Vendors reach rural consumers
Vendors are expanding into India’s rural market while 15 per cent to 20 per cent of consumers are inclined toward web shopping, according to a study by consultancy Technavio.
“Online retailers are focusing on reaching out to small towns by improving their supply chain capabilities, broadcasting television commercials, providing easy payment options such as cash on deliveries, and by offering coupons and discounts,” said the London-based global technology research and advisory company.
“It has been observed that rural shoppers do not restrict themselves to products from Indian entrepreneurs alone. They are also importing products from sellers worldwide. This is encouraging vendors in the market to span out into the rural Indian market,” said Poonam Saini, one of Technavio’s lead industry analysts for retail goods and services.
Technavio’s market research study identifies the following three emerging trends expected to propel the online fashion retail market in India:
• Increased penetration in Tier 2 and Tier 3 cities
• Demand for private label brands
• Distribution of consumers between mobile application and websites
Increased penetration in Tier 2 and Tier 3 cities
Online fashion retail in India is expected to register an increased participation from Tier 2 and Tier 3 cities. Sales to consumers outside the metropolitan areas accounts for nearly half of the total sales from leading online retailers such as Jabong, Myntra, and Indiatimes.
Shopping for fashion products is increasing in these cities owing to the increase in internet penetration, exposure, and affordability. In addition, limited penetration of branded brick-and-mortar stores among non-urban consumers is also increasing the demand for online retailing. Companies like Amazon and Flipkart are in talks with the government of India to improve the postal service with the aim of delivering products within 24 hours in any part of the country.
The apparel and accessories segments are expected to grow exponentially during the forecast period in these cities. Increased reach in Tier 2 and Tier 3 cities will therefore make online retailers more attractive to suppliers and enhance their bargaining power.
Companies are trying to capture this unpenetrated market. Amazon, for instance, tied up with IRCTC in 2015 to reach out to customers in Tier 2 and Tier 3 cities.
Improvement in customer support services
Online fashion retailers are increasingly focusing on improving their consumer support services to enhance the overall online shopping experience.
Services such as online tracking of shipments, 24/7 customer support, and a 100% purchase protection are commonly offered by vendors in this space. Consumers get updates through messages or emails through the entire purchase and delivery process.
Vendors also offer easy return policies and online cancellation services to their customers.
Players are focusing now on forward and backward integration in the value chain to shorten delivery cycles. For instance, Flipkart acquired a 34 per cent stake in MapMyIndia in 2015 to improve its GPS navigation, provide tracking location.
The company looks to consolidated their supply chain and logistics to expand in new geographies. Snapdeal acquired a 20 per cent stake in GoJavas, a logistics provider in March 2015, to deliver products within four hours in select cities.
This trend is therefore predicted to foster the growth of this market until 2020.
Distribution of consumers between mobile application and websites
Mobile applications have a huge impact on the growth of the online fashion retail market in India. These apps are a faster alternative to mobile web browsing that allow consumers to shop on the go.
Companies are coming up with more sophisticated apps designed to leverage each functionality on specific operating systems like Windows, Android, and iOS.
The launch of different apps not only provides convenience to consumers, but also helps them gain special discounts and offers that are available only for purchases made through them.
Mobile applications also offer a more personalized online shopping experience and increase customer engagement. Vendors are also able to reduce their operational and technology costs as the dual expenditure on mobile websites and application is reduced.
However, 15 per cent to 20 per cent of Indian consumers are still inclined toward web shopping. As such, the popular online fashion retail company Myntra, which shut down its own desktop website presence by adopting an app-only strategy in 2015, has relaunched it again in June 2016 for customers who want to shop products through its website.
Overall, online retailers are trying to have a balance between mobile applications and websites to cater to the masses. fii-news.com
