Today, the sector accounts for 25 percent of the organized retail market in entirety and is anticipated to reach 37 percent by 2030.
The success stories of e-commerce businesses in India have notably drawn attention in the last couple of years. E-commerce giants like Amazon, Flipkart, Snapdeal and Myntra have given customers something so unique that they are going to cherish forever. Today, the sector accounts for 25 percent of the organized retail market in entirety and is anticipated to reach 37 percent by 2030.
While apparel has remained the most-shopped category online, other segments like grocery, personal care, and electronics are reportedly on the rise too. This e-commerce progress has pushed several offline retailers to either come online or adopt an omnichannel approach to meet the ever-growing customer aspirations and expectations.
Given the impressive growth cycles achieved by e-commerce players, this platform has successfully moved beyond being a heavy discounting platform, and rather turning into a convenience-driven habit among Indian shoppers. It has, however, drawn concerns too despite the worldwide success.
E-commerce giants hindering the progress of small online and offline retailers?
The rapid rise of e-commerce has gradually resulted in a survival crisis for several Kirana stores/ small retailers that have been distressed by their predatory behavior and discounting practices. The steep discounts, widely relished by Indian shoppers, have killed the customer base of local retailers, significantly affecting their sales figures.
To address this concern, the government has lately introduced a newer and stricter e-commerce policy. The policy primarily focusses on prohibiting steep discounting practices of e-commerce giants, thus protecting the interests of small retailers and making sure they operate in a fair marketplace.
The concerns are not just limited to the Kirana stores but have also pulled online shoppers into their trap. For instance, unlike the e-commerce biggies that ensure high online security to shoppers, there are several smaller e-commerce players that operate in the absence of authentic security software, making shoppers prone to online risks such as data theft and data breach. This further creates fear in their minds to shop online, and most shoppers, therefore, avoid disclosing their financial details – debit card, credit card or net banking – when it comes to transacting online.
Another challenge that Indian buyers face in the present e-commerce market is the dearth of ‘touch and feel’ factor while making online purchases. Even today, a large number of shoppers wish to experience the product before paying for it, and e-commerce players have failed to offer this satisfaction to shoppers despite their nationwide progress. As a result, a growing number of online shoppers are unwilling to shop on e-commerce platforms, especially from the ones that deal with segments like jewelry, cosmetics, apparel, and accessories. Moreover, the excessive focus of e-commerce players on the gross merchandise value (GMV) has been another challenge that has led to heavy losses, rising costs, and lower returns. Several small businesses, therefore, failed and wiped off, while others had to immediately reshape their existing strategies to focus on the revenue instead of GMV, as it was the only way left to mitigate losses.
DMA: transforming the retail market by bringing offline mall experience online
That said, challenges are endless but there needs to be a strategy to address them. This is where innovative players like Digital Mall of Asia (DMA) step in. Its innovative concept of a virtual shopping portal has all the potential to address most of these impediments through an exceptional business model – providing retailers and shoppers a unique opportunity to sell and earn on an immersive digital space.
The model aims at providing retailers an advanced virtual space that comes blended with multiple visual and sensory elements to deliver enhanced end-user experiences. The idea is to enable shoppers to virtually move through exclusive towers of digital retail shops, trial rooms, hypermarket, night clubs, food courts, and much more. DMA will operate on a zero-commission model, which will ensure that no commission is charged for transactions driven through the DMA platform, unlike other major e-commerce platforms that usually charge 5-35 per cent of the revenue. Retailers will only need to pay a fixed rental amount every month, which will enable them to sell products at the cheapest price possible, and eventually improve profitability. And in turn, customers will receive benefits from the higher affordability that the platform will facilitate.
Furthermore, DMA will also enable each retailer to enjoy exclusive rights to sell a particular product category or brand in their respective cities. This will help eliminate the artificial hyper-competitiveness, seen majorly on e-commerce portals. Plus, it can also relieve retailers from waiting too long for payment settlements in a reliable and transparent manner.
The DMA portal will also enable the retailers to integrate their offline inventories with it, which will empower them to leverage the strong local presence of physical retail stores, thereby ensuring faster and efficient deliveries. The new portal can also enable shoppers to check the product first before making the purchase, thus getting rid of counterfeit products.
That said, the virtual ecosystem is likely to be implemented soon and is anticipated to recreate the look and feel of the physical retail mall in the virtual space. The upcoming concept will hopefully disrupt the online shopping space while providing retailers an innovative, safe and secure platform to continue with their operations without hassle. Moreover, it will also bring confidence among shoppers to transact online without any trouble, which has been amiss for the last couple of years.
-- Rishabh Mehra, Managing Director, and CEO- Digital Mall of Asia
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