E-commerce in 2021: More action in B2B, more offline-online teamwork, new players

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December 24, 2020 8:00 AM

“Other players like smaller FMCG companies that were not working as closely with marketplaces will do so now else they might struggle,” Mathur explained.

India’s retail market is largely unorganised and the larger players will look to leverage the 12 million kiranas to grow their presence.India’s retail market is largely unorganised and the larger players will look to leverage the 12 million kiranas to grow their presence.

With the economy expected to open up fully over the next few months, shoppers are expected to go back to malls and stores for some of their purchases. Nonetheless, it’s unlikely consumers will altogether abandon shopping online given how they’re now a lot more comfortable transacting on the Internet. To that extent, 2021 is expected to see the e-retailing business growing well even if the competition from brick and mortar means higher customer acquisition costs.

“The unit economics could be under pressure next year,” Ankur Pahwa, e-commerce sector leader at EY, told FE.

With more players entering the fray — the Tatas for instance – the e-commerce space itself is getting more competitive according to Harsha Razdan, partner & head (Consumer markets and Internet), KPMG India. “The entry of new players, small and large, means the pie will be shared by many more with reduced chances of a monopoly or a duopoly,” he observed.

Razdan expects that together with B2C, the B2B piece of e-commerce is also likely to see a lot of action in 2021. “The B2B e-commerce space will be a lot more in focus next year with many of the mom-and–pop stores being transformed as the larger marketplaces work to upgrade them,” Razdan observed.

India’s retail market is largely unorganised and the larger players will look to leverage the 12 million kiranas to grow their presence. For instance, five-year old Jumbotail that services over 30,000 kiranas is now helping them digitise their stores. The company is also facilitating conversion of their stores into modern convenience grocery outlets. JioMart fulfills orders placed by kiranas by sourcing products from their distribution centres and network of stores. EY’s Pahwa believes many of the marketplaces will also try to help generate demand for their B2B customers.

Indeed, 2021 will be the year of partnerships. Anurag Mathur, partner & leader (consumer goods and retail), PwC, points out that already brands and marketplaces are jointly defining prices though this is happening for some categories like electronics. “Other players like smaller FMCG companies that were not working as closely with marketplaces will do so now else they might struggle,” Mathur explained.

Indeed, as KPMG’s Razdan citing research observes consumers typically tend to use just a handful of apps, even if they have download two dozen of them. Unless the brand is exceptionally strong, it might not attract the necessary mind space and, therefore, would have no option but to partner with other apps or platforms.

EY’s Pahwa believes the partnerships between offline and online retailers to create omni channels would continue to be formed. “All stores malls have realised the power of online and the marketplaces know the importance of a physical presence, so brand creation will move both ways,” he said.

For their part, marketplaces would strive to offer consumers more and could consider on-boarding more SME retailers. “If we want to really overshoot the numbers that we have on growth right now, we cannot just be electronics dependent,” Mathur reckons. The idea also is to supply products suited for local tastes that can’t always be supplied by big vendors; it would be one way to retain consumers. However, as the supplier base expands, maintaining quality and also informing customers will be a challenge. “Most suppliers, especially smaller ones, are not used to making deliveries within specified time periods. But given that is the promise made to the customer, it would need to be fulfilled. For the marketplaces to ensure that suppliers deliver on time would be a tough task,” explains Mathur.

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