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#Forecast2021: E-commerce industry set for a massive uptick

Covid2019 pandemic poked a hole in time and the global e-commerce industry just sped through it

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NEW DELHI: Remember the good ol’ days when we could go to the corner store and buy essentials without fear of catching some newly fangled disease? All that changed with the outbreak of the novel Coronavirus. Lockdown was imposed, and only a minimal number of mom and pop stores and modern trade outlets were allowed to open with a specified in-store limit. This led to the quick adaptation of digital medium by people for fulfilling their daily needs. The adaptation was so fast and in such huge numbers that many of the companies did not have the infrastructure ready to cater to such a high need. For instance, online grocery players were working overtime to deliver orders, yet in the early days of the lockdown, there was a delay of nearly three to five before one’s order reached their doorstep. Local kirana that always dealt in ‘cash only’ quickly adopted e-wallets to ensure that business works as per routine.

It seemed like the Covid2019 pandemic poked a hole in time and the global e-commerce industry just sped through it, landing in an era that was yet to arrive. Several industry leaders, observers and think tanks pointed out that the digital adoption which would have otherwise taken five years was achieved in a matter of months. While the Indian side of it struggled to find its foothold in the initial few months, it managed to attract a swarm of takers, both in terms of investors and consumers, throughout 2020. According to a Goldman Sachs report released in July last year, the e-commerce growth rate for 2020 is expected to be 18 per cent. It also estimated growth rates of over 33 per cent and 28 per cent in 2021 and 2022, respectively. 

The report further suggested that online grocery is going to be the biggest driver for e-commerce in India, accelerating with an 81 per cent annual growth rate. This was proven throughout the lockdown when people developed the habit of ordering groceries online. Coming close on the heels will be fashion, mobile & electronics, general merchandise, personal care and home furnishings, as indicated by the marketing industry. 

This has given a huge boost to the e-comm players who are now thriving with a bigger and active community than before. Their bellies are filled with investments from global giants and investor presentations are shining with the bright future of this domain in the Indian market.

The silver lining is that e-commerce has also spread vertically and horizontally in the non-metro regions. The number of pin codes has increased and these players are covering more ground than ever.

As part of their omnichannel strategy to cover more ground, e-commerce players are adding and will continue to add kirana stores and local shops to their network. Amazon and Flipkart have been the torchbearers of this rapid expansion.

“E-commerce players are also looking to increase the number of consumer touchpoints to gain higher customer mindshare. In the next five years, over 60 per cent of e-commerce volumes are likely to come from tier-2 and tier-3 cities, making it imperative for e-commerce businesses to build their seller base and delivery reach in smaller towns,” Starcom CCO Rajiv Gopinath interjected[L1]  added.

Headless commerce

Many experts have mentioned that people are moving towards headless commerce. This would mean a lot of investment in technology and the integration of different functions to create a seamless experience. A result of this would be the reshaping of retail stores, a drive-through model of shopping and experiential showrooms for the sake of enhancing user experience.

Logicserve digital founder and CEO Prasad Shejale highlighted, “Headless commerce is evolving, and we will surely see more of that soon. We will also see more and more adoption of virtual or e-trial rooms and cashless payments. Buying online and picking up in-store (BOPIS) is also a phenomenon that might soon become popular.”

“While the infrastructure for it is in its infancy, we can expect auto-checkout, curb-side pickup, order-online-pickup-offline and tap-and-pay experiences to become the norm in the coming months,” 22feet Tribal Worldwide president Preetham Venkky suggested.

This will also result in 2021 laying the foundations of a touch-free world. 

Digital  transformation for the retail industry means automating and digitalising their existing systems, adopting DevOps (a set of practices that aims to shorten the systems development life cycle) for modernisation and sustenance, and using cloud and everything as a service added Gopinath. “Digital ecosystems that combine their core e-retail business with sticky customer services, such as video streaming, gaming, booking and payments, in a single platform, will grow.” 

While the integration of technology in e-commerce has been going on for a few years but the pandemic has given a huge fillip to its adoption. Try-n-buy, cashless payments, personalisation and applications have all become a part of online shopping.

The platforms are investing to ensure one-on-one communication with customers and offer personalised offerings.

For years, the allied beneficiary of e-commerce growth is the logistics and warehouse category. However, the next step in their evolution is the digital transformation of these two categories.

dentsu Asia Pacific (APAC) chief data & product officer and dentsu Programmatic - south Asia CEO Gautam Mehra opined that warehouses will be centralised and home deliveries will pick up sharply. “In the automotive segments, real estate is a huge cost for dealerships, this will definitely come down. With VR headsets and a car in the parking, one can turn a mall activation into a dealership with a test drive option.” 

The rise of online shopping has led to greater digital spends over the last couple of years, a trend which will only gain further traction. If e-commerce volumes rise, it is conceivable that investment is focused on digital advertising to facilitate the path to purchase, particularly in the channels that are closest to consumer decision-making.

Brands will advertise heavily on e-commerce platforms. “Brands are responding by investing more in e-commerce advertising. Marketers are looking to create an optimised combination of media used for advertising in order to maximise ROI,” shared Gopinath.

The industry will continue to advertise heavily in 2021 as well; digital and TV being the preferred channels. TV advertisements are ideal to raise awareness among the masses and build brands, which e-commerce embraces. In Shejale’s view, television will remain a popular medium among the masses and TV ads will continue to generate higher advertising demands in the immediate future as well.

In order to tap into this massively viable growth environment, brands will have to focus primarily in four areas: smooth, expected and fast user experience; value addition over marketplace offerings; digital experience befitting the brand; and last but not the least – better customer service (than marketplace), suggested Venkky. 

Clearly, e-commerce players and its various stakeholders will have a lot to contend with this year. As consumers’ buying behaviour undergoes a sea change, with preferences tending to simpler, more interactive, and quicker ways to shop, the forward-thinking e-tailer will be wise to keep the aforementioned pointers in mind.

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