Perspective | Challenges in e-comm: Customer loyalty, logistics, tech
With a current estimated internet users base of 122 million in India which is expected to nearly triple to 350 million, India is in the midst of an e-commerce revolution. Enhanced exposure to internet amongst Indians has definitely impacted the Indian e-commerce ecosystem. The e-retail industry is about $ 2-3 billion at the moment as compared to $ 50-80 billion in China and well over $ 150 billion in the US. There is no doubt that the scope for the e-commerce industry in India to develop is immense, as also for the budding entrepreneurial talent to grow. But at the same time the industry faces a number of challenges.
So how are the opportunities for e-commerce and what needs to be done to overcome the various challenges that the industry faces? In an exclusive feature, Adgully sought to find answers to a myriad of these questions and spoke to a number of players in the e-commerce space to find out the road ahead for the industry. In this two part exclusive, the first part essentially talked about the opportunities in the e-commerce space, what the companies in this space need to do to stand out amongst the clutter and to build customer loyalty & thereby traffic.
The second and the concluding part looks at building long-term customer loyalty & base, logistics, technology and other key challenges.
E-commerce companies need to do relevant marketing both online and offline to not only build customer traffic initially but also retain them and make them keep visiting its site more often, thereby building loyalty. While loyalty & deals do attract customers initially, there is much more that an e-commerce portal needs to do for long term marketing success. Speaking to a number of entrepreneurs, Adgully tried to find answers to the key questions.
There are no silver bullets to develop a long term solution for marketing and building customer loyalty. Loyalty points and deals can be considered enablers, but one will need to provide a great customers experience consistently that will translate trial generation to first retention and then eventually customer loyalty, and this holds true for any retail brand whether online or offline. Discounts and offers, are always good when they come as a surprise, it brings excitement and leads to impulsive buying. But all season discounts can never create excitement, because it’s common and nothing new. It very simple, “the more you have the less you want to have more of it.”
Says Kunal Shah, CEO & Co-Founder, Freecharge, “Loyalty points are not as relevant as they were few years ago. It worked great for some companies when they were new concept, but now it's no more a winning differentiator. On other hands, though deals are great trial creation tool, but they may not be a sustainable long term business proposition for the e-commerce businesses. Building loyalty in a deal driven website is always a challenge, because of its fundamental nature of the business.”
Further says Prashant Tandon, MD & C0-Founder, HealthKart.com, “Not every customer is seeking a deal – many would like priority service, many would like preferential access to hard to get stock and many would want a more efficient process to help them order in an easier way.”
Opereational aspects & efficiency, the logistics and the technology comes into picture here. These are the hygiene factors for an e-commerce firm. If one looks from customers' point of view, these are the major customers touch points. To win the customers and the business, quality product delivery, logistics and technology form the vanilla.
Avers Shipra Jain, Chief Merchandising Officer, Bluestone.com, “Every part of the process has to be kept in check of, in case of operations, starting from the product view, to the order placing, packaging and finally delivery. A seamless delivery of the product as guaranteed goes a long way in having a loyal customer cloud, which in turn means contributes to being recognised as best in the business.”
According to Ashutosh Lawania, Co-Founder and Head, Sales & Marketing, Myntra.com, “Logistics support and timely deliveries are the backbone of an e-commerce business and can make or break the customer experience. Therefore, we lay great emphasis on our logistics system and work with a dedicated vendor to ensure timely and safe deliveries and a pleasant customer experience.”
There is no doubt that last mile delivery is the moment of truth for any ecommerce company. It’s a culmination of customer experience and goes a long way in forming the impression customers may have about an ecommerce site. You could offer the best deal, wide variety, fantastic navigation but if the customer receives the order late or poorly packed all the investment that went to acquiring the customer comes to naught and you stand at ground zero.
Says Rajesh Iyer, Chief Marketing Officer, Pepperfry.com, “Through our managed marketplace model we control the packing, shipping & logistics experience, as our representative’s quality check and package the products at our logistic hubs in Gurgaon, Mumbai and Jodhpur before shipping them through our logistics partners.”
Adds Rajesh Nahar, CEO & Co- Founder, Cbazaar, “Fundamental thing is what you see is what you get and then choosing the right logistics partners, proper packaging, communication to customers at each stage of order processing until delivery.”
Logistic companies have made progress to meet the needs of ecommerce companies but there’s immense scope for offering customizing solutions to improve the post purchase experience for the customer. And Logistics remains a key challenge in this industry - delayed shipments, inability to provide an exact status of the order in smaller cities, towns, or damage during transit are some of the main issues.
The nascent e-commerce industry faces a lot of other challenges and roadblocks that need to be overcome. The cycle of customer interaction does not end with delivery of the order. With social networks becoming an important part of everyone’s life, the customer interaction continues beyond a successful delivery of the order so it’s important for a company to have an active social media quotient. Another challenge faced by the e-commerce companies is the lack of ready talent since this industry is relatively new when compared to well established sectors. Being a new industry, talent needs to be groomed and developed and is not easily available externally. Cash on Delivery is a challenge as it sees a portion of the sale not getting completed and longer cash flow cycle. However with increased awareness on secure online transactions, there are customers who prefer to pay online. The other issue which e-commerce faces is the differential tax structures in each state.
Says Manish Chopra, CEO, and Zovi.com. “A critical challenge for any ecommerce company is to convince customers to shop online. The absence of touch and feel is what makes a majority of the customers hesitate to go online shopping. As a brand, we continuously strive to provide our customers with the best online shopping experience. We have introduced features like Virtual Eye which offers customers the convenience of browsing at home or work and trying on clothes virtually to select the right look.”
Adds Ankur Mehrotra, Managing Director, Delivery On Call.com, “What I foresee is that in every business there is a dead stock, and this dead stock has always been cleared by retailer during the sale period, but e-commerce is offering sale throughout the year, so they need to offer more discount during the sale.”
One of the other big challenge that e-commerce companies are facing is shrinking margin. Customer is smart enough to search the required product on multiple website and then he will buy the product from the portal which have the lowest price, adds Vishwajeet Sinha, Co-Founder, HappyToConnect.com
Challenges therefore are not an exhaustive list. For instance finding a financier for an e-commerce business is also a key challenge which may merit a different space altogether. One never know from where a new problem may crop up, businesses take various risks into account while doing their business planning, one cannot still predict or have an all-risk mitigating model. A lot would be written on e-commerce in the days to come, but there is no doubt that e-commerce has arrived and is gradually consolidating its foundations in India. Yes we are a part of E-commerce revolution but there’s still more to come and it that hopefully will be the best time for the industry; and the consumers.