Documente Academic
Documente Profesional
Documente Cultură
On
' Impact of e-tailing on Retailing '
RM
Submitted By:
SNEHIL PEARL MASIH
17202281
Guided By:
Prof (Dr). ABHISHEK KUMAR
1. The current status of online retailing in India While
Providing a glimpse of its future
Introduction
The Indian retail industry has emerged as one of the most dynamic and fast-paced
industries due to the entry of several new players. Total consumption expenditure is
expected to reach nearly US$ 3,600 billion by 2020 from US$ 1,824 billion in 2017.
It accounts for over 10 per cent of the country’s Gross Domestic Product (GDP) and
around 8 per cent of the employment. India is the world’s fifth-largest global
destination in the retail space.
Market Size
India’s retail market is expected to increase by 60 per cent to reach US$ 1.1 trillion
by 2020, on the back of factors like rising incomes and lifestyle changes by middle
class and increased digital connectivity. Online retail sales are forecasted to grow
at the rate of 31 per cent year-on-year to reach US$ 32.70 billion in 2018.
India is expected to become the world’s fastest growing e-commerce market, driven
by robust investment in the sector and rapid increase in the number of internet users.
Various agencies have high expectations about growth of Indian e-commerce
markets.
Luxury market of India is expected to grow to US$ 30 billion by the end of 2018
from US$ 23.8 billion 2017 supported by growing exposure of international brands
amongst Indian youth and higher purchasing power of the upper class in tier 2 and 3
cities, according to Assocham.
Investment Scenario
The Indian retail trading has received Foreign Direct Investment (FDI) equity
inflows totalling US$ 1.42 billion during April 2000–June 2018, according to the
Department of Industrial Policies and Promotion (DIPP).
With the rising need for consumer goods in different sectors including consumer
electronics and home appliances, many companies have invested in the Indian retail
space in the past few months.
Beccos, a South Korean designer brand is set to enter the Indian market with
an investment of about Rs 1.00 billion (US$ 14.25 million) and open 50 stores
by June 2019.
Walmart Investments Cooperative U.A has invested Rs 2.75 billion (US$
37.68 million) in Wal-Mart India Pvt Ltd.
Government Initiatives
The Government of India has taken various initiatives to improve the retail industry
in India. Some of them are listed below:
The Government of India may change the Foreign Direct Investment (FDI)
rules in food processing, in a bid to permit e-commerce companies and foreign
retailers to sell Made in India consumer products.
Government of India has allowed 100 per cent Foreign Direct Investment
(FDI) in online retail of goods and services through the automatic route,
thereby providing clarity on the existing businesses of e-commerce companies
operating in India.
Road Ahead
E-commerce is expanding steadily in the country. Customers have the ever-
increasing choice of products at the lowest rates. E-commerce is probably creating
the biggest revolution in the retail industry, and this trend would continue in the
years to come. India's e-commerce industry is forecasted to reach US$ 53 billion by
2018. Retailers should leverage the digital retail channels (e-commerce), which
would enable them to spend less money on real estate while reaching out to more
customers in tier-2 and tier-3 cities.
It is projected that by 2021 traditional retail will hold a major share of 75 per cent,
organised retail share will reach 18 per cent and e-commerce retail share will reach
7 per cent of the total retail market.
Nevertheless, the long-term outlook for the industry is positive, supported by rising
incomes, favourable demographics, entry of foreign players, and increasing
urbanisation.
2. Factors Impacting Online Retailing
Some other factors that come into play in India are listed below
The Pros and Cons of Online Retailers vs. Brick and Mortar Stores
Moms love the convenience of online shopping – she can make a purchase in
seconds from the comfort of her home. It means no more long lines with the kids in
tow, and one less thing to add to her to-do list. However, there are certain in-store
experiences that moms cannot get online. For instance, clothing can’t be tried on
prior to purchase and toys can’t be felt for durability.
On the other hand, brick-and-mortar stores may not offer the seemingly endless
selection that online retailers do. Additionally, their reliance on foot traffic and
word-of-mouth to drum up business may put them at a disadvantage. Despite these
benefits and drawbacks, both types of store are valued by moms and chosen for
different reasons. Who will win the battle over moms’ spending power? Brands
must keep the pros and cons of each in mind as they market to moms.
Here is a quick overview of the benefits of each retail approach, and how it affects
moms:
61% of consumers shop in-store, compared to only 31% who turn to the internet.
This is good news for brick-and-mortar businesses. One of the largest drivers for in-
store shopping is the ability for customers to receive the product immediately. Until
eCommerce can find a less expensive solution for same-day or 1-day delivery, in-
store shopping will continue to win on this point. Also, moms often shop as a social
activity – whether it’s to look for new clothes (and get a second opinion) or as a day
to browse with friends. This experience simply cannot be replicated online.
Another major benefit for brands that operate brick-and-mortar stores is the way in
which consumers spend their money while shopping. shoppers spend more than they
had planned to while shopping in stores, while only 25% of shoppers do so when
shopping online. Beautiful storefronts and point-of-purchase displays can strongly
influence moms to make an impulse purchase, and are much harder to ignore than
online ads.
Moms may also enjoy the personal connection with store employees, a well-
executed store atmosphere, and the ability to touch and hold products before
purchase. All of these aspects can lead to higher in-store purchases. Apple, Whole
Foods, and Nordstrom’s are a few companies that have done an excellent job of
training employees to be knowledgeable about their products and services. This is
important more than ever, as consumers don’t get this immediate assistance when
they shop online. They may read review after review, but it’s not always as helpful
as in-person assistance. Brands must remember how crucial this is as they control
how their store is operated. Keep moms in mind, and you may see an increase in
sales.
The Pros and Cons of Online Retailers vs. Brick and Mortar Stores
For brands, the eCommerce route can have many benefits over a brick-and-mortar
store. They don’t require expensive storefronts; instead, more cost-effective
warehouses are used to hold inventory. With multiple warehouses, brands can ship
products quicker via online orders, and moms can receive products faster than ever
before. The convenience of shopping online is arguably the greatest benefit, as
consumers can select a product and purchase it within minutes. Moms can shop after
her kids are already in bed, or on a smartphone as she’s out doing errands. This has
opened up countless opportunities for brands, as advertisers discover new ways to
target moms where ever they are, in order to encourage immediate purchases.
Moms also love to shop online because it allows them to find the best price for
products. Whether they follow the brand on social media for exclusive deals or
search for online coupons, moms can find a product they want and save money at
the same time. In fact, 38% of moms visit manufacturer websites in search of
coupons. They can also more efficiently find the best price across many different
websites, instead of having to visit many different stores.
For moms, both brick-and-mortar stores and online retailers have their advantages,
but which one will she continue to shop? Ecommerce is a rapidly growing industry,
but until the Internet can provide all the benefits of in the in-store experience,
physical stores will continue to be in demand.
However, in-store experiences will need to grow and evolve in order to continue to
compete with the convenience of online shopping. Brands need to go above and
beyond expectations and provide an enjoyable, convenient shopping experience.
This can be done as brands incorporate new technologies into stores to make the
shopping experience more efficient, and continue to offer helpful resources for
customers. The biggest challenge for brands is to create one flawless and integrated
system to incorporate online and in-store shopping together. The brands that can
discover a seamless way to make shopping both online and offline connect will be
the most successful.
Moms expect a high level of service and dedication from all brands, whether they
are shopping online or in-store. Both methods have opportunities to grow and
improve as technology continues to advance. To learn more about moms’ online
habits, download our free white paper.