From a valuation of USD 3.8 billion in 2009 to USD 12.6 billion in 2013, the Indian e-commerce industry has seen a heretofore unprecedented boom. Google’s Annual Online Shopping Growth Trends Report, in collaboration with Forrester Research, estimates that from 35 million in 2014, the e-commerce consumer base will grow to 100 million people in 2016.What is driving this e-commerce furore?
Avenues and their market share in e-commerce Industry
1. Online travel accounts for nearly 71%of e-commerce business in India
2. E-tailing accounts for 8.7% of organised retail and a minuscule 0.3% of total retail sales
3. Within e-tailing, this PWC report shows thatelectronics constitute 34%; Apparels and accessories constitute 30%; Books constitute 15%; Beauty and personal products constitute 10%, whereas healthcare is only 3%; Home décor and furnishings add to 6% and baby products a mere 2%
Factors leading to the e-commerce boom in the Indian market
Internet penetration is the biggest game changer, which has grown from 5 million users in 2000 to an astounding 200 million internet users in 2014, as reported by TOI here
The convenience of ordering products ranging from uber luxury / everyday apparel to utilities and electronics to groceriesfrom home/ office is enticing to the growing working population ofthe country
Coupons and Discounts offered by players slash down the cost of products to stunning lows, making shopping onlinefar more financially viable than purchasing from brick and mortar establishments
Reliable Shipment, Money Transfer and Cash on delivery are boons for the Indian consumers
Rise of the aspirational middle class, with an increased disposable income
Customer Satisfaction is of prime importance to e-commerce players, and such catering to their requirements is alluring to shoppers
Coupons burgeon, discounts diminish
In 2011, 1 in every 10 internet users accessed coupons sites, but in 2013 this number had grown to 5 out of 6.
95% buyers search for deals online, and 74% view the coupons available at couponing portals.
The coupon business is 13.5 per cent of the total e-commerce audience in India, growing at the rate of 62.9 per cent with 7.6 million unique users a month.
It was recently reported by the Economic Times that couponing and deal-buying sites have seen a revenue rise of almost 500%, attributable to big e-commerce players such as Amazon India, Flipkart and Snapdeal.
Recently, LG, Samsung, Videocon, Sony and Panasonic have instructed their trade partners that their products sold through online players without their knowledge during flash sales will not get the benefit of after-sale service and warranties.
Canon and Lenovo have issued statements saying that they will offer different sets of products and/ or models for online and offline sales.
Business Standard reported that Kishore Biyani, chief executive of Future Group said that “Let e-commerce sell products without offering discounts and then compete.
They are surviving only because of these discounts. As long as e-commerce companies are funded, they will be able to give such discounts. The moment the funding stops, there will be no discounts.”
Coupons are the way to the Future
Coupons aim at piquing consumer interest. A marketing campaign vested with a demand to the consumer to “get a coupon” will most definitely generate sales, and if conversions are not a 100%, at the very lease it will give rise to leads.
Coupons allow very effective measurement of results, as coupon codes can help determine how many customers used which coupons, what is the revenue generated from certain coupons, the actual number of leads and sales who used coupons/ viewed coupons. The actual result measurement is possible by channel, campaign type, communication, medium, customer segment etc.
Coupons allow a consumer to feel/ experience an advantage or a thrill while shopping online, without diluting his/ her perception of the actual price. What consumers do not realise is that the actual price is the MRP (Maximum retail price) and therefore, can be scaled down to be more eye-grabbing.
As an instrument for brands to test various price bands for newly launched products, coupons are a god sent. Instead of reducing prices at breakneck speed to their own detriment, brands can bring new products into the market using coupons in a calibrated manner.
The couponing market has opened the floodgates of entrepreneurial opportunities to young Indians. With considerably less technical knowledge and capital, anyone and everyone can now become an Affiliate and market for brands and leading e-commerce portals. Due to the pay for performancenature of affiliate marketing, those who are most promising and attain maximum conversion receive the best rewards as heightened commissions.
Discounted pricing by online platforms is being heralded by many to be ‘predatory’ and is even being accused of devaluing brands. As long as e-tailers continue to receive funding, their ability to offer unbelievable discounts will not be hampered, albeit subject to the limitations set out by the brands themselves (as in the case of LG, Sony, Panasonic and Canon etc.). Not being able to offer comparatively less pricing online will be detrimental to e-commerce, therefore, an alternative to outright discounts has to be explored and exploited – and what better than the already established coupons.
Coupons are fairly more viable as they mean more sales for the brands as well as for the e-tailers, attractive deals for consumers and massivebusiness for couponing players. Following Flipkart’s ‘Big Billion Day Sale’ debacle and the discontent and anger it gave rise to, it would be safe to assume that e-tailers have learnt their lesson and will rely mostly on Coupons (and not on discounts) to attract consumers.
By Vikash Khetan, founder CouponzGuru.com