A majority of businesses are very keen on adopting online platforms for increased revenue sales in India. Over 54% of businesses reported a growth of more than 20% since going online in revenue sales. These were the findings from a research study conducted by strategic market research consultancy Spire Research and Consulting spanning from August to October 2014. The full report is also available upon request.
The research study aptly titled, ‘India’s E-Tailing Industry – Seller’s Perspective’ was released at a press conference held in New Delhi today. The study was conducted across 13 states in India spread over 300 retailers in 3 sectors consisting of apparel, consumer electronics and food. These insights concentrated on current online shopping trends and its effect on sellers. Furthermore, the data was gathered through one-on-one, online and telephonic modes of communication.
More businesses are going online and using it as an extension of their brand
As shown in Table 1 above, Spire’s study revealed majority of businesses have accepted online platforms as an extension of their brand. Businesses in the apparel (82%) and food (80%) sectors seem to have an advantage by going online as compared to consumer electronics (72%). Moreover, consumer electronics seem to have a lower potential as consumers are more inclined to be involved in the purchasing process.
There is expected growth from other sectors as well which consist of baby products, books, home décor and jewelry. Japnit Singh, Senior Director, Singapore and India of Spire Research and Consulting commented by adding in, “We are pleased to introduce this study on the e-tailing space, considering the country is one of the fastest growing markets for e-commerce globally. The research clearly shows that, sellers in India have a positive sentiment towards e-commerce with maximum traction seen in apparel and food businesses. Our study clearly indicates a growing trend towards adoption of online channels. Over 50% of businesses accounting for significant revenue share from online sales even right now, with revenue shares set to rise significantly over the next five years.”
Most businesses expected to benefit from online sales
As shown in table 2 above, most businesses are leveraging online sales to gather up to 20 – 50% revenue due to emergence of more online specialists, convenient payment modes and increased awareness among inexperienced sellers. Spire forecasts that by 2020, 45% of businesses will see their online share grow to between 20 – 50% of sales.
Challenges for sellers in e-tailing industry
Despite challenges – e-tailing is set to grow further. There were relatively few obstructions faced by sellers/respondents when Spire conducted the study which consisted of:
Lack of robust payment mechanisms
Cash On Delivery (COD) options were prone to risks as well as payment delays
Difficulties in logistics and order placements
Challenges for sellers in e-tailing industry
On the other hand, businesses were expected to gain sales revenue from traditional/offline channels with sellers following a dual strategy of combining online with offline sales. Furthermore, the report also revealed the e-tailing space would eventually be dominated by a few large capital heavy organizations given the need for nationwide logistics infrastructure and a currently limited consumer base. At the same time, Tier 2 and Tier 3 cities were expected to have a faster adoption rate with greater sales margins derived directly from online channels. Furthermore, these channels will follow integrated strategy combining both offline and online sales.
Conclusion
The Spire study revealed that over 54% of businesses reported a growth of more than 20% in revenue sales since going online. Now widely accepted as an extension of any brand – online channels are raking in the moolah. With the study covering 3 major sectors – businesses in the apparel and food industries had more profits than those in the consumer electronics sector.
Spire believes that despite challenges such as lack of robust payment infrastructure, risk in COD payment options and difficulties in logistics as well as order placements – the e-tailing industry in India is poised for growth. Moreover, the study gives clear indications of an emerging trend towards adoption of online channels – with over 50% of businesses accounting for significant revenue share from online sales.
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