Evidently, the pandemic has boosted the adoption of online marketplaces in India, aiming for $55 billion of sales in 2021, with almost $40 million new online shoppers. It has made way for an e-commerce boom and accelerated digital transformation. Also, with new players entering the market, online marketplaces are giving consumers a convenient way to compare prices and products from a single platform. These platforms are further strengthening the trust factor between the brand and the buyer. An increase in first-time internet users, evolving buyer persona, growth in e-commerce penetration, and customers' inclination towards tech innovations are some factors that have accelerated the growth of the overall ecosystem.

Admitting that social commerce is gaining popularity among brands, customers and investors alike, Sapna Arora, CMO, PRO & Regional Brand Head at OLX Group joins us for an invigorating conversation. 

Excerpts:

Q. How has the evolution of online marketplaces been in the past 5 years? Any distinct characteristics that you observe?
It has grown massively in the past years. According to a recent report “The rise and rise of E-Commerce in India,'' by Tonic Worldwide’s insights division GIPSI”, during the pandemic, two new e-commerce websites have been discovered. The rise of small commerce witnessed immense growth with creators, home businesses and local stores which have taken their consumer experience online.

Existing and new online marketplaces are going hyperlocal. Ecommerce platforms are localising offerings in the hinterlands in regional languages, especially, video and voice, in order to break the language barriers, making the platform easily accessible and convenient for the customers. There are new customer-centric models being introduced. Social commerce is gaining popularity among brands, customers and investors. Brands are leveraging new-age social media platforms like Instagram, Facebook & Snapchat to connect with young customers. Another unique trend gaining traction is voice shopping and shopping directly through WhatsApp.

Since, digitisation has opened up a big zone of opportunity for retailers, to retain a leadership position in the e-commerce sector, you need to stand out as a trustworthy and reliable brand. Gradually, omnichannel retailing, answering queries in real-time and addressing consumer pain points will become the norm in the retail sector.

Q. How are established businesses or even MSMEs leveraging an online marketplace for their growth?

Over the years, the online marketplace and D2C model has gained momentum in India due to factors like growth in internet penetration, the rise in digitalisation, the growing millennial population, and an increase in consumer awareness around tech innovations and personalisation. With partial lockdowns across the country, and with the evolution of digitalisation, e-commerce, and the start-up ecosystem, brands are opting for the route of the D2C channel and online marketplace for their growth.

Q. What should brands offer and expect in return from a marketplace?

Brands should be strategic about what range of products to offer on a marketplace because this range shapes consumer perceptions of the brand. Marketplaces offer brands and retailers value-added services, such as data-sharing agreements consumer, product, price, and trend analytics; and digital marketing, including SEO/SEM support, media/content services, to create a brand buzz and recall value.

Q. What are the various business models that they deploying?

As the world adjusts to the new normal and is moving from offline
to online, e-commerce players are moving towards the digital front and on innovations in order to engage and cater to the consumers’ expectations. Conventional models are no longer viable options, and since
e-commerce is evolving, there have been fluctuations in the business models and are becoming more complex. 

Some of the leading behemoths' marketplaces used to have an inventory mode but were later recognised as online marketplaces. Social commerce has emerged as a new business model for online marketplaces and has witnessed exceptional growth in the last year. Social commerce is expected to grow 7X as per the data by Venture Intelligence. India has embraced the new model, moreover, social commerce has proven to be cost-effective for the bigger brands because of its close association with social media, has inherent advantages when it comes to engaging and retaining customers. The ecosystem is evolving and will become more standardised and resemble organised platform e-commerce in India

Q. What are the various opportunities and challenges that lie ahead of the new players?
As new platforms are becoming mature in the market and big brands are going digital, there will be stiff competition in the market. The inevitable part of the competition is the price battle. In the run-up of the festivals, brands offer heft discounts on their platforms to attract online shoppers, since discounts are one of the most important factors that influence purchasing behaviour. While brands are going digital, personalisation still remains a challenge. A lot of customers prefer visiting physical retail stores vs shopping online, and the personal touch factor by the retail store cannot be replaced. 

The introduction of the new policy by the government can distort the e-commerce market. The recently proposed amendment was the ban on flash sales, which will hinder the growth of new players. 

Over the last 5 years, the e-commerce industry witnessed demand from the rich cohorts based in metropolitan cities. However, rapid digital penetration across the country is contributing to expanding the spending funnel to tier 2 & 3 cities, which will lead to new business opportunities for new players. A lot of new companies entering the market are made in India and are going global. This will result in generating employment and revenue in the country. 

Technology-enabled innovations like digital payments, hyper-local logistics, analytics-driven customer engagement and insights are supporting the growth in the sector and will benefit the new players.