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Webinar Recording: The Third Wave Of eCommerce – Global Insights

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The session will focus on “The Third Wave of eCommerce: Global Insights”. In India, we have gone through two waves of ecommerce, starting with establishment of inventory-led businesses and now managed marketplaces. Both models have been primarily focused on providing access to online inventory and satisfactory fulfillment. This Webinar was led by Alok Mittal, Managing Director, Canaan Partners, India.

The webinar throws light on three evolutionary stages of development of Ecommerce (EC) in USA and its different functional models. The speaker first narrated briefly about the three consecutive stages of EC development, such as EC versions 1.0, 2.0 and 3.0. The narration later followed by nicely articulated and example based discussions on ten different EC models of USA, such as Flash sites, Group buying, Subscription based, Social shopping, Collaborative consumption, Crowd sourcing, Me-commerce, Online brands, Pre-order model and Re-commerce model.

Under the purview of the above models, the speaker made a deliberate attempt to map the progress of EC in India and its potentials in the space of the third wave. The following Q&A section was the substantial part of the discourse:

Q.1. What type of EC model does ebay conform to? Is it an auction model?

Alok Mittal: The ‘ebay’ is neither completely an auction model, nor a collaborative consumption model. It is more a ‘fixed price’ model of EC. On the contrary, Amazon stands for an auction model.

Q.2. What do you think of EC model for the electronics market space?

Alok Mittal: There are potentials for EC in the electronics space too. But its optimum potential is limited to the ‘auction model’. Since, the value depreciation or value deterioration is very high in the electronic goods; it is difficult to sustain other conventional models.

Q.3. What is coupon based EC model?

Alok Mittal: Sometimes coupons, rebate and other offers to help us to expand our market space. Also, it helps us to target and consolidate different categories of our customers. In difficult times, coupon based model may help us to retain our existing customers.

Q.4. In spite of billion dollar EC business in India, many companies are making bottom line loses. Why?

Alok Mittal: Perhaps many Indian EC companies have not been able to leverage the third wave properly. There has been a substantial change in consumer behavior during last five years. Neither the inventory model nor the ‘managed marketplace’ model can help us to recover the lost space or to grow further. We need to concentrate more on customer value addition and creation of many differentiated experience opportunities for the new age customers, especially the younger generation.

Q.5. From consumer behavior stand point, is there any difference between product based EC and service based EC?

Alok Mittal: It’s not a question of selling products or services, but to create opportunities as per customers’ preferences and building confidence among them. It requires a high level of trust and the capacity to offer progressive solutions towards customers’ problems or requirements.

Q.6. What is the scope of EC in health care services?

Alok Mittal: There is opportunity in the sector. But, so far as the current status is concerned, there is a very high trust deficit. The scope of EC and business opportunities may vary across categories of diseases and level of preferences in social and personal terms.

Q.7. What do you think about the scope of mobile phones in online shopping? And what is the growth percentage in the sector?

Alok Mittal: There is about 30% growth in mobile based online shopping. It is convenient, so popularly used for recurring and instant purchases, electronic payment, other monetary transactions, banking etc.

Q.8. Whether the EC model is to be based on ‘lower price’ or ‘premium rates’?

Alok Mittal: Differentiation is required based on availability and non-availability of the items, scope for personalization, merchandizing, delivery chain, customers’ buying potential, alternatives available in the market and several other competitive factors.

Q.9. How much do you see customer loyalty in the EC space?

Alok Mittal: Price alone does not drive away customers from a brand. There must be a balance between pricing and discovery propositions. Customer loyalty is directly related to your capacity to hold customers’ attention. The degree of loyalty may significantly differ in regular purchase and opportunity purchase. We need to constantly look at analytics to better understand the customer loyalty.

Q.10. Is EC market popular among the youth only? Is it an urban phenomenon? Is it spreading across demography?

Alok Mittal: During the next 10 years, there will be more than 36 crore people in the online shopping space. It may be popular among the younger generation and urban people, but the determining factor is the customers’ comfort level, in term accessibility and affordability of technology and devices.

Q. 11. What is the legal compliance of EC business?

Alok Mittal: Obviously legal obligations are there. But it depends on whether you are in the pure market place or payment gateways. Your nature of legal obligations will differ accordingly.

Q. 12. What is the scope of online publication space in India? Is there somebody doing noticeably well in this domain?

Alok Mittal: Yes, the space is expanding, but not in the same speed as it is happening in the western world.


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