COME ONE, COME ALL!

If you’ve only glanced through today’s newspaper, you’d read that yet another company has been attracted towards the glitter that the Indian e-commerce industry has acquired. PepsiCo has joined the likes of Motorola, Marks & Spencer, Britannia and Coca-Cola in selling their products exclusively online. “The Dramatic Decade: The Indira Gandhi Years”, published by Rupa Publications was to be sold only on Amazon for 21 days after its release by author and President Pranab Mukherjee.

PepsiCo will be selling premium snacks named Doritos and Tostitos, while selling variants of its Tropicana juice. These are most likely to be sold on LocalBanya.com, BigBasket.com and AaramShop.com. Lays’ chips, Kurkure, Pepsi and Mountain Dew are already being sold on the aforementioned websites. The important point to note here is that though fashion, books and electronics are the most popular choices for online shoppers, the entry of FMCG e-tailers could be the advent of another dawn because of the inelastic demand for consumer perishables. The ability of e-tailers to give more discounts over brick-and-mortar sellers is only an added advantage.

An obvious question that comes to mind would be, “Why are we seeing so much exclusivity in online sales?” The answer is quite simple, actually. The online sector is growing at a tremendous pace in India, which would give firms more access to markets which might be limited had they chosen to sell their products offline. Also, the common consumer trusts established online portals such as Flipkart so much so that when Motorola put up its Mobility range of phones (Moto E, Moto G & Moto X) exclusively on Flipkart, the first batch was sold out in all of 20 hours. The consumers had only seen the phones but not experienced their functioning before buying them as they can in stores such as Croma, Reliance Digital, etc.

This is an extremely important factor taken into consideration by PepsiCo because their new products are priced slightly higher than their previous ones, which could deter market demand. Also, there more moolah to be raked in by PepsiCo, so they wouldn’t mind giving some part of the margin up until the products are out of the trial phase and the consumers are habituated to them. Therefore, consumers will be more willing to try new products from reliable sources such as e-commerce giants.

In conclusion, it’s a great time to be an Indian consumer!

Until next time,

Arushi Kotecha

E-Comm’s free shipping of cheer to Banks

The growing trend of e-shopping, the use of online transactions, has taken a flight over a period of time and thus the increased use of credit cards for shopping brings revenue to banks in terms of interest and fee income. According to the official data released by the RBI, the average monthly credit cards spending has risen up from 12,035 crores to 15,470 crores, over a period of one year. It is a delight for banks, as they see a boom in their fee-based incomes, and all thanks to the globalised e-commerce sector in India.

Higher credit card outstanding translates into higher interest income for banks, as they charge penal interest for unpaid dues beyond the stipulated period, i.e. the credit card customers have to pay interests in form of fines, if they are unable to their pay their credit dues, before a given deadline. Thus, with increasing amount of credit card usage over e-trade payments, the chances of payment defaults by customers also increase, eventually leading to a hike in revenues of the banks.

Head of the credit card division at a private sector bank said online shopping and travel spends have led to a rise in credit cards spends. “Customers are increasingly buying tickets online, booking hotels and vacations, which has increased credit card spends,” he said. “Banks have tied up with many electronic chains and mobile companies, giving EMI (equated monthly instalment) options to customers on purchase of phones and other electronic items on credit cards. Alongside, the EMI option over the purchase of expensive gadgets, has also increased the credit card spending by a large chunk of consumers.

Therefore, as the customers across the country will keep on getting more and more variety of their desired products online, they will keep on using online payment modes, and thus income of both banks and the e-commerce firms would keep on increasing.

IS MOBILE SHOPPING IS THE WAY FORWARD FOR E-COMMERCE?

We’ve all been witnessing so far the explosion of the e-commerce industry and of late the surge in the number of their mobile apps. Major fashion e-tailers have recognised mobile shopping as the next big thing and have duly invested in it. The rise in the number of low-cost smartphones has certainly helped drive this growth in a kind of linkage effect. This has helped even more in the rural areas and small towns as people there do not always have access to a computer.

You can see the e-commerce giants taking this seriously too. Almost all of them have a mobile site plus an app that offers heavy discounts. Myntra has even gone so far as to thinking about closing their main website to focus solely on the app! I do not know if it makes sense but you can see their reasoning behind it. Retail shopping and especially in fashion is largely impulse driven and if you are able to give people the ability to satisfy such impulses through something they are constantly using, it can definitely make you a lot of money.

So while the growth story is not new, it has opened up a whole new avenue to shopping. It is particularly appealing to the time-poor multi tasker who has a variety of options available on the go. Mobile shopping has also increased the power in the hands of the consumer while shopping in offline retail stores. The phrase “par flipkart mein toh itne ka mil raha hai” coupled with triuamphantly jabbing the phone at the shopkeeper, is a scene I’ve witnessed more than once.

But let us not get ahead of ourselves in this mobile shopping frenzy and look at the problems or challenges to this idea. The biggest one is the one online sites had just about managed to get over and that is the trust factor. Sure, Cash-on-Delivery helps and most of these companies have an already established brand name, but the thought “Agar kuch malware bacteria virus aa gaya toh?” is something that’s entered everyone’s mind. What companies are realising is that while traffic on the mobile sites has increased by huge numbers, their convertability into actual sales is relatively low.

I’d like to conclude by asking for your opinion. Do you believe mobile shopping will take off as expected? Will it match the growth of online shopping or for that matter surpass it? Or are you of the opinion that mobile shopping is like the Blackboard’s discussions page, it looks like a great idea but we all know we’re never using it ourselves.

Good Day!

– Narayan Sharalaya