Online sales are the future & few firms can go it alone

By: |
December 30, 2020 4:45 AM

Since it is unlikely buyers will want to use too many apps, it is critical to ensure the top apps sell your brand

Indeed, there is already much chatter on Super Apps—which offer a wide range of products—and how many Super Apps the Indian market can accommodate.Indeed, there is already much chatter on Super Apps—which offer a wide range of products—and how many Super Apps the Indian market can accommodate.

To be sure, shopping in malls and bricks-and-mortar outlets will pick up pace once the vaccine for Covid-19 is here and the fear of getting infected in crowded areas recedes. However, 2020 has shown us that an increasing number of consumers seem to be comfortable shopping online. This is true as much for India’s smaller cities and towns as it is for the metros. And while buyers would no doubt want to visit the shops for big-ticket purchases and special items—such as those for a wedding—they are less likely to do so for groceries or standardised apparel. They have discovered the convenience of an app and home delivery.

This then is a signal for makers of goods that they can no longer afford to ignore the online channel. That’s where much of the shopping, at least for day-to-day items, is going to take place from now on. The question is whether it is enough for manufacturers to have their own websites or whether they need to be a part of a large marketplace like an Amazon or a Flipkart. Experts reckon buyers will soon get used to a handful of apps, which would pretty much take care of about 70-80% of their needs. They are unlikely to look beyond these.

Indeed, there is already much chatter on Super Apps—which offer a wide range of products—and how many Super Apps the Indian market can accommodate. Right now, there are about half a dozen contenders, including Amazon, Flipkart, Paytm and Jio. And all of them are working to team up with brands to enhance their range of merchandise. The action in the B2B space over the next couple of years could well eclipse that in the B2C space as marketplaces scout for good brands to team up with and help them generate demand.

In October, Walmart, which owns Flipkart and the fashion portal Myntra, picked up a 7.8% stake in the Aditya Birla Fashion Retail (ABFR). The partnership will help ABFR accelerate e-commerce sales; apart from the existing B2B arrangements with Flipkart, ABFR has an agreement for the sale and distribution of its brands through Flipkart’s marketplaces. ABFR could also potentially use Flipkart’s supply chain to reduce time-to-customer and obtain consumer data from Flipkart and Myntra to analyse trends and efficiency. In July 2020, Flipkart had acquired a minority stake in Arvind Youth Brands and is most likely on the lookout.

But, makers of all products, from soaps and shampoos to biscuits and apparel, must latch on to one or more of them; unless the product or service is unique and exclusive with a strong brand pull, it could get lost and be easily ignored by consumers. Some partnerships are emerging; there has been much talk about the Tatas creating a digital platform. Most manufacturers have realised the importance of the online channels and how critical it is to make sure their products are available on the online platform with a customer base. It is no longer about discounts, but about the availability of the merchandise. Today, the number of online shoppers lags Internet users by a wide margin. It is no surprise then that India’s total e-tail GMV has been pegged at $270 billion for FY30 and $800 billion for FY40, up from the current $120 billion, by Kotak Institutional Equities.

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