Voice Tech bridge digital divide
Spurt in Digital Commerce: New Challenges for Brands
As Maruti Suzuki India resumed business after the pandemic lockdown, they shared that every second car sold by them over the months of June-July, was sold online!
Significantly large proportion of stock market sales and purchases are also happening online now.
Who would have imagined? That we would be buying cars online, or that the online stock trading platform will pose a threat to the good old stockbroker?
It had all started with books. Yes, you knew the title of the book that you wanted to purchase, and it was an easy thing to do, to go to an online site, order it, and have it shipped home. There was no mystery about purchasing a book, and you would be sure to get what you asked for. But then, the categories kept growing. From music to fashion to jewelry to food items to furniture and gift items. Some of them were not as intuitive to succeed for e-commerce, as say books were. Would people like to purchase fashion online, without trying the clothes out, would people purchase expensive jewelry without seeing and feeling it in their own hands. And so on. In spite of all these doubts, these categories gradually took off, and today, one hardly hesitates to purchase anything online.
But even then, who would have imagined that we would be purchasing a 4-wheeler online?! But that is the kind of transformation that this pandemic has brought about!
And this is very symbolic of what changes have transpired from March 2020 onwards.
Even as the country went into complete and then semi-lockdown periods, a vast majority of businesses were not able to operate, not able to sell their products. The only exceptions were those businesses that had an existing e-commerce set up, and because of which, they were able to meet the consumer demands through their e-commerce stores. From being a small percentage of the retail pie, during these periods, e-commerce sales became a very dominant large percentage of retail.
The businesses that had made small beginnings on their e-commerce journey, or others that had not yet started out into e-commerce, all accelerated their efforts to be impactful via e-commerce. Since it was clear that regular physical stores will take a while before these open up to regular working hours, it made total sense for businesses to step into the e-commerce space, and enable sales, as best as they could.
Ordinarily, setting up a full-fledged e-commerce site, and supporting it with necessary logistics, etc. can take several weeks of work, but as there was a sense of urgency involved here, many businesses were okay to find a way to sell online, even if there were some compromises involved. If not their own website, many have found a way to sell via marketplaces. And few have even embraced, what would be termed as social commerce, via Facebook front end, or even using Whatsapp.
Besides pureplay product sellers, even businesses that offer different kinds of services, have found a way to go online and sell.
On the consumer end, where pre-pandemic adoption was driven by a matter of choice, during the pandemic, many have adopted digital commerce, as the only means to get products and services that they needed. Much as demonetization hastened the use of digital payments, the pandemic has done the same for digital commerce. And while the pandemic has brought the new consumers to digital commerce, seeing the convenience, the choice, the overall ease of use, may make many to become long-term adopters of e-commerce.
And this clearly happens at the cost of brick-and-mortar retail.
For the longest of times, a deep distribution network was considered to be a huge asset for a brand. And while it still holds value, the distribution that e-commerce provides, is far deeper and wider. So let’s say you are an established brand with several thousand storefronts across the country, selling your products. And this has been an asset for you, all these years. And then comes an upstart competitor, who opts for a direct-to-consumer model, using e-commerce. Thanks to the logistics partners that the new brand can engage, their distribution is not restricted to a few thousand stores, but pretty much, every home in the country!
Clearly, the challenges for traditional brands that have not adopted to e-commerce so far, are:
- A sharply reduced “value” of their asset of physical distribution network that they had developed
- In a world where the consumer will continue to fear the virus, the likelihood of much reduced footfalls into those physical stores,
- Consumers having tasted blood using e-commerce in pandemic times, and understood the convenience, may well make digital, a preferred way to shop,
- Using variety of technologies and combining with the basic cost-efficiency of e-com, the competitor selling online has cost savings that they could pass on to the consumers, putting pressure on the traditional store, on selling price.
Irrespective of how and when the pandemic ends, some of these changes are irreversible. If a traditional business is considering to “wait it out” before the “old normal” returns, the reality is that the old normal will NOT return. Some changes are for good and will stay with us. And that, indeed is the new normal.
Traditional brands will need to reinvent themselves rapidly.
The answer does not lie in a knee-jerk isolated e-commerce play. What is essential to do at this point in time, is to go about the entire gamut of change, that can be loosely termed as digital transformation. An embrace to digital at the highest level, digital transformation is about imbibing a true digital culture, across all aspects of the business.
Setting up an e-commerce front end, is part of the solution, but not the only thing, most certainly. Other elements to embrace will be digital marketing, marketing automation, investing into a data management platform (DMP), perhaps a customer data platform (CDP), investing into a rugged, state-of-the-art website and other digital touchpoints, with a key focus on user experience (UX).
But efficient transactions are the key, and hence a good strategy around e-commerce becomes the key. As emphasized, internal cultural and organization structure become critical as a company makes such a big move. It may demand some retraining to existing team personnel, it may also demand bringing in some key roles like a Chief Digital Officer and Head of E-commerce, to begin with.
Most of all, there has to be a clarity that there is no going back. One has to be prepared to only dig deeper, with understanding the digital consumer, the platforms, the dynamics, the tools, embracing them, truly embracing them, and then work to create success.
To enable success in this new normal digital age, will demand the organization to have a fundamental shift in the way they deliver value and also the way they drive revenues.
Sanjay Mehta, Jt CEO, Mirum (India)
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