India is a country with extensive rural areas where online shopping may be difficult and product delivery may be a time-consuming affair for retailers. Yet the country has a market of 1.34 billion consumers who are discerning in their habits and view shopping as a personal journey of obtaining information and indicating their preferences seamlessly across several platforms. It is paradoxical that it is the consumers who appear to be orchestrating the change and not the retailers. The established retailers appear to have a reactive, not proactive, stance in this market evolution. The connotation of omnichannel suggests that the retailers be omnipresent to the consumers. Yet cognizance of transitional market dynamics has allowed 100% FDI in online retail of goods and services under the marketplace model through the automatic route in an attempt to legitimize the existing businesses of e-commerce companies operating in India. FDI is however prohibited in e-commerce companies that own inventories of goods and services and sell directly to consumers using online platforms. Also the marketplaces are prohibited from offering deep discounts on the products and warranty/guarantee of the goods. These can only be offered by the sellers and their contact details have to be displayed online in the marketplace platform. Sales from an individual vendor in such a marketplace is capped at 25% of the total sales. The e-commerce retailer can continue to provide support services like warehousing, logistics, order fulfilment, call centre, and payment collection to the individual sellers. These directives of the Government can potentially end the price wars in the e-commerce space and level the playing field with physical stores. As the retail players in the online space gear up towards implementing the transitions laid down by the Government, it is evident that their transformative role in the Indian market have been duly acknowledged. Over the next few years, it will be of much interest to monitor the retail landscape and analyse the market dynamics that unfurl among the dominant stakeholders.
Questions for Discussion and Review
Conduct a SWOT Analysis of the Indian e-retail sector. Match its strengths to opportunities and indicate any competitive advantage that the sector may have.
A customer notices that a particular product available at the store is cheaper on the retailer’s website and requests to get the same price at the store. The salesman says that online offers are limited to those buying online. In this context, discuss the implications of a customer walking out of the store and buying online instead.
Analyse the evolution of e-retail as a disruptive business model and identify the stage of leadership development that India has currently reached.
Is China the most relevant benchmark for global CEOs who are attempting to study future changes in Indian e-retail? Discuss.
Explain some of the current challenges encountered by e-commerce retailers in India.
Discuss the strategies that are being taken by online and offline retailers to build sustainable omnichannels for their organizations.
Delivery logistics is innovating to add value and provide delivery speed to customers. Discuss its impact of delivery the e-commerce business.
Indian consumers often abandon their online shopping carts because of unexpected costs such as high cost of shipping, tax rate, accessory charges at the point of payment. Explain how omnichannel retailing can help lessen this problem?
Critically evaluate the factors that may make the Indian e-commerce sector profitable in the long run.
Discuss the Government’s policy regulations that are shaping the overall retail sector in India.
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