It's no more about discounts: Convenience, comparison shopping draw consumers to e-commerce

As per a BCG report title ‘Decoding the Digital Opportunity in Retail,’ 55 per cent of the consumers said they shopped online because it was convenient, while 52 per cent said it was because e-retailers offered the highest discounts.
The report – based on a study called BCG CCI Digital Influence Study, conducted over two years with a sample size of 18,000 per year – says that it was from 2014-2016 for the first time that more consumers cited convenience over price.
“We’ve found this reported consumer preference all over India, although of course it is more in the metros,” Senior Partner at BCG India, Abheek Singhi (who leads consumer and retail practice) said on the sidelines of a leadership summit.
An equal focus on convenience and facilities to buyers is the key to success for e-commerce players in India.
To cater to the convenience and less of the money-burning discounts experienced by retailers, brands like Fynd – an offline-to-online fashion e-commerce portal – are helping consumers gain access to products online, irrespective of the city or the brand.
“The two major reasons that a consumer shops online are convenience and price competitiveness. A person does not have to step out of his home and is yet able to compare prices across different portals and choose the best deal for himself,” said Co-founder, Fynd, Harsh Shah.
Founder & CEO, Naaptol, Manu Agarwal added, “Shopping online offer you convenience of browsing through hundreds of different products from various product categories through a single screen as against a retail store where the customer would need to move from one department to another to browse through different products.”
THE DISCOUNTING GAME
E-retailers in India have long been wooing customers with hefty discounts on products, leading to a money-burning race. With immense marketing boost, the e-retail industry in India has tripled this year but the losses have increased. In the last one year, e-commerce majors Flipkart, Amazon, and Snapdeal reported Rs 11,754 crore, combined losses, with Snapdeal at the brink of an organizational crisis.
This development is a clear indication that discounts and offers alone can’t give the e-commerce industry the push that it requires.
“Though there is a mass belief that customers in India shop online for discounts only, this is not really true. This myth is being shattered everyday, and one can see the same reflected in BCG’s report. At the end of the day, time is money and a customer never keeps both the things in isolation. If he/she is able to save some time by purchasing his favorites online, he will do so even if the online product is a bit costly,” said Fynd’s Shah.
Manu Agarwal however, approaches this cautiously, saying that for a number of online retailer, discounting is the mainstay of the business, a strong decisive factor in turning customers to a platform.
IMPORTANCE OF DIGITIZING THE VALUE CHAIN
The BCG report also maintained that retailers should begin digitizing their entire value chain – from collecting real-time granular data from their points of sale, to using insights from this data right at the product design stage.
“Audience from Tier II, Tier III and beyond – which contributes close to 70 per cent of our customers – still use TV as their primary source of information and entertainment. The TV viewership in India has a CAGR of 22 per cent which is much larger than the Internet penetration, reaching every set top box in the country is our endeavor. Having said this, it is still important to note that there has been an immense surge in the number of Internet users in India, and hence digitizing the value chain will be certainly beneficial and is something that we are working towards,” said Manu Agarwal.
Harsh Shah added, “Digitization not only helps a company get a complete hold of its value chain but also helps in drafting predictive analysis through which a company can take many efficient decisions.”
BCG’s Singhi was of the opinion that for “franchisee based retailers, this might be harder because their distribution network is not directly under their control, but even these businesses are making sure data from points of sale comes to their servers for analysis. The technology to achieve this is all available.”
Naaptol uses a home-brewed system called Warehouse Inventory Management System (WIMS) for managing indents, inventory and dispatches, developed by its in-house technology team, as does Fynd, which uses in-house tools for product inventory maintenance, image processing, order placements or fulfillment.
“Everything has been built from scratch by us and is designed in such a way that we are able to mould it according to our unique offline-to-online e-commerce business model,” said Harsh Shah.
Apart from detecting customer trends in real time, BCG recommended retailers use technology to make their supply chain more efficient, with warehouse automation, for instance. It also recommended digital marketing to rationalize spends, targeted promotional offers using in-depth data of each individual customer, and optimizing inventories based on the profile of the customers who walk into a store.
“Since the inception of Fynd, 80 per cent of our marketing efforts are via digital marketing. Digital channels give us an option to accurately reach our target audience and also helps us visualize the entire purchase funnel for customers acquired via each channel. All this allows us to optimize our campaigns at a micro level and make full use of each penny spent,” said Shah.
He also added that using technology effectively has helped them avoid product cancellations by almost 70 per cent, enhancing the consumer experience and giving the brand what every platform aims for – a satisfied customer.