How Google will change e-commerce in India; Diwali deadline in face-off with Amazon, Flipkart

Global giant Google is rumoured to debut in e-commerce from India around Diwali. Chances are this might  instantaneously transform the e-commerce sector into a super-interesting battlefield. How? “It will be a game between Google, Amazon and Walmart-controlled Flipkart,” say experts.

Currently, Amazon and Walmart (Flipkart) control over three-fourths of the $20 billion e-commerce segment.

And having big players is a good thing, feels Mary Turner, CEO at Koovs.com. “Today, only 1% of all retail transactions in India are online, compared to 17% in the UK and 16% in China. So there is an opportunity for more growth. ”

The Indian e-commerce sector is set to touch $100 billion by 2020, as per industry estimates. And it will take a competitive turn with three American behemoths battling it out.

What more? Google’s e-commerce foray could put pressure on existing players in terms of higher customer acquisition costs and providing a great shopping experience backed by latest of technologies, says Divyesh Patel, co-founder, Turing Analytics. 

“Existing players may not be paying huge attention to aspects like recommendation engines and the search experience. They will be forced to optimise on these aspects if Google pulls this off.” 

Though Patel believes Google does have an edge in terms of technology platforms, the existing e-commerce giants will shine in terms of their strong supply chain and customer support. 

Amidst the new game set to begin, a series of interesting trends will roll out both for consumers and the sector alike, predict experts.

Firstly, for consumers, the party will continue with raining deals, discounts and cashbacks, says Sidharth Rao, co-founder and CEO of digital agency Dentsu WebChutney.

Secondly, the market will further ripen up for acquisitions. The big three, flushed with big money and investor optimism, will aim to buy out smaller players to beef up their e-commerce war chest in India.

Experts believe start-ups that operate in specialised niche domains such as medicines, cosmetics, food, furniture, fashion, etc., will continue to grow, acquire scale and ultimately get picked up by the big three. 

Harsh Shah, co-founder of Fynd says despite the biggies, there will still be lots of breathing space for start-ups to innovate new business solutions and to learn from them. "The one which works well might consolidate into one of these biggies. Knowing that industry giants are going to support your innovative solutions will definitely be a plus for start-ups,’’ says Shah.

Dentsu's Rao says Amazon acquired a string of companies that kept outperforming in their niches like Zappos, Woot, Quidsi, Shopbop, Pets.com, etc. "There will always be room for what is called 'category killer', like what some retail professionals think of large specialist retailers,” says Rao.

Experts feel that with Google, Amazon and Walmart, the e-commerce scenario will mould in such a fashion that there wouldn’t be much space for horizontal e-commerce players that operate in multiple products and service categories. 

“We will see the emergence of strong vertical players in niche categories. The e-commerce scene will mirror that of offline retail where you have large hyper-markets co-existing with single brand stores,’’ says Varun Alagh, co-founder of MamaEarth, which deals with baby care products.

Niche e-commerce players will need to have a meaningful and differentiated customer proposition, “be it in customisation or merchandise variety, to add greater value as compared to large horizontal players. Niche players will also have to surpass the customer service standards of the big three,” says Rajiv Nair, CEO, Kaya.

Experts feel niche players will succeed by doing what the giants might perhaps not. For example, they could excel in delivery and installation services like Pepperfry, believes Patel. 

“Or they could offer a unique value like The Souled Store, which sells pop-culture merchandise. I believe a business model focused on a specific customer segment with higher margins would be viable. And like Pepperfry, Chumbak or Urban Ladder, niche players can also focus on building physical stores to make a full circle in retail,” adds Patel.

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ONLINE BONANZA
$100bn  The Indian ecommerce sector is set to touch by 2020  
$20bn  Amazon, Walmart (Flipkart) control over three-fourth of the segment  
Only 1%  Of all retail transactions in India are online, vs 17% in UK, 16% in China

Source: DNA Money