Try asking a 25-year-old Indian consumer if she has seen or heard of the once popular home shopping catalogues, and all you draw is a blank look. Ask a 15-year-old to list the best places to buy a computer game, latest smartphone or even a party dress, a long list, including some well-known Indian and global e-commerce portals, will be rattled off.

This is hardly surprising, given that the country has 900 million mobile phone users, 100 million personal computers and over 220 million internet connections serving as access points. The people’s rapid availability and adoption has played a significant role in fuelling the explosive growth of e-commerce in the country.

Explosive growth

It started with online rail and air ticket reservations, which became an instant hit when introduced over a decade ago — first in the metros, then smaller towns. Today, this segment accounts for more than two thirds of the total e-commerce transactions in the country – to be precise,

t 70 per cent of the $13 billion e-commerce market. Electronic goods, apparel, books, beauty and personal care products, and home and furnishing are the other major categories.

Last seven years have seen e-commerce grow at a compounded annual growth rate (CAGR) of 30 per cent, from $2 billion to $13 billion. As e-commerce penetrates deeper into the Indian market, revenues could touch $90 billion over the next seven years, assuming a CAGR of 30 per cent on a larger base.

Using these growth rates, a study by consultancy firm KPMG and the Internet and Mobile Association of India estimates that the contribution of e-commerce to the country’s GDP will be four per cent by 2020. This is a dramatic 5-fold increase from current under one per cent.

Brand building investment

Starting with investments in technology, creation of a fulfilment network, smart partnerships and heavy initial investments in brand building and consumer acquisition have brought e-commerce players to the current size and valuations.

Significant in its rapid rise, e-tailing has grown to about one-sixth of the total e-commerce business over the last decade. In the next 6-7 years, this could touch one-third of the total.

Even as the pie expands, competition is likely to hot up with large Indian consumer goods players preparing to enter the market and large global players already expanding their footprint in India.

As foreign players with manufacturing units will now be allowed to sell their products online in India, without any additional foreign direct investment approval, global consumer brands are readying their digital go-to market strategy. However, the differentiator will be building trust in customer engagement and its effectiveness including ‘ease of buying’, ‘24X7 availability’, ‘attractive storefront’ and ‘customer support’ services.

Committed delivery schedules, freedom to cancel an order at will, seamless exchange and a ‘no fuss return policy’ will hook a customer. Indian consumer, who until a few decades ago, was happy to queue up for milk and sugar to rail, air and movie tickets, today has options at the touch her fingers. The informed customer looks for an experience that matches the brand promise: from purchase, delivery and installation to after-sales service, support and warrantee coverage. Delivery on brand promise is now the new minimum that the Indian consumer expects. The earlier concept of customer loyalty may also be losing relevance as they are sitting in the world full of choices.

Customer engagement

When the customer is in trouble, and reaches out for help or dials a troubleshooting desk, she needs a quick empathetic resolution and not a policy read out to them. A resolution may need an efficient escalation process by a qualified and empowered agent.

Of the 1.2 billion people in India, 800 million are below 35 years of age. So, the largest set of consumers is in the highly volatile GenY category, who are not only more educated but have also tasted the benefits of the digital ride.

The senior executives and board members no longer await voluminous market research reports and customer studies — they can get direct and instant access to the customer feedback through the social media.

The recent acquisition by Facebook of the 50-employee WhatsApp, with its formidable 450 million active users, for $19 billion was achieved with zero spend on advertising, public relations or marketing.

Its growth, of one million users a month, is the result of successfully delivering on what it promised and taking advantage of their happiness index through.

The fact that WhatsApp’s or chat messaging volume is nearing the entire global telecom SMS volume illustrates the power of being relevant to the consumer. It also indicates that advertising is fast losing its position as the way to build brands in the times ahead.

At best advertising will be relegated to the position of being an announcement medium as its influence on the buying decision will continue to diminish.

There is a distinct shift in the power — from companies to the user — as online reviews and forums gain momentum; today, buyers look for these reviews even before reading the product details. Significant and conscious apportionment of investment in delivering the brand promise, including efficient service and support, is becoming the key to earning customer loyalty.

In all likelihood, the traditional phone is the fourth channel of choice for consumers today for query resolution, who prefer to chat live. That consumers prefer immediate attention and resolution over niceties is indicated by the rapid explosion of users on the social media. For the corporations too, it offers an unparalleled opportunity to buy cost effective solutions with better quality.

This naturally leads to lower cost per contact, thereby freeing up resources for enhancing service quality.

For organisations keen to communicate with customers effectively, social media and live chat connectivity is not an option, but an absolute necessity — because listening to the voice of the customer has moved from the private to the public network.

And, this move is providing tremendous empowerment to the citizen, leading to far reaching changes in the social strata which will further fuel the e-commerce industry.

The writer is managing director of Teleperformance India

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