Deep discounts, among other things, are behind Indian e-tail’s phenomenal growth. A new analysis, however, shows that discounts will matter less for future growth. An AT Kearney report shows that by 2020, 60% of the buyers will shop online because it would offer greater convenience of ordering and delivery, compared to 48% today, while buyers motivated by discounts will fall from 56% today to 52%. As the internet reaches more Indians, more than 125 million shoppers will come online—taking the estimated total from 50 million today to 175 million—and the number of women shopping online will grow by five times. Value-added services will become the key differentiator; 46% buyers surveyed for the Kearney analysis say that they will pay extra for faster delivery while 37% and 35% say they will pay for hassle-free return and extended warranty, respectively.
Even as the new guidelines for e-tail severely limit the room for e-tailers to offer the kind of discounts they have done so far, the Kearney findings should prod them further away from this model. In fact, with value-added services likely to become that much more important, online marketplaces in India could learn a lot from what firms abroad are doing. For instance, Lamoda, a fashion e-tailer in Russia, has trained delivery personnel to offer fashion advice to buyers—a service typically expected from shop assistants—with the option of immediate return if the garment doesn’t fit or is not up to the buyer’s liking. China’s JD.com offers a 3-hour delivery for premium buyers. There are, of course, other ways of ensuring more convenient delivery/ordering—for instance, helping the buyer locate a store that stocks an item ‘out-of-stock’ on the online marketplace. For Indian e-tail, there is simply much more to offer than just big bargains.