Ecommerce in India: A Game of Thrones



So Game of Thrones was again in news related to some new characters it will cast for its new season next year. Speculations abound about Jon Snow and hopefully, if alive, he will ‘know something’ worthwhile in the coming season. Sometimes, I guess even the creator of the series, Mr George R R Martin (affectionately or due to a long name, also referred to as GRRM) would wonder at all the plot twists the TV show has, and the deviations from what is there in the books.

As interesting is the show on the TV and in the books, we have another equally exciting (possibly more?) show which has been going on for the past few years. Just as its televised peer, this show also has no clear leader in sight for a few years to come, and this is what makes it interesting.

This is the Game of E-Commerce in India.

The e-commerce (including hyperlocal) space in India has been touted as one of the major frontiers to conquer for many companies. All the major empires have been leaving no stone unturned to bleed themselves dry in order to catch hold of a bigger pie of Westeros (the consumers’ wallet). The bloodbath in the name of discounts and offers have been coming from all the players over the last few years, and although the discounts have mellowed down a bit, there doesn’t seem a clear change of strategy in order to capture the throne.

Same as in the GoT series, there are 4 major players in the Indian e-commerce domain, viz. Flipkart, Amazon, PayTm and Snapdeal. Although Flipkart leads the market-share currently (Lannisters?), none of the other players are too much behind. We also have niche players, just like the smaller empires in the series, which occasionally get acquired by a bigger player and in turn, add to the arsenal of the larger empire. The 2 biggest of such M&As have been that of Myntra (by Flipkart) and FreeCharge (by Snapdeal). Did anyone mention about Tyrells’ and Boltons’ closeness (or the lack of it) with Baratheons and Starks? And how can we forget the dragons in this game as well.

Any guesses?

This battle becomes all the more pronounced during the ‘Sale’ days as we saw a couple of months back in October. 3 out of the 4 kingdoms sent their armies in full strength from Oct 13 to 17 so as to carve a bigger empire for themselves. This battle made front page, 2nd page, 3rd page news across the country (if you know what I mean) for all the 5 days.

However, this battle does differ from those in GoT in one aspect. In the latter, there are no clear winners. But the former has 2 sets of winners, the end-customers and the sellers.

I was surprised at the parallels we can draw between the two completely different subjects. I am sure a more creative mind can find many more connections between e-commerce and the hugely popular series, but let us also focus on what strategy can the different empires undertake to win this game in India. And we need to look no further than the creator of the series, GRRM.

Let’s look at it in some detail, shall we?


1. G – Grocery:

E-commerce in groceries is not as easy as it sounds. Period. To state the obvious, this segment has not been really cracked by the 4 biggies. We do have a few successful models in front of us which have started on really well and are gaining some good traction in their home markets. Players like Grofers, PepperTap and BigBasket have been working on 2 completely different models among themselves. A player like Grofers ties up with local kirana stores and hence does not necessarily own any inventory. It works as a marketplace, presenting itself as a platform from local kirana stores and hypermarkets. However, BigBasket works on an inventory-led model.

There are other niche players as well like LocalBanya, ZopNow and Lazy Lad, among others. Focusing on the bigger empires, we see that nearly all of them have been trying to enter into the grocery domain. Amazon India launched its Kirana Now program in Bangalore and has been piloting different models to see what systems will actually work in India.  Flipkart has launched Nearby as a standalone app for all your grocery shopping needs. PayTm has been piloting grocery retailing in Bangalore for around quite a few months now, and this business will most likely be as a separate vertical for the Alibaba-backed company.

Snapdeal already has a tie-up with Godrej’s Nature Fresh for retailing groceries and it is expected to extend the presence and deliveries to other cities very soon. It is very apparent that everyone wants to crack the code of this segment, which has been touted to grow at 25-30% per annum in the major cities of the country. The biggest challenge in groceries will be the cost factor with companies looking to find the sweet spot through better economies of scale.

Other factors like perishability and control over deliveries also need to be looked at. As we have seen Game of Thrones, help can come from any quarter if you are in trouble. The same may well happen here as well. Did anyone mention Ola Store and Uber?

2. R – Rural:

Tier 2, 3 cities along with other parts of rural India have been witnessing phenomenal growth in smartphone usage, helped in a major part by improvement in internet penetration. Flipkart, Amazon and most of the Indian e-commerce companies have gone on record stating a major chunk of their sales happening in non-metro cities. Nearly all of them have separate teams working dedicatedly to connect India’s deep hinterlands with the commerce happening from the comfort of a shopper’s home.

Amazon has warehouses on the outskirts of Bangalore, which cater to demands from towns like Belgaum and Hosur. They have employed local village entrepreneurs and assigned the task of deliveries in these towns, thereby greatly reducing the last-mile logistics costs.

Snapdeal too has set up village kiosks where the company keeps its wares and locals are encouraged to order through smartphones or village desktops. The company uses this kiosks as pickup points as well, where villagers can come and receive their ordered goods, thus eliminating the last-mile connectivity in these cases.

Flipkart has been opening new pickup hubs and state-of-the-art warehouses in different parts of the country to serve customers better. However, as much as the potential which these smaller cities and towns hold, they are still part of an unconquered frontier owing to lack of quality infrastructure and logistics in India.

To succeed in rural India, companies will have to focus on simple, yet innovative, ideas. One such idea could be the creation of innovative pickup centres for the marketplace sellers. The other could be similar to the one Amazon piloted earlier (and now launched at full scale) – a tie-up with India Post.

Amazon has a similar tie-up with US Post in US and has brought down the same idea to India. Flipkart and Snapdeal also have recently moved together with India Post and have begun to take advantages of nearly 500,000 post offices across the country for deliveries. The biggest beneficiary of this has been India Post itself, as this gives a chance to it to bring back its days of glory.

Having strong networks and partnerships always helps, as Lord Baelish will gladly tell us.

3. R – Returns:

Returns and reverse logistics have always been areas of concerns for e-commerce companies and sellers, although they provide immense value to the end-customer, who can literally pick and choose the products s/he wants. Returns add a lot of cost to companies and it affects the sellers more severely, as most of the e-commerce companies are running on the marketplace model and return logistics is more expensive than the forward one.

Some companies have tried solving this problem in unique ways and there is a lot to learn from them.  Apparel and accessories company had started with giving a choice of 5 dresses which a customer can order during the purchase. The delivery person will bring the 5 dresses, which can be tried out by the customer. In the end, the customer can keep the one which is the best fit and the delivery guy returns with the other 4 dresses. This method reduces one complete trip for the delivery personnel, and at the same time, adds a bit of personalization as well.

The same model, with some variations, is being followed by as well, where it brings some sets of eye-wears to the customer’s doorsteps and s/he can pick and choose the one which gives the desired look. India’s largest mobile commerce company, Snapdeal, too has been working diligently on this front. It has already acquired a stake in the logistics company GoJavas and together they have launched a 90-minute return policy in 15 cities of India.

That’s how e-commerce is changing the way customers shop now, with same-day deliveries and 90-minute returns. Other players soon will catch-up and we might see reductions in pick-up times from 90 to 30 minutes.

4. M – Mobile:

We spend a lot of time on our mobiles. We might actually be looking at photos and people more on our screens, than lifting our heads and seeing actual people. Some of us might be watching the entire GoT series on mobile. E-commerce cannot be behind then, can it?

Some companies shut their websites to go app-only, like Myntra and Ola. A lot of companies have been app-only since their inception and have little intention of marking their presence on a desktop as well. Mobile commerce is here to stay and companies like Myntra and PayTm may well be on the path to actually define how the game will be played in the near future. With PayTm getting a payment banking license as well, mobile payments and virtual cards might actually make a few ATMs shut their shops.

However, companies won’t be able to force customers to come to their app and newer ways need to be found, sooner rather than later. The uninstall rates in India are very high owing to limited storage space in phones and the constant need to upgrade the apps, which causes a dent in the mobile data. Flipkart has relaunched its mobile website in association with Google Chrome to offer an app-like feature on mobile-web. And when one empire looks to dominate, the other has to respond with equal might. Snapdeal launched its mobile website, Snap-Lite, within days of Flipkart’s launch.

Even Lord Varys would have to agree that technology has been moving at a pace faster than birds’ whispers.

E-commerce has been in India for quite some time now (with sites like IndiaMart etc.), however the real seeds were sown when Flipkart started up in 2007 and has been the leader sitting happily in King’s Landing since. The competition has caught up with it now, with 3 other major players vying for the coveted throne of India’s biggest e-commerce player. From US to China (remember the Alibaba ‘Dragons’ we talked about earlier?), everyone is trying to gain a share of our (mobile) wallets.

A lot of bloodbath has happened through discounts, but I believe the Indian pie is big enough to accommodate these 4 players along with the smaller niche ones. We certainly don’t want a ‘Valar Morghulis’ situation here, with each one killing the other off, do we?

The key to supremacy may well lie in #GRRM. #GoT it?

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.

  1. nikhil tillu says

    Hi nishant, nice correlation.
    The same situation is in travel segment
    Many players Mmt, Yatra, goibibo, cleartrip some new business models emerged by players like Oyo rooms, stayzilla n no clear picture On who ‘ll win the throne though.

    All this ecommerce Buzz is creating a lot of change on the customers Mind which is good but the main pain point is the vendors we are dealing with. wherein they are finding it much difficult to absorb this shift from off line to Online its only a matter of time that we should wait n watch.

    It’s really amusing though to see all these exciting stuff everyday by some player

    1. Nishant says

      Hi Nikhil,

      You have put it correctly while mentioning about players in Travel and Hospitality segment. Sellers are a big part of ecommerce in India and one of 3 pillars of the whole system. Although some offline players had raised concerns of a decrease in business due to the advent online shopping, the concerns have been reducing slowly and most of the players are on an omni-channel strategy.

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