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Indian E-Commerce Industry 2017

Autor:   •  February 11, 2019  •  1,902 Words (8 Pages)  •  560 Views

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and hence cannot guarantee sustainable business models essential for survival of companies.

Figure 1 clearly indicates that although “comfort and ease of use” as the reason to shop online

has marginally high preference over “discounts”, there is still high propensity of Indian consumers

to view at e-commerce industry as a means to buy at cheaper rates.

Figure 1

With slow growth in the loyalty of Indian consumers, it is apparent that only the moneybag e-

commerce firms that offer unique customer experience in terms of availability, variety and price

have the propensity to succeed. The recent mergers and acquisitions (estimated to be 930 M&A

deals worth USD 26.3 billion in 2015) are indication of a trend of e-commerce companies towards

consolidation to generate operational synergies through diversified offerings which are expected

to further enhance the business of the acquirer firms.

Price still stays to be one of the most important factor in India and customer loyalty to

ecommerce sites is still far from reality. Knowing the customers’ needs and delivering them

exactly on time can drive the loyalty factor. In this factor, Amazon has its foot in the door with

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the success of “Amazon Prime”, while the next big competitor Flipkart’s similar subscription

model of “Flipkart first” turned out to be a failure comparatively. Also, Amazon has a wide range

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of 95 million products whereas Flipkart’s spread is limited to about 80 million products , as a

result customer by default tends to search for a product more on Amazon than on Flipkart. Also

with CoD (Cash on Delivery) still being the most popular payment option (60% of transactions)

and also the need to provide fastest delivery - same day or next day delivery to stay strong in the

business, logistics is turning out to be the biggest bottleneck for online retailers. As a result the

big players have resented to building their own logistics arms rather than depending on 3rd party

logistics. Flipkart’s e-kart and Amazon’s ATS (Amazon transport Services) are the best examples.

To achieve economies of scale, they are opening up their logistics to be used by competitors as

well. This will result in win-win for both the parties. Another highly important factor we need to

consider is the effect of social media on ecommerce. The feedback regarding the firm’s products

and services on social media has an impact on a bigger customer base. For instance, if one sees

his/her friend complaining about the product or service of a firm, one tends to be wary while

ordering from that website or app the next time around.

Players like Ebay (merged with Flipkart now), Shopclues and Infibeam have been complete

marketplace models since their inception. While e-retailers like Flipkart, Snapdeal, Jabong and

Myntra started off as 100% inventory models, they have slowly converted into hybrid models –

part market place and part inventory with larger affinity towards market place. By definition,

“Inventory model of ecommerce means an ecommerce activity where inventory of goods and

4 http://www.thehindubusinessline.com/companies/amazon-steals-a-march-on-flipkart-with-seller-count-product-

range/article9427120.ece

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services is owned by e-commerce entity and is sold to the consumers directly by the e-retailer

himself” whereas “An online marketplace (or online e-commerce marketplace) is a type of e-

commerce site where product or service information is provided by multiple third parties,

whereas transactions are processed by the marketplace operator”. All the firms are trying to

adopt a marketplace model because such a model allows company to free themselves of

Inventory holding costs and also parallel helps them to expand the range of their products and

increase their geographical reach. To quote facts, currently Amazon has 2 lakh plus sellers

registered on its website with the growing base of its sellers adding an average of 1,60,000

products every day to the product range. Whereas Flipkart is comparatively lagging behind by a

small margin with 1.4 lakh plus sellers 5(as of December 2016). This difference in number of

sellers is also one of the reasons why Amazon’s product spread is higher than Flipkart’s product

range.

The option of developing subscription based models (in order

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