Road to Recovery: The Retail Edit

The retail sector contributes to 10% of the nation’s GDP. Retail sales have been an economic indicator because consumer spending drives the Indian Economy. Once the lockdown ends, consumers will want to make themselves feel better – which usually means they would step out to shop. The pandemic, however, would have an impact on how we would feel about crowds and tight spaces.

As retail outlets in the country remain shut, retailers have accelerated and activated campaigns on their online channels. A lockdown extension would result in a disproportionate impact on the retail sector which would eventually lead to a loss in jobs. The sector directly employs around 50 million people. If the lockdown continues a 25% loss in jobs is expected.

In a recent webinar by India Retailing.com, mall owners have suggested the government to open up the organized sector as it would be convenient for them to manage a billion square feet area with all the necessary hygiene checks in place.

It’s about time retailers start moving to online channels. Once the pandemic comes to an end online shopping is expected to boom. One of the largest increases in eCommerce shopping is in India.



global covid 19 and ecommerce WARC data

The post COVID world would witness a change in consumer behavior. Consumers would be extremely cautious with their spending as well. Here are a few suggestions on how retailers should work on their retail strategies during the current pandemic.

1.      Focus on current customers

2.      Upgrade your website

3.      Develop relevant content

4.      Optimize internal processes

5.      Prepare for logistics and supply chain to come back online

Nielsen has identified three distinct time horizons for global market regeneration beyond the novel coronavirus (COVID-19) global health emergency and attached likely scenarios to each. The three-tiered framework identifies the conditions for businesses to rebound, reboot, or reinvent as they confront expected unprecedented recessionary conditions.

covid exit scenarios rebound reboot reinvent



 BCG has shared an exhibit with probable strategies retailers can use to reach various objectives. The exhibit suggests ways retailers could align their markdown program closely with the retailer’s objectives.

the advanced analytics behind fashion company markdowns

Beyond COVID-19 Business Transformation for the New Normal

Beyond COVID-19 Business Transformation for the New Normal

As the world continues to navigate through the uncertainty of the COVID 19 crisis, businesses have taken a massive hit, leaving leaders scrambling for ways to keep businesses afloat. It is now strongly established that consumption patterns will see a colossal shift in the coming weeks. Offline purchases will be shifted to eCommerce, leaving brands to consider and implement stronger strategies to keep up with this inevitable change in consumption patterns. In a recent episode of Talks at Tenovia with business leaders, we interviewed TN Hari, entrepreneur, author, and Head of HR at Big Basket. In the discussion, he highlighted the 5x increase in demand for goods and the challenges businesses will face to match the demand during the crisis. The demand itself indicates a shift in buying behavior and this is something that every organization needs to analyze. In times of a crisis quickly adapting to the buyer’s needs is key to sustaining in the long run.


Some key consumer behavior changes according to a research study by Agility PR

  • 44 % of respondents say that the coronavirus spread has impacted their purchase decisions.
  • 21% of respondents say they are shopping more frequently online.
  • 29% of respondents say they are taking advantage of BOPIS services to get products delivered without going in-store, with 18 percent using a curbside pickup, 17 percent using subscription services, and 13 percent opting for auto ship.

While some of these changes are going to be temporary, others would be permanent. Consumers have come to realize that touch and feel are not as important especially in the event of a pandemic. This leaves online purchases and eCommerce a wide array of opportunities to catch momentum.

The reluctancy to step outside and buy will mark a tipping point for the adoption of eCommerce platforms. According to Bain insights, the outbreak in China has caused dramatic shifts in online purchases of consumer goods in China and this will hold true worldwide.

Traditional brick and mortar retailers need to quickly adapt to changing consumer buying preferences. They either choose to fulfill orders through established online retailers resulting in reduced bottom-line revenues or enter the eCommerce business wherein they sell directly to consumers. 

Retailers should explore an Omnichannel approach in order to stabilize and then increase revenues. Here are a few tips for business leaders to succeed during a crisis:

  • Consider going hyperlocal
  • Leverage tech to forecast demand and optimize inventory
  • Evolve your business model and ecosystem
  • Refocus on products and offer customizable solutions
  • Revolutionize your marketing techniques

In the words of Darwin “It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change”

As consumers gradually but firmly change their buying preferences towards the online channel and eCommerce channels it is important that retailers adapt to change immediately unless they want to be the next Kodak or Nokia.

Implications of COVID-19 – The URGENT Need for a Digital Transformation

Implications of COVID-19 - The URGENT Need for a Digital Transformation

The last month has seen a major shift in the landscape of businesses both offline and online. As retail stores shut shop and people frantically wash hands, social isolation has somehow gotten us all more digitally connected than ever before. The COVID-19 situation is, in fact, a global crisis and a very serious one, which would force a lot of businesses to innovate and make tweaks to their business model. In the words of Steve Blank, of the Lean Startup fame:
“If your business model today looks the same as it did on 1st March, you’re in denial – and possibly out of business”. You should read up his Lifeboat Strategy to deal with this crisis for your business.


WHY YOU NEED AN ECOMMERCE AND A DIGITAL TRANSFORMATION STRATEGY

Ok here’s why: Offline business will take a while to come back to what it was. The good news is that the consumption will not stop – people’s behaviors won’t change – where they buy products or services from will get disrupted over the next few months. 


eCommerce will grow

The social isolation situation may continue longer and even after the lockdown is lifted, people will continue taking preventive measures keeping most shopping limited to online. 

Online sales have increased two-fold after the crisis struck. Most products like electronics have anyways largely been purchased online. Other sectors like Groceries, however, have only recently seen a spike in demand and sales online. What happens with grocery sales increasing online is that it is fundamentally a game-changer for the eCommerce industry. And if people get used to the convenience of this, it might just become habit-forming. 

Now, if your business is ahead of the curve on eCommerce, great! But if you’re a business leader and you’ve been slow to adapt to eCommerce, you have to prioritize it as one of the top projects on your to-do list. 

Adapting to eCommerce means a bunch of things including making tweaks in your supply chain, merchandise, hiring, warehousing, operations, customer service and finally sales and marketing. For some companies, it includes exploring a B2B eCommerce approach to expand their distribution.


And That’s why you would need a Digital Transformation

Digital transformation doesn’t mean activating your digital marketing and ticking that checkbox. It’s an approach that involves looking at your business with a fresher mindset. It is a shift that will need a change in the mindset, skillset, and toolset. 

Most brand leaders have heard of Digital Transformation and have probably taken some strides towards this. But if we were to look around, it’s nowhere near where it should be in the ecosystem. This COVID-19 crisis will quickly make it clear the gaps in your digital transformation strategy and execution. 

As the old Chinese saying goes: The best time to plant a tree was 20 years ago, the next best time is now” 

In summary: We would strongly urge brand leaders to rethink what their businesses would look like if eCommerce would play a bigger role than it ever has: across the supply chain, distribution, brand awareness, new channels of sales, and new avenues of customer service and conversations.  

As stressful as the situation can get as we adapt to a post COVID-19 / Corona Virus world – as leaders we can do what’s in our control as we navigate our companies through this crisis. Act now!

Changes in e-Commerce policy: A Hidden Opportunity

Changes in e-Commerce policy: A Hidden Opportunity

On December 28, 2018, the Department of Industrial Policy and Promotion (DIPP) under the Ministry of Commerce, Government of India passed a new set of policies and introduced significant changes to its earlier policy (of 2017) which governed Foreign Direct Investments (FDI) in the e-commerce sector. The Indian retail landscape is economically and politically a sensitive one with stringent laws on foreign investment. E-commerce has been the only sector exclusive of the rule. But with the new regulations in place, it is largely going to change the dynamics of the Indian e-commerce industry.

Highlights of the policy:

  • Marketplace Entity (like Amazon) will have no ownership or control over the store inventory (of sellers).
  • The marketplace with run on an inventory-based model.
  • Marketplace Entity or its group companies cannot buy more than 25% from a single vendor.
  • Marketplace Entity cannot influence the price of goods and there will be a standard pricing model for all vendors.
  • Marketplace Entity will offer logistics and operational services to all vendors non-discriminately.
  • Marketplace Entity will offer cashback to all buyers without any discrimination.
  • Marketplace Entity cannot mandate the exclusivity of products to any vendor.

While the above policies remain strong for marketplaces, this could be a blessing in disguise for retail owners.

Let’s look at some of the benefits retails are most likely to gain out of this new policy:

  • With the inventory-based e-commerce, retailers will now have more control over their products and yet reap the benefits of a managed marketplace.
  • Since marketplaces cannot run their own discounts, retailers can set a pricing model as per their sales strategy as well as take control of offers and discounts.
  • Now that vendors will not be tied up by the exclusivity clause with the marketplace, they can spread their products across different platforms.
  • Most importantly, marketplaces will now be mandatorily required to submit a compliance document that abides by the policy guidelines on September 30 of every year. This will make the e-commerce landscape more transparent not only for vendors but also for end customers.

Overall, the current scenario creates opportunities for vendors rather than hindering their e-commerce business practice.

Trends that will shape Indian eCommerce in 2019

Trends that will shape Indian eCommerce in 2019

A lot has changed in the Indian eCommerce landscape in the last few years. As we move into another year towards the future, we see constantly changing eCommerce trends and take a new shape to cater to the more evolved audience.

What to look out for in eCommerce Trends 2019

Voice-activated searches

With easy voice searches enabled by AIs like Alexa, Siri, or Google, search engines like Google has made radical changes to its search result algorithms. This basically means that search will be more specific and yield specific results. This means the product discovery journey for users will also change and eCommerce brands will focus on such shifting trends in defining their search marketing strategy.

Vernacular aided experience

While India’s literacy rate is nearly 75%, those literate in basic English language is only 10% (125 million approximately). However, on the other hand, internet users in the country add up to nearly 481 million. Thus to fill the gap of linguistic preferences to internet usage, many eCommerce brands have already introduced regional language sites and this will continue to grow this year with more language options and more retailers trying to expand their audience base.

More omnichannel presence

While multi-channel has been the trend of 2018, omnichannel marketing will find its presence in eCommerce trends of this year, which will blur the lines between offline and online commerce. Brands will be mapping their user journey across channels and finally transition from multi-channel and detached presence to an integrated, omnichannel presence.

Refined product search

While social search has already been adopted by brands, it will only become more common and pervasive. This will also reduce the number of searches (for eCommerce products) on search engines and brands will most likely spend more advertising dollars on social marketing and other marketplaces.

Augmented Reality and Virtual Reality

Another interesting and rising trend in the retail business worth paying attention to is the integration of Virtual Reality in user experience. This year this is most likely to get leveraged further. By 2020, experts expect retailers to invest in Augmented Reality as well.

Understanding consumer behavior to improve sales

Understanding consumer behavior to improve sales

As markets evolve, so do consumers. With changing business trends, buyer behaviors also change which ultimately affect sales and revenue. Unlike earlier, the sole determining factor for buyers to make a purchase decision does not limit to the price-point but extends to more intangible ones.

The key factors behind shifting consumer behaviors:

Evolving online trends:

With evolving online trends, consumers look at ‘buying activity’ differently. Widespread social conversations, reviews, and an array of digital channels lead to more ‘informed buying decisions’. Also, being better connected to their favorite brands increases brand loyalty.

Cultural elements:

Even though their purchase technique and choice of products are different for the digitally savvy consumer, their decision is largely influenced by their society, social class, and its respective cultural elements. The cultural and social influences go hand-in-hand to define a consumer’s behavior. A classic instance of such behavior is how family habits and practices influence people. For example, if a family has had a ritual of buying precious jewelry on major festival days, the children tend to continue the practice, as a subconscious habit.

Personal preferences:

The personal preferences of millennial buyers largely impact their buying decisions. General demographics like age, occupation, and personality will determine what they are more inclined to buy and how. Also, since the modern lifestyle keeps radically changing, the consumer behavior also becomes more volatile. For instance, a sudden rise or drop in an individual’s annual income can change their preference in clothes, accessories, mode of travel, and even accommodation.

Psychological factors:

Lastly, psychology plays a significant role in defining a consumer’s behavior. As a marketer, to be able to successfully position your brand as a solution to your buyer’s need/s, you need to extract from their behavioral study which explains what they buy and how. Sentiments like needs, beliefs, attention, perception, and attitude can become motivational factors that drive the ultimate purchase decision of an individual.

The millennial consumer has more know-how and better connect with brands, and hence, is more perceptive and adept at assessing the brand value. This requires brand owners to have an in-depth understanding of consumer behavior and take a more customer-centric approach to drive sales.

 

Union Budget 2017: Impact on the Indian eCommerce Industry

Union Budget 2017: Impact on the Indian eCommerce Industry

Introduction

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The Union Budget 2017-18 is special in many ways. From the date of presenting the Budget to the transition towards a cashless economy, it is unique. Above all, this budget came four months after the demonetization decision. The demonetization decision was a huge boon to eCommerce industry as the number of people who opted for eWallets and electronic transactions has increased.

In this context, the industry expected huge sops for all their digital transactions and more clarity on the GST bill. While the Government took all measures to bring about transparency and accountability in the system, there was no major change to the indirect taxes like the customs, excise and services taxes and no clarity on the GST Bill.

Following are some of the important aspects of Union Budget 2017, from the eCommerce and startup perspective:

  • 5% reduction in the income tax slabs , which means more disposable income at hand and more purchasing power
  • Abolishment of the Foreign Investment Promotion Board in 2017-18. The roadmap for implementing same is yet to be announced
  • Promotional Digital Economy and planned schemes around BHIM app, AdharPay, introduction of PoS terminals and other related fiscal and policy measures.Tax sops for manufacturers of Point of Sale units, card readers, finger print readers and scanners to encourage indigenous manufacture of these devices
  • Payment regulatory board to be set for regulating digital payments
  • Incentive schemes to boost the manufacture of electronics in the form of Modified-Special Incentive Package Scheme (M-SIPS) and Electronic Development Fund(EDF)
  • Proposal to simplify , rationalise and integrate labour laws
  • New Cyber security regulator to be set up
  • The introduction of an e-payment framework for all payments made to the government is right on target, and the e-assessment mechanism is likely to be in place in near future

There were a mixed set of responses from the industry experts, and here are some of the noteworthy reactions:

Kunal Bahl, Co-founder & CEO, Snapdeal

“We commend the focus on growing the digital footprint in the country – enhancing digital infrastructure, capping cash transactions, reducing cash donations, using Aadhar Pay to enable more digital payments are significant measures. Initiatives make an impact when there is continued attention and the announcement of today builds on the demonetization efforts of last few weeks. We also welcome the emphasis on skill development and technical education – this will enable India to successfully harness the demographic dividend. The attention to affordable housing, greater employment in rural areas are the right interventions to build a more equitable society.”

Mr. Manu Agarwal, Founder and CEO, Naaptol

“Government has planned to take digitisation of transactions to the grass-root level and believe it is a good step towards a stronger economy. The convenience of digital payments will instigate the consumers to spend more and I believe it is positive sign for us”.

Ashish Hemrajani, CEO and Co-founder, BookMyShow

“We look forward to the GST (Goods and Services Tax) roll out in the coming financial year. The e-commerce space will hugely benefit from real time taxation which not only will introduce the required transparency but will further enable free flow of products and services. We also hope that the GST will play a critical role in automating demand curve pricing to a large extent, thereby improving yields and offering much-needed clarity on taxation in the entertainment ticketing space with respect to e-tax for cinema, plays, live events and sports ticketing, similar to airline pricing. A unified tax structure would also help in removing ambiguity and ease the process for e-tax application and collection. The Industry and the Government will both be winners.”

Impact of the GST bill on Indian eCommerce

Impact of the GST bill on Indian eCommerce

Introduction

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The GST Bill is one of most significant tax reforms that independent India has ever taken up. This bill, when implemented will remove all the confusion over the multiple taxes that prevail at the national level and in various states.

In today’s post, will try to understand the impact that the proposed GST bill will have on Indian eCommerce industry.

Current issues prevailing in the industry

The eCommerce industry in India has seen a phenomenal growth over the past few years and is poised to become the second largest online market after China.  The new age tech-savvy customers are demanding personalised attention and unique shopping experiences which is forcing the eCommerce industry to come up with unique and innovative products and experiences.

Due to the ever increasing demand, multiple domestic and foreign transactions, the eCommerce ecosystem in India has turned out to be highly complex in nature.  Due to this complexity, the industry is facing various issues such as:

  • Determining the role of the online market places while computing their tax liabilities

  • Liability for undertaking the waybill compliance: market place or seller

  • Liability for Deposit Entry Tax

  • Provisions under the prevailing VAT for discounts, bundled offers, returns , cancellations and replacements

  • Provisions under the current VAT for the sale of digital content such as eBooks and software products

  • Determining the state in which the sales has happened, especially in cases where the products have to be moved between states before reaching the end customer

  • Complexities associated with credit blockage

  • Service tax and other compliance related issues

Impact of the Proposed GST Bill on Indian eCommerce Industry

The Central Government of India has proposed the GST bill with the intention of creating one nation market place and that means that the bill is a huge boon for the Indian eCommerce industry. It is set eliminate all the complexities involved in their transactions.

According to a report released by Price Waterhouse Coopers, here is the impact of the GST on the Indian eCommerce sector:

Pricing impact

The output rate of tax could be higher for the company compared to the current service tax rate. However, the companies should have a higher credit pool than they do in the current regime, which could reduce the prices of their services.

Place of supply in case of B2C

Place of supply in case of B2C transactions would be the location of the service provider

Place of supply in case of B2B

In case of B2B transactions, the place of supply would be the location of the service recipient. It will be important to examine whether there would be rules to define inter-state service or intrastate service. This could be important to understand additional compliance requirement for e-commerce companies.

Compliance Requirements

Currently, e-commerce companies discharge their output service tax liability through centralised registration. Under GST, the centralised registration option may not be available. Hence, e-commerce companies would need to as such obtain registration in each state where they have their place of business, resulting in increased compliances.