E-commerce is growing at a phenomenal rate in India. Though the annual e-commerce transaction in the country stands way behind China, investors are betting big on the future of eCommerce in India and are pumping in millions to buoy the prospects of both start-ups and major market players.
For instance, Temasek Holdings, the South-East Asian investment company with a $180 billion investment portfolio, and an early investor in China’s Alibaba has invested in the Indian e-tailer Snapdeal. To garb a share of the pie, global banks such as Citigroup, Goldman Sachs Group Inc., and Morgan Stanley are now keen to back start-ups and so are looking to recruit more bankers in to negotiate deals. While these developments augur well for the eCommerce sector, there still remains many roadblocks to scale the sector up to China’s standards. In this blog, we look into factors that need to be addressed urgently to ensure the sector lives up to expected growth levels.
Make Internet Infrastructure All Pervasive
Lack of infrastructure to support new businesses is one of the prime reason for the slow growth of this sector. Computer and Internet penetration, quality and speed of Internet connectivity, logistics, security infrastructure, online payment mechanisms have slowed the pace of eCommerce growth. China owes its success entirely to its state-owned telcos’ which rose to the moment to meet performance goals set by the government to connect millions of new homes every year. Emulating China, possibly in a war footing scale, can help eCommerce find a more firm footing in India.
Improve Logistics Support
Most logistics companies in India, including the state-owned one, are less reliable. Also, majority of these companies are technology agnostics. China’s state-owned parcel service, in sharp contrast, is known for its efficient technology- driven services. Besides, China has an entire new industry of last mile scooter-based delivery agents both in urban and rural areas. India’s logistic landscape has to come of age to realize the potential of eCommerce growth.
Simplify Regulatory Environment
A comprehensive law helps to promote and sustain a vibrant e-commerce environment. China has cautiously put together a committee to tailor a more comprehensive e-commerce law to nurture the development of e-commerce in the country. The objective is to promote healthy development of e-commerce. India’s regulatory environment for e-commerce remains uncertain and is still caught in two minds about allowing 100 percent foreign investment in the sector. To encourage e-commerce growth at full speed, the government should formulate a clear and less interfering policy.
Sort Customer Complaints Efficiently
A long-standing drawback of India’s eCommerce sector is its inability to look beyond user transaction. It’s precisely because of this that companies have not been able to build an ecosystem around online shopping and understand and target customers effectively. Even today, Akosha.com, and consumer complaints forum, receives thousands of e-commerce related complaints on an average every month. Chinese companies, on the other hand, have managed to build an effective network by giving enough priority and authority to user complaints. To succeed in the long run, it’s imperative for Indian eCommerce companies to have a clear, flexible, transparent policy on customer complaints. They need to set up a process to log and analyze all complaints and address them in the right earnest.
Dispense with the Discount Madness
Foreign funding notwithstanding, most of India’s e-commerce companies are losing financially, because a major chunk of the money goes into doling discounts. Companies like Flipkart and Snapdeal are trying to outdo each other in offering discounts which is affecting the sector by and large. Companies need to realize that such tactics can rebound and earn them a bad name just as Flipkarts ‘Big Billion Day Sale,’ earned it the sobriquet “Flopkart”. Bringing down discounts to realistic levels and focusing on profits can help the country’s eCommerce industry in many ways.
Addressing these may look to be a tall order, but if done the right way, the world’s next Alibaba may come from India.