the festive season, a stringent focus needs to be put in delivery of products within the promised time. We recently saw air cargo getting clogged which is a big challenge for e-commerce industry.

– We noticed a small set of fraudulent users because of which many of the user policies could not be sustained. Strict action needs to curb the misuse of our products; hence a definite change in our policies is imperative.

– Ensure aggressive growth to improve customer experience.

– Tap the growing market with increasing competition.

Rajiv Srivatsa, Urban Ladder

We need to create infrastructure for better logistics and timely and trusted deliveries. Also, the industry will grow stronger with better internet penetration across the country.

Clearer cross-border (inter-state) regulations will also help in scaling up pan India.

Vikram Chopra, FabFurnish

There are several issues related to sales tax laws that have caused uncertainty in the e-commerce ecosystem. Since this sector is so huge, it is important to have clear-cut laws on the same to avoid any sort of ambiguity.

Secondly, developments on the FDI front are also predicted. This will certainly open more doors for this sector and enhance the pace of growth. So that’s a space that needs to be followed closely.

Thirdly, there might be a change on the basis of funding – from chasing growth to targeting profitability as this is the best time in this sector to drive organic growth. The coming years hold a lot of promise!