We are in the throes of the festive season. While the brands continue to juggle expertly with advertising, dealer incentives, and consumer offers, the dealer finds a huge change in his business environment.
It is clear that online retail is here to stay, and steadily cementing its position. India will see more people come online than any other country in the next 15 years. Number of online shoppers is forecast to touch 220 million in 2020, from 39 million in 2015, with the Gross Merchandise Value for B2C increasing to Rs.670,000 crore in 2020 from Rs.105,000 crore in 2015. Growth has been further triggered by increasing Internet and smartphone penetration in not only metro cities but also in Tier-II and Tier-III cities.
GST too is expected to enhance growth. Transparency and simplification of taxes across the borders, elimination of incidence of double-taxation, improvement in the efficiency of supply chain, and service providers able to leverage seamless hub-and-spoke models for delivery resulting in lower costs and fewer bottlenecks, will enhance operational efficiency of the e-commerce industry.
On the flip side, contrary to perception, the going is tough for the online trade too. Having been somewhat contained by government regulation, they find some manufacturers are opting for the different-model, different-channel (DMDC) approach. For the discerning consumer, no longer supremely driven by cut-throat pricing and a toll-free number as the single point of interaction, personalized after-sales service offered by the brick-and-mortar dealer is emerging as a key differentiator. Heavy transportation cost in large-sized home appliances is a deterrent. Cash-on-Delivery, the popular mode of payment for the consumer, is not preferred by the e-commerce companies for it has high administration costs, cash handling risks, and locking up of working capital, thereby reducing their margins. New digital payment solutions may take time to be adopted by the Indian consumer, who prefers to pay in cash for more reasons than one.
The traditional dealer, feeling threatened by the not-so-new entrant, is doing all he can to protect his turf in the growing Rs.450,000 crore-plus industry!