What makes e-commerce click?

In recent years, with VC, PE and hedge funds pouring millions into the Indian market, the startup ecosystem has clearly taken off. Soaring valuations and market penetration of e-commerce companies such as Flipkart, Snapdeal, LensKart and many such others has made people think about different models to woo Indian consumers, suppliers and investors.

Interestingly, most small startups are thinking really big. The race to the top is defined by building mega brands backed by technology and supply chain solutions. Product discounting and the convenience of being served at home is making people think of unheard options — drone supplies, launching satellites to digitally map real estate, deploying server farms to cater to the needs of millions of consumers who want to order pins to pine trees on the net.

Demand is simultaneously being aggregated (inventory model) and disaggregated (marketplace model), and market forces are pushing the volume-discount model to consumers. For suppliers it is volume and for consumers it is a discounted pick. Everybody is happy. Even investors who are for now subsidising consumers, are hoping that subsequently a portion of consumers’ wages would be spent on their platforms.

The small startups in a way are evening out the market. Brick and mortar companies are jumping into the e-commerce bandwagon either via their own channels or by hooking up to marketplace platforms.

Clearly the market dynamics have changed — reach, quality, price-sensitive affordable product range and brand spend is superseding the thought process of companies.

Levelling the field The small and young startups are disrupting market consumption of products and services, and suddenly it has become a level playing field — small and big, branded and unbranded, all of them have started to coexist on a simple webpage, side by side.

Now the comparison is whittling down to price points, feature comparisons and same day deliveries, besides obviously discounting. One of the significant outcomes has been the surge of secondary markets and allied services. For example, the market for used cellphones, cars, and other such products and services has pierced the secondary markets and is levelling the aspirations of people. Thanks to the marketplace platforms, in the digital world a small consumer has now the power to control big outcomes. Importantly, when consumers rally on a broad spectrum, brands prevail or perish — the small deciding on the big and the big deciding on the small.

Unbelievable, but this is the new think. The intelligent network of consumers is pushing the boundaries for companies to reinvent themselves. In this market, then, how do companies thrive?

Reinventing’s the game This is where ‘thinking small and thinking big simultaneously’ is taking shape. Innovation is not about creating products and services and then launching into the market. The new innovation is a series of increments derived from consumers’ cognition and introducing into the market in rapid succession.

Again, brands cannot be all-pervasive, uniform and consistent. Brand messaging too has to be contained, segmented, reiterated and penetrated into relevant segments. Products and services again are segmented. Interestingly, the segments are huge and the proposition is small, personalised and niche. Bottomline, companies cannot be everything to everybody — this is well-known rule, but now it has become even more pertinent.

A brand, a product and a service has to stand for something. If it is price-sensitivity, then the consumer will look for the best price, probably the least. If it is quality, it has to be blemish-free. If it is features, it has to be beat everything else in that segment hands down.

Importantly, companies have to reset themselves in adapting to the needs of a digital consumer.

A digital consumer is defined by mobility, need personalisation and instant gratification; he/she merges self-identity with the identity of the brand and looks for a rational yet subjective price-point.

Marketplace platforms are here to stay, they will percolate to many unknown nooks in offering products and services, and the marriage of consumers and suppliers is a new dance. This calls for thinking big and small simultaneously.

The writer is the CEO of Clearthink Software Pvt Ltd

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