Inventory-Led Model Is The Future; Hotel Aggregators Win Big (Digital Commerce Report)!

Redseer Research has just released few interesting reports, which showcases to us the future of Indian e-commerce, across retail and travel industry.

There are some major surprises, and twists, something which digital entrepreneurs should take note of.

Inventory-Led Model Is The Future?

The report tracked e-commerce portals and found that inventory-led model is making a giant comeback, and in future, the inventory-led model for distribution can be the top choice.

As per the trends observed by the report, 70% of all larger portals in India will adopt inventory, and ditch marketplace based business model. As of 2017, 58% of e-commerce companies relied on inventory model, compared to 50% in 2015.

The Redseer report said,

“The e-tailing industry is expected to move more and more towards the inventory led models. With the horizontals majorly driving growth. The horizontals have realized that in order to control the overall consumer experience it is imperative to have their own inventory. The reliance on marketplace model is hence going to decline going ahead.”

Other highlights from the report:

• COD makes a comeback in e-commerce; as focus shifts to Tier2 cities (this means the defeat of Digital India vision, as users are now opting for cash, compared to cashless payments)
• The e-commerce industry is facing 30% returns on all orders. Fashion industry witnesses maximum returns; mobile phones the least.
• 83% small online sellers admitted that paid ads are giving them the higher return. (this means a win for Facebook and Google, which have been pushing for paid promotion, compared to organic reach)
• FMCG products have the highest growth potential in 2018 (this means e-commerce is about to explode in India!)

Online Travel: Hotel Aggregators Win Big!

Meanwhile, if we observe online hotel industry in India, then hotel aggregators like OyoRooms, RedBus and others are winning big.

In fact, they have now captured a larger share of the online hotel booking niche.

Between Q1 to Q4 of 2017, their market share increased from 18% to 26%, thereby eroding Online Traveling Agencies or OTAs market share by a big margin.

However, the report found that when it comes to pleasure trips, then OTAs are more preferred, but when it comes to business and official trips, then hotel aggregators are the winners.

25% of the respondents preferred OTAs for pleasure trips, compared to just 12% for hotel aggregators. While, 13% opted for hotel aggregators for business trips, compared to 11% for OTAs.

It seems that the battle between OTAs and hotel aggregators is becoming more and more interesting, as the consumer becomes more informed and educated about the industry.