Gujarat-based sellers are the highest sellers of fashion on Snapdeal 

Snapdeal, India’s leading value-focused e-commerce platform, is making rapid progress in its mission of taking India’s bazaars online.

India’s consumption is US$800 Billion, which is growing consistently and will reach US$2 Trillion by 2025. Online commerce is right nearly 2% of India’s retail and will reach 10% by 2025. Thus, the online market in India will be worth US$ 200 Billion in the next 7 years.

In India, 10% of the retail is in the organized sector and 90% of India’s retail is serviced by the unorganized sector – the various bazaars that are common in each and every state and city in the country. In the past, unorganized retail was adversely impacted by organized retail and had no recourse. Snapdeal built a marketplace to provide these sellers with an opportunity to move online in order to grow.

The growth of genuine marketplaces like Snapdeal is now offering sellers a robust and future-ready opportunity to grow their business by expanding their operations online. More than 500,000 sellers from across India have already tapped the online opportunity through Snapdeal.

The e-commerce market in India is growing not only in size but also in diversity. In 2018, India’s e-commerce heralded the rapid emergence of buyers from India’s Tier 2 & 3 cities. This growth of e-commerce into India’s non-metro cities will accelerate in 2019 and over the next few years, for some obvious and some emerging reasons.

The single biggest factor for this growth has been the sharp drop in data prices (down by nearly 90% in the last two years), and a sharp surge in data consumption (up nearly 10x in the last one year). This, in turn, has led to a huge demand for affordable smartphones (ample choices below Rs 7000 now available across all online platforms).

The numbers reveal the foundation for this growth. At the beginning of 2019, India has more than 330 million smartphones and nearly 226 million users are connected to social media networks. The number of current online shoppers in India is about 100 million. This is a largely homogeneous segment – English speaking, relatively high-income, mostly metro buyers and voracious Internet users. These consumers have good brand awareness and are motivated by deals and convenience. Most importantly, they have disposable income to make discretionary purchases when tempted by discounts on branded products, including smartphones, electronics and branded fashion (apparel, footwear, cosmetics etc).

While these early adopters will continue to grow the market, the next 100 million e-commerce buyers are also now entering the online markets and they are a very diverse set. A majority of them live outside India’s biggest cities and while online buying for them is an aspirational start and brand awareness is on the rise, the ability to pay brand premiums is restricted due to limited disposable income. However, given their sheer numbers, the online markets are quickly adapting to their requirements.

This explains the rapid expansion in the value segment for online marketplaces. Consumers in remote parts of the country see on their Facebook and Instagram accounts what the movie stars are wearing. And in a matter of days, they are able to buy fashion products inspired by such trends and listed online by quick-moving local brands. Thanks to the Jio and Airtel led 4G revolution in India, e-commerce is seamlessly connecting the agile and fashionable value brands to value-conscious, fashion savvy consumers.

We have now entered a multi-decade transition of unbranded goods, currently sold in the bazaars of India, moving online. The reason for this is that the next 500 million e-commerce buyers will place a greater emphasis on functional aspects of the product than the brand attributes. This will lead to more opportunity for seller branded products, where value-for-money is the primary purchase enabler vis-a-vis the flaunt value of the brand. As a current example, “Laurels” is a fashion brand that the offline shoppers may never find in a store, but is a very popular brand that is available at all leading online platforms and sells fashionable wrist watches, wallets and sunglasses at great value – match well-established brands in terms of features, finish and range – all at a fraction of the price of national brands.

Driving this transition of the online buying experience is the expansion of Internet bandwidth. A few years down the road, consumers will look back and laugh about the time they bought products online by looking at static photos. The unfamiliar, seller brands will be key beneficiaries of the online video revolution, given while they could never afford to showcase their products on television ads, they can now do so at next to no cost, given the smartphone camera and high velocity of traffic on e-commerce platforms. Today’s online seller brands will become national, potentially international brands of tomorrow, coming out of India.

Financial credit for these sellers will be a key enabler for their growth and an incredible opportunity for financial services companies. With every passing day, these sellers with unestablished brands are building a credit history through their transactions on e-commerce platforms. Every transaction is creating a tremendous amount of data – consumer ratings, return rates, repeat rates, conversion rates, among others. All of these and other factors will make access to capital abundant for the outperformers and difficult for the laggards.

Nearly 90% of India’s retail is unorganized and thrives in the bazaars of India, which offer interesting insights for expanding the online markets. This new audience of e-commerce buyers will spend more time browsing and discovering, rather than intent based buying. Thus, the experience will need to be expanded to include ease and friendliness of discovery, rather than the only efficiency of enabling high intent purchases. The buyers will want their online buying experience to be fun and engaging, than sterile. Indian consumers love the melange of visual, colourful and musical stimuli when they are out shopping – they want Masti.

Snapdeal is at the heart of this vast opportunity in bringing India’s bazaars online and using technology to make the experience more productive and efficient for the sellers.

Snapdeal operates a genuine marketplace, where it does not own any inventory or has a set of “preferred sellers” or has its own private labels. All the sellers on Snapdeal compete on an equitable basis on the strength of their selection and pricing. Using technology tools, Snapdeal enables to sign up instantly by using their GST numbers. It also provides and connects sellers to various inventory planning tools, catalogue enhancement guidance, warehouse management systems and accounting tools which are simple yet effective.

The expansion of the market is a very good opportunity to ensure that sellers from smaller cities also benefit from growth. The recent updates to the FDI policy relating to e-commerce will allow deepening of the market and will enable India’s online commerce to grow in a manner that brings lasting gains to both buyers and sellers.

For genuine marketplaces like Snapdeal, increasing the number of sellers from diverse regions also helps expand the most relevant merchandise for buyers from all non-metros.

While the digital revolution started in metros, consumers in smaller cities feel that now their time too has come. We are still in the version 1.0 of Indian e-commerce and the landscape will look very different from what it has been till now, primarily because the new audience that is coming online to buy now will exhibit very different demands and behaviour than the incumbent e-commerce consumers do. E-commerce will now play an important role in helping the newly minted online consumers bridge the gap between first world aspirations and the developing market realities.

 

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