The article is authored by Dave Aditya from NMIMS, Hyderabad and is the second prize winner of June article writing contest conducted by Marketing Bloggers.
e-RETAILING – INCEPTION, PROGRESSION AND FORECAST
Gone are the days when for every small thing from a two rupee pen to a ten thousand bucks scooter, one had to shop, order it and wait for their order to arrive. Decades ago, waiting time after order of maruti 800 was in years. These dynamics have been undergoing a gradual change past decades. And today finally we have trapped on the concept of online shopping to a great extent. The history of online shopping can be backtracked from examples like the opening of a online pizza shop in 1994 by pizza hut, introduction of SSL encryption for secured online data transfer when it came to payment transactions in the same year and the inception of the first German company named intershop for providing and being one the most leading software developers of ecommerce solutions for large-sized companies going online that time. Hence, the year 1994-95 can be regarded as the harbinger of digital online marketing in the world. Eventually, in the subsequent years, giants like amazon and ebay stemmed.
The progression phase has then been a gradual process. It is gaining momentum day by day and becoming the preferred choice of shopping spree for the e-customers. It will not be wrong to deny the fact that the brick-mortar model of a company or a shop is now getting replaced by the click of a mouse. In today’s hectic and competitive world, convenience has been the most preferred option for majority of the customers. Thus, providing this need in the most beneficial and optimum manner in such a way that value addition and profit maximization go hand in hand is the challenge today that these online shopping service providers face. Hence, in order to achieve this, online shopping then saw some further advancements like cash on delivery system, use of net banking for transactions and billing to mobile and landlines. This calls for the need of a term to define marketing going digital and hence the name “digital marketing”. Marketers have always been searching for innovative ways of marketing their products. In the digital domain, there has been innovation in the form of evolution of online shopping websites like ebay or flipkart. Each of these have some striking and remarkable differences as a part of their marketing strategies. For example, ebay provides good bargain opportunities on both first hand and second hand products and offers a facility to give feedback on the genuineness of the seller. Flipkart, on the other hand, provides a three-day price guarantee on mobile phones meaning if the price of the mobile phone purchased by a customer falls within three days of purchase, the difference in the amount is reimbursed. Thus, the point that arises here is that the new entrants in online shopping will require a strong innovative idea to market their products online. Everything that is innovation may not work in the desired manner. Thus making it very much clear to the marketers that innovation should be doable and sustainable. The best example to support the argument would be the bankruptcy of Webvan (2001, paragraph 2), a US based online retailer, almost a decade ago. This online grocery business faced downturn because its warehouse and infrastructure costs, delivery trucks costs, servers, routers, and color monitor costs for online setup far exceeded the sales growth. This debacle can be attributed to mismanagement of cost allocation on financial grounds and innovation of “credit and delivery” grocery not working in the desired manner because of inappropriate marketing strategies.
At the same time, if one considers the brighter side of the coin, online supermarkets, if we consider only in India, are sure to have a long run in the near future. There are a number of online shopping supermarkets today coming up each of them trying to attain positioning and differentiation in most effective way. For example, foodworld (paragraph 3), an online supermarket store in Bangalore and Hyderabad and a part of a leading pan-Asian retailer (Dairy Farm International) vouches that for the purchase of products before 12 noon, free home delivery will be provided before 19:00 hours on the same day within 3km distance from the store trying to tap the “convenience” aspect of the customer. Similarly, mygrahak.com (paragraph 3) tries to achieve differentiation in terms of providing the customer a quick view of the possible discounts on various brands by introduction of links like brands on offer where one can get branded products at discounted price, combo offers showing the costs saved on its purchase and bill busters where products like atta (wheat flour) are given for free in bulk quantities like 5 kg on purchase amount of 2499 INR. Hence one will not deny the fact that gradually the entry barriers for new entrants in online supermarkets are increasing as chances of the digital marketing turning into a red ocean rise and therefore to tackle this, online marketers need segmentation, targeting, positioning (STP) and differentiation in the right place with the help of their innovative ideas. It also won’t be completely wrong to state that aspects like cash on delivery, free shipping and attractive discounts will soon face commoditization. Thus what will be required is further modification and ability to stand out in a bunch of online marketers to lure the online customer. One such innovative example to tackle commoditization of attractive discounts can be that the online store can provide a genuine calculation of the savings the customer would get benefitted by going for combo offers at discounted price i.e. giving the customer an acceptable and genuine cost saving calculation sheet when he makes a discounted purchase from the online store again tapping upon the convenience aspect of the customer with the assumption that today’s customer will not have time to calculate the best possible combination of his products which give him same level of satisfaction. In an economist’s language, providing the same level of satisfaction on the indifference curve, taking customer’s budget constraints into account. Also, information technology can be utilized to bring innovation and prevent commoditization. For example, say a software or an mobile app can be made available which will ask for customer’s budget, customer’s desired purchase products, their quantities and then providing him with all possible options for his desired product line purchase keeping into mind his satisfaction level i.e. if a customer wishes to buy biscuits, snacks and toothpastes within a budget range 200 to 500, then the software or mobile app can calculate all different possible combinations based on product availability in the store in such a way that the range is not crossed and satisfaction level of the customer is also taken care of an acceptable extent. It sounds complicated but today’s online marketing scenario compels one to think of this anticipated and nightmarish need which will arise in the near future. However, it has growth opportunities as statistics state that the e-reatil industry is growing at the rate of 35-45 percent per month. The testimony of this fact can be that many top honchos like Arun sirdeshmukh (CEO of reliance trends) and Manoj Chandra (VP marketing and customer service at Bata) today have left their lucrative jobs in the attraction of growth opportunities in the online space.
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