If you disagree that there is a bloodbath happening right now in Indian e-commerce, you can save your time and stop reading further. It’s not yet the kind Ashish predicted last year, but the kind where businesses are bleeding every inch of the path to survival. Most of these wounds are self-inflicted though – some consciously, and most purely out of not thinking through well enough. Acknowledging this seems to be difficult for boards running these businesses since most of their decisions come with a lot of confidence; confidence that to some extent comes from “this is right for my business” and mostly from “I know it all”.
The question is – in a domain that is still at a nascent stage, is this confidence well-founded? We have enough and more evidence in the e-commerce space in India now to say with equal, if not more, conviction that what’s being done is not the way to building a sustainable and scalable e-commerce business.
And hence the question “What’s not going right?” instead of “What’s going wrong?”
Gone are the days when standard business models worked irrespective of what area your business was in. Awareness and knowledge have led to a reformed understanding among consumers. They are now more aware of their choices and the overall value in their choices. The competitive situation has tilted the scale a lot in favor of the consumer, thus enabling them with the aptitude to make evaluated choices. This has created challenges for businesses, resolving which requires acute understanding of the consumer nature, needs and behavior in social and individual contexts.
Ignorance of consumer understanding has large costs involved and this now quite visible in the form of Indian e-commerce space’s struggle towards building viable businesses.
E-Commerce in India evolved as replication of a globally successful business model; the US. Examples of Amazon, Zappos, eBay were largely looked up to when business structures for Indian e-commerce were developed. What seems left out of learning from these businesses was essentially the most fundamental aspect that made their companies successful – a dedicated focus on site visitors and customers – their propensity to identify, learn from, cherish and nurture their customers. Customer retention hence, was no more a challenge either.
Let us look at a standard e-commerce business in India. To begin, you got your business model tuned, set up the front-end, secure backend. Supply chain and delivery channels in place, you also get investors to believe in your business. Of course, you also thought of your customers – after all they are the source of your revenues. So you got your UI/UX team to create good environment for your visitors. With good collection coupled with seamless (if you’ve really ensured this) experience, you do your best to convert this visitor to a customer.
With all this in place, still the state of e-commerce in India makes struggle look like a good phase.
There’s a part I intentionally skipped in the progression I mentioned above. It is – hold your breath – customer acquisition. There is something fundamentally wrong in the way customer acquisition is understood and approached.
How is it evident? The huge influx of investments allowed big players to do the most obvious – Spend huge on media – display, social and yes, for some, TVCs too. The propositions made are – CoD, assortment of products, easy returns (which btw, personal experience says aren’t easy at all),option for EMIs.
Some are even trying to change consumer perspective towards their brand name, instead of towards the segment.
It took Google 6 years to become synonymous with “search” for its consumers. This, for a global product that affected daily life of its users. Also it was consumers who initiated the term – “Googling” it. Attempting to force your consumer’s/users to use your brand name for an activity they are not even familiar with – How good a strategy is that?
Now I will leave it to you to figure out whether this does or does not lead to digging your own grave. More importantly, which of these propositions do you think consumers really find a deeper connect with?
Business-wise, the more fundamental question and often the least thought is – Where does all this take your CPA? How long will e-commerce space in India keep justifying the high cost involved on the excuse of a nascent market?
In an Outlook article where he analyzes Aamir Khan as a business person, eminent social commentator and adman Santosh Desai says – ‘(it is) Aamir’s ability to begin with an idea, execute it without compromise, and find ways to make it valuable to the consuming ecosystem that make his efforts so remarkable.’ As a startup you begin with an idea which you execute to create a product, maybe in an uncompromised manner. The real question is – what is it that you are doing to make it valuable to the consuming ecosystem?
Most e-Commerce businesses go by off-the-cuff ideas without really putting a deep thought into customer outreach. While pain points are recognized (also addressed in communication – CoD, comfortable shopping, free returns etc.), what remains unseen, unidentified and mostly ignored is the human nature of a consumer/customer. To put forth simply, the focus of your business communication (B2B or B2C, irrespective) should not be about conveying “attached benefits”, but be about conveying “acquired value”; value that yields them those benefits. Understanding of these benefits should largely be a derived comprehension of the value your product adds to their living (B2C), to their business (B2B).
Attempting to target your consumer with a surface-level understanding based communication will only get you a slight increase in traffic that perhaps your ads were able provoke anyway by communicating your existence. What needs to be plugged in (see what I just did there ? ), is the huge gap between understanding of the “value” your product provides and understanding of the “attached benefits” that come out of those.
In the next article, we go into nuances of the Indian consumer and market that affect your business. Then we lead specific points that e-commerce businesses should consider to analyze and evaluate their customer outreach programs.
The startup business space is interesting. Challenge for a startup is about thinking every aspect thoroughly – most importantly your consumer proposition. The importance of it does not change whether you are from e-commerce space or of any other business leanings.