Summarizing the Key challenges in Online Retail market in India-
Most Indian consumers prefer to sample a product before making a purchase. This applies across categories such as clothing, shoes, perfumes and accessories. Lack of touch-and-feel in online shopping could lead to issues such as wrong product sizes (in shoes and clothing). This creates a mental barrier for consumers to shop online
2- Increased competition with the entry of global players
The growth potential of the online retail segment in India is attracting leading international players. The entry of international players would increase competition in the segment. The advanced technology capabilities of global players in areas such as customer analytic and recommendation engines would pose a challenge for local companies. International players have larger financial resources than their Indian counterparts. This enables them to bear losses and restrict supplies to their competitors by buying out supplies from vendors. This could drive out smaller domestic players from the market.
3-Low margins prompting E-commerce players to look at new Business Models
The majority of e-Commerce companies are price players due to the stiff competition they face and the race to acquire the maximum number of customers. This results in very low margins or none at all. E-Commerce players could look to adopt new business models to increase their margins.
1- Lack of touch-and feel and a mental barrier for online shopping
Most Indian consumers prefer to sample a product before making a purchase. This applies across categories such as clothing, shoes, perfumes and accessories. Lack of touch-and-feel in online shopping could lead to issues such as wrong product sizes (in shoes and clothing). This creates a mental barrier for consumers to shop online
2- Increased competition with the entry of global players
The growth potential of the online retail segment in India is attracting leading international players. The entry of international players would increase competition in the segment. The advanced technology capabilities of global players in areas such as customer analytic and recommendation engines would pose a challenge for local companies. International players have larger financial resources than their Indian counterparts. This enables them to bear losses and restrict supplies to their competitors by buying out supplies from vendors. This could drive out smaller domestic players from the market.
3-Low margins prompting E-commerce players to look at new Business Models
The majority of e-Commerce companies are price players due to the stiff competition they face and the race to acquire the maximum number of customers. This results in very low margins or none at all. E-Commerce players could look to adopt new business models to increase their margins.
Cheers!
Always Positive
13th May
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