E-commerce in India: Where are we headed?


As per a study by ET, Amazon offers about 5-15% of the commission, which is the highest  for every transaction routed to their website.  The affiliate sites are routing traffic to the main website ( are sites like coupondunia ,  Timesdeal, Mydala, Couponraja, Cashkaro etc). The apparel segment attracts about 15% of commission while electronic segment attracts about 5% as commission.

Unlike others, Amazon prefers to work directly with these affiliates while others would prefer to work with mediators (or digital agencies) who in turn would deal with all such affiliates who divert traffic to respective site for monetization.  

This is at a time, when there is huge mad rush to acquire customers, even if it is showing losses in the books – Flipkart (consolidated) has booked losses worth over 700 crores  (till 2014, March) followed by Amazon with about 325 crores (Oct 13 to March 14) . This year too, they would book huge losses in account of mass advertising and online promotional cost. After all these are the e-commerce poster boys and investors having multimillion worth of investments across dotcoms will have to protect the investments for a while now before they sell it off to somebody else and meet their ROI targets.

However, brick and mortar modern retail models like Future Retails  which operates ‘Big bazaar’ sees this through as a 'temporary' and 'loss-making' way of doing business while Tatas have preferred to buy stake in Snapdeal while Godrej, Reliance, Birla is planning to develop their own platforms. As per an estimation, on customer acquisition cost in India, Flipkart spends about 1800 rupees to acquire a new customer and with brands like Amazon, Snapdeal, Jabong etc among others in the rush, would make this more compelling for digital marketers, affiliates and firms having businesses around online would become part of this rat race.  Technopak estimates this market to be $32 billion by 2020, currently exceeding to  $ 2.3 billion. 

Big investment bankers are looking at Alibaba kind of models in India to make a big portfolio (though searching for a potential business model) would make it shine for few more months.

Technology companies would be focusing around Mobile penetration, analytic and  new technology adoption quickly so that they can sell solutions, by rewriting the codes to capitalize again. Wipro hiring 10,000 people in open source alone is a testimony to this saga, while players like Microsoft, Amazon web services,  IBM etc are among others  - eying on providing the cloud infrastructure to India, right away by setting up data centers in India. 4 G penetration, Googles’ move to increase number of digital natives would surely help achieve this and lot of government associations comes in handy, after all government would need a back-bone to ride on technology and eliminate 'traditional' file system and including digitization are on the top agenda.

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