India Internet eCommerce Forum by VC Circle – Key Takeaways

eCommerce India ForumVC Circle hosted India Internet eCommerce Forum in Mumbai and here are the key takeaways from the meet.

Horizontal vs Vertical Online Retailing in India Vertical specific platforms will have enough time (2-4 years) before it will start facing competition from the Horizontals. While eventually consolidation will set in, the platform which is differentiated and has built a brand will continue to stay. Within verticals however some
consolidation has already been happening (for example within babycare, food ordering, media reports around consolidation in taxi booking). Within real estate, there are two models emerging (classifieds / listings and transaction based) however there has been limited consolidation so far.

Offline vs Online Some categories like furniture, jewellery, beauty products, are building an offline presence. Some of the key reasons provided by companies were: a) building omni channel presence; b) provide ‘touch and feel’ to customers and build higher level of trust; c) offline presence to become an extension of online buying process where transaction is closed. Some brands like Adidas have started a separate online channel to drive eCommerce sales. Some of the strategies adopted by brands with a large offline presence to check cannibalization from online sales are segmentation of products (separate line of products for online and offline channels) and converting existing retailers into e-tailers.

Where is the Traffic Coming from – Mobile Or Desktop ? In India, Mobile has become the predominant means of doing online commerce and desktop eventually will become less relevant in times to come. For example Flipkart indicated that over 70% of its traffic is coming from mobile vs ~10% 1.5 years ago. Ixigo is getting 50-60% of its traffic from mobile. The key issue with traffic and transactions moving to mobile is higher failure rates of transactions and lesser reliability relative to desktop. Within mobile the apps are more sticky than mobile websites which drives down the cost of re-engagement with customers for companies.

What Operations of eCommerce Companies are Outsourced ? Companies indicated some merit in outsourcing operations to third party facilitator (for logistics, payments etc) vs doing it everything on their own. The merits for outsourcing would be that facilitator do the same job better and cost of doing it own goes beyond just the price of outsourcing due to bandwidth issues.

Finally, One of the key debates on whether valuations for eCommerce companies are high, no clear consensus emerged but shared a common view that disruption by eCommerce companies is for real and believed that India will reach gross merchandise value of US$100bn+ over next few years. The two key challenges highlighted by companies are: a) retention of talent; and b) movement of merchandise across the country remains one of the biggest pain points for eCommerce.

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