India: The mobilised economy
By Georges Berzgal, VP & Managing Director, Global Ecommerce – EMEA, Pitney Bowes
How do you ensure #cross-border #ecommerce success in India?
Expert tips from @Pitney Bowes.
Over the past 20 years, India has undergone a dramatic transition from what was considered an underdeveloped country to a global industrial power with active urban centres and large rural manufacturing hubs. It is one of the fastest emerging economies in the world, and due to its vast population of more than 1.3 billion people who now have greater access to education and technology than ever before, India’s commercial potential is massive. Since the millennium, the literacy rate among those aged 15-24 years has increased nearly 15 percentage points to just under 90%. Crucially, the gender gap here has been quashed, leading to a more evenly spread, educated and independent society.
Education and access to information and technology usually go hand in hand when tracing the progress of newer economies, and India follows this pattern. Technology has boomed in the region over the past two decades, and due to the country’s adoption of technology around this time, the younger generations have largely bypassed e-commerce and moved straight to m-commerce in the consumer sphere. It is therefore much more likely that a young person will do their internet browsing for news, media and shopping, on a smartphone rather than a laptop or desktop computer. For example, Cisco forecasts that by 2019, India’s mobile users will reach 651m, with Zinnov estimating this to represent a market value of $19bn.
This is a simple matter of cost and availability. It is cheaper and more widely accessible to have a smartphone than a laptop for many in India. Smartphones cost around $100 on average, and monthly data contracts are becoming more commonplace among major network operators, to meet the m-commerce demand. Flipkart, the umbrella company that owns Myntra, another of India’s leading online marketplaces, reported a 55% increase in mobile transactions between July 2014 and July 2015, representing 70% of its trade. This trend will only go one way, as smartphones become more readily available, and consumer behaviour continues to lean towards flexible, on-the-go web browsing and personal shopping.
Taking Myntra as an example for UK retailers interested in doing business in India, it has had tremendous success by listening to its customers and anticipating their shopping habits. It has a range of features which help personalise the online experience, providing style recommendations, encouraging detailed product feedback, and offering 24/7 customer service. Along with a dedicated mobile app for iOS and Android, Myntra has created a community feel to independent shopping and has reaped the rewards. Lots of different options are available to UK companies looking to sell their products online in India, but by choosing a ubiquitously known platform like Myntra, brands can tap into a trusted forum – predominantly built for mobile – that records over 8 million unique users each month.
That said, India is not without its challenges, but they are quickly being overcome due to its commercial value. For example, reliable, fast internet speeds are not as widespread as in other comparable economies. Certain retailers however are already getting ahead of the curve, by creating ‘lite’ versions of their apps which require less bandwidth to use. This lets data heavy pages with lots of product images load in around three seconds on a 2G network connection, which is equal to users in many areas of the UK.
In addition, the regulatory environment is also undergoing change. In 2016, the Indian government announced a landmark ‘demonetisation’ ruling to curb rife counterfeit currency, which saw 86% of India’s currency being nullified almost immediately. On top of the huge disruption this caused to the socio-economic landscape, this also had an impact on how Indian consumers paid for online goods and services. Before the demonetisation effort, Cash on Delivery (COD) payments represented around 45% of online payments, but these were quickly replaced by Card on Delivery transactions following the changes. Cash transactions also meant higher admin costs for ecommerce companies which lowered their margins, and reduction in COD has meant improvement in margins. Cash on Delivery payments are by no means gone for good, however, and traders using their own website in India should offer those payment methodologies geared to the customer base they seek to build. Another example of changing dynamics is the new Goods and Services Tax (GST) which was implemented earlier this year and saw tax margins raised on items of varying value.
All being said, the overall market potential of the world’s second most populous country is something that a globally focused brand needs to be aware of and take into consideration as part of its global strategy. Indian ecommerce is growing at an annual rate of 51%, the most aggressive in the world, and is expected to increase from $30 billion in 2016 to $120 billion by 2020. The foundations for trading in the region are already in place, courtesy of some hugely popular online platforms that target shoppers in a way that really suits their lifestyles.
With such an online focused retail dynamic, international traders may be concerned about the logistics of distributing their goods en masse to vendors without bricks and mortar stores. This is where longstanding and robust relationships with these companies is key. Trust is a precious commodity in international trading, and Pitney Bowes’ 97-year heritage in cross border commerce and global logistics and speaks for itself.
Learn about Complete™ Cross-Border from Pitney Bowes, the scalable end-to-end global ecommerce solution that can handle all facets of enterprise retail cross-border expansion.
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