E-Commerce Industry in India 2014 – e-retailers War Go Online and Innovative e-commerce Promotional Strategies

Online shoppers in India are set for more engaging experiences courtesy the intensifying competition in the country’s e-commerce industry.  The Indian e-commerce industry has been attracting higher level of investments in the recent past.  Additionally, the adoption of innovative strategies accompanied by improved e-commerce infrastructure such as payment and delivery systems has augmented the e-commerce growth in India.  The Indian e-commerce industry has grown by more than 80% in 2013 and is expected to attain a valuation of $50-$70 million by 2020.

Against the backdrop of the burgeoning market for online retail in India, the e-commerce bigwigs are vying with each other to pocket a larger share of the growing breed of online shoppers in India.

So who seems to be lunging ahead in the race to woo online shoppers? Will India’s home bred version of Amazon, Flipkart manage to hold on to its “industry leader” status or does it face significant threat from the likes of Amazon and Snapdeal?

With an increasing number of e-retail portals offering a similar spread of products, leading e-commerce portals are realizing the need to create a recall value that helps the customer associate their product to their brand.  So how does one differentiate? Cues could be taken from Myntra.  Through a series of initiatives such as hosting fashion shows in college and incorporating inputs from fashion designers on its website, Myntra has successfully established its identity as a fashion portal.

In another instance of product differentiation, Jabong intends to score over its peer fashion portals by exclusively retailing high end brands that are yet to find presence in physical stores in India; the fashion retailer has collaborated with Google to create a shopping hangout to mark the launch of a high end UK label on its portal.  The sale of premium products not only adds a unique dimension to Jabong’s  brand proposition but will also be instrumental in generating large revenues for the firm.  On a similar note, Myntra acquired the exclusive rights to retail Spanish brand “Desigual” that does not have any physical presence in India.

Specialty fashion portals, especially Myntra currently pose stiff competition to Flipkart in the apparel segment which is one of the highest margin categories with profits ranging from 30-50%.  Flipkart seems to losing out on its share of the online apparel market.  Myntra clocked over 24 million unique visitors in December and Jabong nearly 20 million.  Flipkart, despite being a broad-category seller, in comparison, recorded only 13.22 million unique visitors.

Myntra’s success in the apparel category can be partially attributed to the heavy discounts given by the firm, made possible due to the infusion of funds from investors.  The Bangalore based fashion portal recently raised $50 million from the Belgium based investment firm, Sofina and its existing investors following which it garnered another $40 million from Wipro Invest.  Though the general perception around raising funds is that they are used to raise efficiency and improve infrastructure, a significant portion of these investments are being channeled into providing heavy discounts to users in a bid to outshine competitors as seen in the case of Myntra. However, with an increasing number of firms offering discounts, price wars are likely to follow. Price wars have eroded the profitability of India’s aviation industry and the country’s e-commerce industry seems to be inching towards the same fate.

Nevertheless, Flipkart continues to hold 50% share of India’s 12,000 crore e-commerce business.  Moreover, the firm has managed to become synonymous with the online retailing of books.  Flipkart conducts activities to promote academic books online.  India’s leading e-commerce portal has also been trying to promote the sale of gadgets through its portal.  For instance, after launching Moto G in India, the firm will be launching Motorola’s latest smartphone, the MotoX .  Similar to MotoG, Flipkart will unveil launch day offers for MotoX.  Such strategies are likely to improve the visibility of Flipkart as an online gadget retailer.

Separately, specializing in a particular product seems to be the new buzzword for increasing market share in India’s online retail markets.  This is evident from Lenskart’s plans to sell out its lesser performing subsidiaries, Jewelskart, Bagskart and Watchkart to a horizontal player in order to focus on the growth of its primary business of retailing spectacles online.  Lenskart’s specialized product focus has already resulted in the firm gaining almost 10% of the market share of the e-retail business in India.  Further, the firm’s market share is suitably poised to grow owing to its increased focus on its primary revenue generating business.

While the e-commerce portals in India have strategies in place to chart out their future growth plans, it cannot be ignored that their competitors are replicating similar moves.  Such a scenario gives rise to many possible outcomes for India’s e-commerce industry.  There are chances that the industry may get weakened on account of the cut throat price wars. Alternatively, we may witness the emergence of a few firms while others may wind up operations.