Ecommerce in 2016: 5 Important Trends to Watch Out For
2015 was a stupendous year for Indian Ecommerce. It witnessed many battles being fought to get a share of consumers’ wallet. Many new companies sprang up, and some shut shops as well. The new ones were mostly in the space of hyperlocal deliveries, primarily groceries, mastering which is still going to take some time.
One of the most important announcements was the acquisition of FreeCharge by Snapdeal. The announcement was made through DDLJ-style tweets by both the companies, and Snapdeal quoted itself to become the biggest m-commerce company of the country.
The turn of events at Housing.com grabbed quite a lot of headlines, for reasons very different from those in 2014 when Rahul Yadav had secured funding from Softbank. Myntra went app-only and a lot of chatter came to the surface analyzing the pros and cons of the move. The year ended with a splurge of sale-events by the biggies. This year was special as Flipkart and Amazon (and, to some extent, Snapdeal) announced their sales on the same days (October 13 to 18) causing elation for customers and sellers (and probably some nervous days for the employees of these companies).
Ola too made headlines for a brilliant move of Ola Boat for Chennaiites facing a tough time while the year ended.
So how do we expect 2016 to turn out for Indian Ecommerce?
Although nobody can accurately predict how things will turn out, this post tries to unearth 5 trends which will underline the dynamics of this industry in the new year.
1. Mobile App vs Mobile Web
Mobile apps were touted to be the sole way forward for Indian ecommerce. Myntra made a very bold move of going app-only in May and reports were out that Flipkart was contemplating a similar move. However, in the final quarter of 2015, Flipkart dropped the idea and launched its mobile site, with Snapdeal following suit. 2016 will see 2 main developments in Indian telecom industry and market. Firstly, 4G will be rolled out in a big way, with Vodafone and Reliance Jio launching their services, in addition to Airtel expanding its current offering to more circles.
Secondly, basic (feature) phones will be outsmarted by smartphones (in terms of number of units projected to be sold). These 2 events will enable more people to come online for the first time and ecommerce is set to benefit from this. However, the amount of storage space on mobiles will still be limited, and hence apps will experience roughly similar number of uninstalls as compared to installs.
This will put mobile web-apps at the forefront of the battle and companies will strive to bring out the ‘lite’ versions of their services, giving an app-like experience. It was 1-0 in favour of apps till now, however its Mobile Web 1-1 Mobile Apps currently.
2. More M&A? Probably.
2015 saw a number of new companies coming up in the hyperlocal space. From food-delivery to grocery-shopping, new startups are offering anywhere from Rs 50 to 100% cashbacks for customers (T&C applied). The cashback model is good for generating trials in the customers, but these are not customer-acquisition techniques.
Companies are slowly realizing this and there were issues with some of them leading to layoffs in the year. Tinyowl had to let go of employees twice in 2015, while shutting down operations in 4 cities. Zomato and Housing employees also had to deal with some layoffs. Some startups might cease to exist in 2016, while some of them which have unique and innovative business models will get acquired by the bigwigs.
Consolidation in the industry is imminent. The acquirer will try to add more firepower in its arsenal without starting from scratch, the acquired will let go of control as it will need more money and leadership guidance. Moving away from hyperlocal, some other companies need to add new features in their offerings.
Flipkart will need a mobile payment solution to ease its operations, Snapdeal needs to add to its logistics to serve customers better. One of the quicker ways to accomplish tasks like these will be investing in companies which have mastered these already.
3. New Names in Ecommerce? Definitely.
These names might be a little new in Ecommerce, they are certainly not in the internet space. Google and Twitter are likely to provide customers with a new experience of shopping online, directly through search results and tweets.
Pinterest introduced a ‘buy’ button in 2015, and Twitter is expected to launch the feature soon in India. As more Indians embrace Twitter, buying and selling services through tweets can become a full-fledged feature on the platform.
This will give this micro-blogging service a great means to add to its top-line growth. Google already has a Wallet service, and adding INR to it will make the jump to Ecommerce easier. Buying directly from search results will be one of the prime objectives of Google, helping it pocket more money from commissions. The return of mobile web-apps might just be what the doctor ordered for Google Ecommerce.
4. Women to Drive the Rally
Ecommerce is set to grow by staggering amounts till 2020. The growth will be seen across all age groups and across all cities. But the biggest chunk of growth will be seen in the number of women online shoppers. Women shoppers are expected to grow by 30% in urban areas and by 157% in rural areas by 2016 (as compared to 25% and 85% respectively for males) according to IAMAI-IMRB and Nielsen Informate reports.
Accel Partners’ 2013-14 report also puts women influenced GMV to be US$ 3bn by 2016-end. The increase in women internet base in India will be due to increased internet penetration, adoption of ecommerce, empowered youth (especially in rural areas) and increased spending power. In countries like the US and the UK, women spend twice the amount of time shopping online as compared to that by men. With many reports predicting similar numbers in emerging markets in the years to come, fairer times are in the offing in Indian ecommerce due to the fairer sex.
5. New Products and Services will Expand the Horizon
With 100s of verticals already being offered to customers, one might be tempted to think that we have seen it all. However, there are many more verticals which can still make it big despite being the late entrants to the ecommerce industry.
One of the biggest verticals will be automobiles. PayTm has already been selling Mahindra 2-wheelers, and by end of 2015, Flipkart started piloting Maruti cars and Bajaj (and KTM) bikes to be sold online. New services will act as differentiators for these established players, be it 1-hour deliveries or 90-minute returns.
Also, services ecommerce set to go through a boom cycle when players like Amazon and others start offering such services, giving UrbanClap and the like, a run for their money. With GST expected to get implemented in the next fiscal, ecommerce players will find it quite easy to do and grow business here.
The trends highlighted above have their roots in how 2015 went by, and are set to define how the battle will be fought in 2016 and onwards.
Companies will do well, if they start focusing their energy on these trends and try and grasp every opportunity that comes their way. This is going to be one of the most important ways to win big in Indian ecommerce and 2016 might just be the year of reckoning for the industry.
About the Author: Nishant Sinha is an MBA from Indian Institute of Foreign Trade, New Delhi. He has 3.5 years of experience in Supply Chain Management and is currently working with Flipkart. You can reach him on Twitter at @NishantSinha88.