Mobility for Shopping and Retail? Why is it required?

......Let's take the example of a female shopper aged between 30 and 40 entering the store for purchasing groceries and other consumables. The application detects which store she has entered, and "greets" her with a welcome message and a list of the day's special offers in that store. The application then displays a "shopping list" built automatically based on her past purchase history, along with a recommended and optimal "shopping path" through the store. While evaluating a particular product - say a box of a new cereal brand, the shopper uses her application to scan the barcode, and retrieve additional information such as nutrition facts, and reviews and comments by other shoppers.....

What is likely to outnumber the billions of human beings on planet Earth over the next few years? The answer: mobile devices such as smartphones and tablet computers. Consumers the world over are switching to such devices as their primary channel for communicating, messaging, performing basic tasks and accessing information over the internet. This revolution is impacting various industry sectors, one of the significant ones being the retail industry. In retail stores the world over, consumers increasingly use 'smart' shopping applications on their mobile devices while inside the store. 

New research conducted by Brand Anywhere and Luth Research last November showed that 51% of consumers are more likely to purchase from retailers that have a mobile-specific Website, but only 4.8% of retailers actually have one. 

These applications provide value added services such as information on products beyond what is available in the store. Such information could include product details, reviews, ratings from other consumers, and better deals from other retailers. If a better deal is available elsewhere, the consumer usually opts for it resulting in a negative impact on store sales. Retailers are usually willing to match the best offers from competitors - but are hindered by the lack of real-time intelligence about consumer behavior while inside the store.

Smartphones currently influence 5.1 percent of annual retail store sales, translating into $159 billioni  in forecasted sales for 2012, according to new Deloitte research. For the first time in the industry, the in-depth study measures the “mobile influence factor,” or impact of smartphones on in-stores sales.

The mobile influence factor captures the in-store sales driven by consumers’ store-related smartphone activity such as product research, price comparison or other mobile application use.

Deloitte anticipates mobile’s influence, based on consumers’ smartphone use, will grow to represent 19 percent of total store sales by 2016, amounting to $689 billion in mobile-influenced sales. By comparison, direct mobile commerce sales will pass the $30 billion mark by that time, according to industry estimates. 

Shopping is more than just making a purchase, it's a process, and like most things today, technology is changing the process of shopping, which in turn is changing consumer behavior. Mobile technology is disrupting the traditional path-to-purchase and is having a profound effect on the retail landscape.

In many ways, the shopping process has become more casual. Traditionally, people would do most of their product research at home, narrowing their selections before deciding on a purchase. Mobile technology is changing this process by empowering shoppers with the ability to gather information on the spot from multiple sources, check on product availability, special offers, and alter their selection at any point along the path-to-purchase.

People are planning and shopping differently today. Mobile shopping is spontaneous, non-linear, and very fluid. People are shopping in ways, and in places, that they never did before—and that's really the power of mobile shopping.

Ecommerce in developing markets

India has an internet user base of about 250.2 million as of June 2014. The penetration of e-commerce is low compared to markets like the United States and the United Kingdom but is growing at a much faster rate with a large number of new entrants. The industry consensus is that growth is at an inflection point.

Unique to India (and potentially to other developing countries), cash on delivery is a preferred payment method. India has a vibrant cash economy as a result of which 80% of Indian e-commerce tends to be Cash on Delivery. However, COD may harm e-commerce business in India in the long run [6] and there is a need to make a shift towards online payment mechanisms. Similarly, direct imports constitute a large component of online sales. Demand for international consumer products (including long-tail items) is growing much faster than in-country supply from authorised distributors and e-commerce offerings.

About 80% of this is travel related (airline tickets, railway tickets, hotel bookings, online mobile recharge etc.). Online retailing comprises about 15%. India has close to 10 million online shoppers and is growing at an estimated 40-45% CAGR vis-à-vis a global growth rate of 8-10%. Electronics and apparel are the biggest categories in terms of sales.

If you feel India is a near-term booming market for ecommerce, I would agree. Things have changed today in terms of both investor and customer perspective and now it is more real than ever.

 A year ago, Mukesh Bansal, the chief executive officer (CEO) of India’s largest online fashion retailer Myntra.com, started the process of raising a new round of funds by reaching out to several investors, including Premji Invest, SAIF Partners and others. At that time, Myntra was facing aggressive competition from Jabong, backed by Germany’s e-commerce conglomerate Rocket Internet, as well as India’s largest e-commerce firm, Flipkart.com, both of which challenged Myntra’s dominance of online fashion sales by offering deep discounts (30-40% on a daily basis, in most months). The battle was obviously being closely watched by the investors Myntra was courting. “The feedback from most of them was: we are interested and we like what you are doing, but not now”.

Here are the excerpts from a recent interview:

The evolution of the e-commerce market in India has been quite remarkable over the last few years. What does the future hold for this fast-growing industry?

E-commerce in India has evolved significantly in the last decade, and there are many aspects of e-commerce like TV shopping, online shopping and mobile, which are all part of what is digital commerce. That journey has happened over the last decade.

eBay entered India nine years ago through the acquisition of Baazee.com, and five years prior to that was the start of organized retail in India. So, it is about 15 years old.

What is interesting though in India is that the entire evolution of e-commerce happened over 15 years. In advanced markets like the U.S., it took over 50-60 years.

First you had organized big-box retail, then catalogue shopping, then TV shopping, Internet and then the mobile shopping. In India, this entire journey is compressed into 15 years, and especially e-commerce has been compressed in nine years since we came in. It is moving forward quite rapidly. Industry statistics talk of a 55-60 per cent year-on-year growth, and moving from a $2.1 billion to a $3.2 billion market in 2014.

Amazon.com Inc in July 2014 said it will invest a further $2 billion in India just a day after the country's largest e-tailer Flipkart attracted $1 billion of fresh funds, raising the stakes in a nascent but fast-growing e-commerce sector.

Amazon, which opened its Indian website in June last year, has drawn up the battle lines by slashing prices, launching same-day delivery, adding new product categories and embarking on a high-voltage advertisement campaign.

Amazon and Flipkart are joined in India's $13 billion e-commerce sector by marketplace Snapdeal, fashion e-tailer Jabong, and U.S. auctioneer eBay Inc.

Indian e-commerce is expanding at a compound annual growth rate of 34 percent, according to a joint report by consultants Digital–Commerce, the Internet Mobile Association of India and the Indian Market Research Bureau. That rate, however, is slower than in some other emerging nations such as China.

Of the $13 billion market, travel services account for about 70 percent, according to consultancy Technopak. The type of goods sold through Amazon made up $1.6 billion of the total last year, according to researcher Forrester, and Technopak expects that figure to swell to $76 billion by 2021.

By comparison, e-commerce sales in China are likely to surpass $180 billion this year, according to researcher eMarketer.

In May, Myntra agreed to be bought by Flipkart in India’s largest ever e-commerce deal. Myntra fetched an estimated value of more than $330 million, significantly higher than the $200 million valuation it received in January. At least 10 e-commerce firms, including Flipkart, Snapdeal, Jabong, Pepperfry and Limeroad, have announced fund-raisings over the past two months and investors and analysts say that several other sites such as online marketplace Shopclues and fashion retailer 

Yepme are likely to receive money within the next six months. Flipkart said on 26 May that it received as much as $210 million, mostly from Russian firm DST Global Solutions Ltd, which has backed companies including US-based Facebook Inc. and Twitter Inc. as well as China’s Alibaba Group. The online retailer has now received $770-780 million since starting out in 2007, including $360 million last year. A few days before Flipkart’s latest fund raise, online marketplace Snapdeal announced that it raised $100 million from new investors. including Temasek Holdings Pvt. Ltd, BlackRock Inc. and Premji Invest. It had raised $133.7 million less than three months ago.

The fund-raising by Flipkart and Snapdeal reflects both the increasing amounts of capital required to build a national e-commerce business as well as the strong revival of investor appetite for India’s fledgling Internet firms.

From 2012 to the beginning of this year, hundreds of sites such as Indiaplaza.com and Urban Touch, which raised anywhere between $1 million and $10 million each, shut shop as investors become increasingly parsimonious about giving money to e-commerce start-ups because of high cash burn and lower-than-expected sales growth. Now, analysts say, they can’t seem to get enough; large global financiers such as Morgan Stanley, Singapore’s state-run investment firm Temasek Holdings and US investment firm BlackRock are queuing up to invest in India’s e-commerce businesses.