The reason behind the booming ecommerce industry in India is crystal clear. It is being driven by a surge in internet penetration, the emergence of global players, a rise in smartphone usage, advancements in mobile technology, a burgeoning millennial consumer base, and the rise of digital payments. As a result, India’s ecommerce market is projected to grow to $150-$170 billion by 2027.
Although traditional ecommerce companies have played a significant role in raising awareness and initiating the ecommerce movement in India, the Indian ecommerce industry is evolving rapidly. Bain & Company’s ‘How India Shops Report’ indicates that India’s online seller base has grown by 35% annually, with approximately 40% of new sellers emerging from tier-2 or smaller cities.
The Indian government’s Open Network for Digital Commerce (ONDC) initiative is poised to democratize the ecommerce industry, providing a level playing field for all sellers in terms of product, pricing, reach, and sales. However, to gain a competitive advantage in this new environment, sellers from across India will need to think differently. One of the ways to do this is to better understand their customers by leveraging consumer insights and data analytics.
Insights and analytics can equip small businesses with valuable information that can help them make informed decisions about their products, pricing, and marketing strategies. In the past, established players had a significant advantage in terms of access to resources and data. However, with the rise of analytics tools, small businesses, newly-established brands and first-time sellers can now access the same information as larger businesses, allowing them to compete on a more equal footing.
The use of analytics to better understand customers’ preferences and buying behavior, enables sellers to tailor their marketing campaigns, product catalogues, product offerings etc. to meet those needs. For instance, consumer insights can help sellers gauge how their customers prefer to engage with their products. This may include information on what types of images or videos of products are most effective in driving conversions, what types of product descriptions are most compelling, or even what types of packaging or shipping options are most important to their customers.
This can help smaller sellers gain a competitive advantage, as they are often more nimble and able to quickly adapt to changing market conditions. Similarly, consumer insights can help businesses identify trends and opportunities in the market, allowing them to create new products or services that meet the needs and demands of their customers. This can be particularly important for smaller businesses, as they may not have the resources to experiment or conduct extensive market research.
Here are some of other ways data analytics can help in improving the ecommerce business:
Enhanced inventory planning: Accurately forecasting the amount of inventory required for each product and platform at the SKU level using consumer insights, particularly sales data, can help sellers reduce the likelihood of product shortages that negatively impact the customer experience, or excess inventory that may need to be marked down.
Personalized customer experiences: Insights can assist in delivering tailored experiences to customers, resulting in increased repeat purchases and greater lifetime value.
Targeted promotions: Targeted promotions for customers more likely to buy can ensure that marketing spends are more focused and result in better conversions.
Optimal product pricing: Insights and analytics can help in determining pricing models that result in repeat purchases, greater lifetime value, and higher revenues. This is particularly useful as studies show that around 30% of retailers make pricing decisions that are inaccurate.
New market/platform entry: Sellers can use insights to determine which new markets or channels to consider and which areas are not providing enough return on investment.
Churn reduction: Predictive analytics on customers who are most likely to churn is a well-established method used in several industries, and it is also helpful in retail. Small sellers can use this to prevent churn or win back lost customers.
It is evident and already proven that insights and analytics have become critical tools for small and large ecommerce sellers alike in achieving success. As technology continues to evolve, so will the capabilities of data analytics and insights, creating new opportunities for small sellers across India to stay competitive and thrive in an increasingly crowded market. By keeping up with the latest trends and leveraging these insights effectively, e-retailers of all sizes can continue to level the playing field and unlock new avenues for growth and success.