Indian e-commerce players need better strategies to lure customers

Experts believe without effective e-commerce, India’s post-pandemic economic recovery would be harder than it is now. E-commerce players like Myntra and Amazon are helping physical stores overcome difficulties in delivering to consumers beyond urban centers. Through its Mensa network, Myntra has partnered over 15 to 1,000 small shops across India to reach last mile consumers. While Amazon India has upgraded its logistic services with HIS, DSP and Amazon Flex networks.

By 2021, India’s e-commerce market is expected to grow to $84 billion with over 900 million consumers going online, says a report by Deloitte and Retail Association of India. More than half of Indian customer base is likely to come from Tier II and III cities.

COVID-19 makes growth predictions redundant

Online luxury shopping is one of the key reasons for the high growth in consumers from the Tier II and III markets. These high net worth customers often complain about the limited edit of collections from brands like Gucci, Louis Vuitton and Burberry in physical monobrand luxury stores. Customers in these towns also have to pay high customs duties to procure luxury items. Customs duties are sometimes equal or surpass the value of the goods with the extensive paperwork often holding back the shipment of these goods.

A 2019 report by McKinsey’s FashionScope predicted India’s apparel market will reach $59.3 billion in 2022. The online segment of this market was predicted to grow at a compound annual growth rate (CAGR) of approximately 32 per cent, according to a report by RedSeer consulting, a research and advisory firm. However, COVID-19 has made these forecasts redundant with e-commerce apparel sales declining in double digits, says Taohai Lin, Consumer & Retail analyst, Fitch Solutions.

A more subdued market

Hence, brands and e-commerce players will have to cater to a more subdued market and shifting consumer behavior, says Darshan Mehta, President and Chief Executive Officer, Reliance Brands. The company estimates the Indian fashion market to contract between 10 to 15 percent. According to it, mid-market brands backed by weak operators will be the worst sufferers while brands catering to the value segment and having a robust online presence may gain market share,

Analysts also expect the uncertainty over public spaces to bolster consumers’ shift to e-commerce. Rasul Bailay, Assistant Editor, The Economic Times, expects the concept of showrooming, in which consumers use physical stores to browse but then buy online — to become more prevalent across the country. COVID-19 is likely to deepen the trend towards immersive online user experiences. Retailers move away from discounts

Now, convenience and choice attract customers more than discounts, says a recent survey by TechArc. Faisa Kawoosa, Senior Technology Analyst and Founder of TechArc, advises online players Amazon, Flipkart and Myntra to research around these two factors before moving away from the discounts pitch. Myntra recently launched Myntra Insider Masterclasses to enable customers to interact directly with leading industry experts. However, despite these initiatives, the issues of touch and feel and returns still plague the Indian market. For such customers, Myntra launched the ‘alteration at doorstep’ service, which connects 500 tailors in 13 cities to local customers and allows them to alter purchases at no extra cost rather than return them.

Indian e-commerce players and brands face have to constantly adapt to the changing needs of their consumers. They have to work harder to lure and retain their consumers. Reliance’ plans to launch a new luxury e-commerce platform quadruples their threat and threatens to force them to either take the deep discounting route or constantly innovate on their products and services.