The e-commerce road is not without
pitfalls. Early caution and proper strategic direction and actions can ensure
unprecedented growth and complementary benefits, says the Advisor to Tommy
Hilfiger & Amazon India, Manish Saksena
It could not have been a more
opportune moment for bringing in the concept of 'Make in India' being promoted
and enabled by the Narendra Modi government. With the Indian rupee privy to
enormous fluctuations and still stabilising, this contra-thinking can
contribute greatly to making this economic dream come true. The idea is a
winner as it harnesses our people and design skills. It puts together some of
our inherent strengths and promises a future that can provide employment,
growth, respect and pride to countless Indians.
Traditionally, India has been a
manufacturing nation. However, there have been as many hindrances as there have
been opportunities in the expansion in this sphere. One of the major challenges
has been the acceptance of India's products globally. Additionally, it has
developed more in the commodity categories, which attract less premium and less
profit.
Many apparel and fashion goods'
manufacturers have had flourishing export portfolios but their leverage has
been dented by the increasing competition from other manufacturing countries.
There have been instances of lost opportunities. To be fair to manufacturers,
they have not found the orders lucrative enough as the margins increasingly
become wafer-thin in a competitive environment.
Now, there is an exciting, innovative
set of manufacturers who have all the infrastructure and backend resources to
prop them up. They are all set to move up in the supply chain and to cater to
the domestic market. The undisputed potential of the burgeoning Indian market,
coupled with the hunger of a growing and upgrading economy has provided cues to
these manufacturing powerhouses to look at building brands for the Indian
customer. The biggest catch here is that these product innovators and experts
have been on the backend and have not forayed deep into retailing, which is an
area with a completely different set of dynamics and experiences.
It is not that they have been
loathe to explore retail waters. But there have been bottlenecks. There is a
lack of professionals in the nascent retail industry. Further, the
manufacturers have been unwilling to step up a rung. With few guidelines on the
market, pricing, distribution and business development and expansion, even
several export giants have not made forays into the domestic market.
Then, came along e-commerce. About
five years ago, e-commerce created a big and burgeoning online market. This new
taker had a limitless appetite for products since, by its very form, it was
about unrestricted space. The unwritten norm in the e-commerce market remains,
the more the width, the more satiated the customer experience. These retailers,
while tapping the brands, had some success but like many new ventures, faced
resistance. Brands were still closed to this kind of freewheeling, open,
exposed marketplaces that, in their view, could disrupt and dilute their very
nascent brand imagery. Retailers then had no choice but to fill their aisles
with undiscovered, unexposed, uninitiated products.
This led to a great
synergy - the product that was waiting to launch itself into the closets of the
global manufacturing experts and the unending aisles with their empty hangers
of the e-retailers found each other. Interestingly, the products that came from
this symbiotic relationship found takers from far and wide as it filled the gap
which the brands had not serviced in developed markets. The freshness of
international aesthetics appealed to many. On the other hand, the wide spread
of customers in B and C towns who were less exposed to the branded market
anyway, did not fret over its unbranded status. This 'Made in India' and 'Made
for India' product was clearly on its road to being a winner.
Traditional brick-and-mortar
setups guzzle huge amounts of capital investments. They demand equally huge
operational costs of manpower and infrastructure. This was another
unprecedented and unexpected challenge for these non-retail companies. However,
e-commerce took that entire stress out of the system and gave them the field to
play in, with what they are best at.
The e-commerce platform then went
ahead in seeking small players who were making interesting products but were
inhibited by scale and investment to go beyond the neighbourhood retail
scenario. Discovering them and expanding their customer base by making them
reach out to more takers, helped these nascent cottage industry-type formats to
scale up their manufacturing to feed demand.
This led to a rise in many zones
and many sectors across India giving a quiet, yet substantial, boost to these
quaint and interesting 'Made in India' products. In many cases, these tend to
be locally sourced products, which have now found markets and sustainability
beyond the local field without really expanding the physical retail space and
at no prohibitive investment costs.
The same effect at a small yet very steady pace is being seen in the crafts and handloom sector. These, by very nature, are not about mass production and mass consumption. Handicrafts have an inherent identity. While they are unique and exclusive, making them is skilled, painstaking work. This could push up costs to make it viable for the craftsman to continue supplying the items. These are the products that find few and discerning customers who value and appreciate the costs and charm of exclusivity.
Unlike the traditional
market, e-commerce enables the craftsman to reach a customer without travelling
from the workshop. It succeeds where crafts melas failed - in marrying the
distant customer with a crafts product made by a craftsperson in another part
of the country. The relevance of this is far more than anything above, because
when it comes to handmade goods, the customers are few and between. Uninhibited
access ensures more exposure and more search and discovery of these products.
In the long run, these products will rub shoulders with the best of
international crafts and get their due.
E-commerce has begun questioning
two pre-conceived notions. It proves that customers don't always buy fashion
for its frill value. While imagery and brand value are critical, they may or
may not be the priority for many. This was proved earlier by the traditional
high street markets of Mumbai and Delhi which were local hubs, and in melas and
haats that continue to flourish. Now, through e-commerce, the haat has gone
into cyber space and functions in a more organised manner. Secondly, it has
dispelled the image set in the minds of several urban, brand-savvy customers
exposed to international brands that a 'Made in India' product is of poorer
quality.
Yet, the e-commerce road is not
without pitfalls. Early caution and proper strategic direction and actions can
ensure unprecedented growth and complementary benefits.
With branding and brand-building
activities come a sense of responsibility and a sense of commitment to ensure
that the brand meets a certain level of expectation that the customer seeks.
This unwritten rule works in favour of both the brand and the consumer. The
customer gets better quality and the brand seeks to upgrade the product and its
experience to compete in the organised market.
This key element loses
significance in an equal e-commerce environment where a brand, a label and a
tag are seen alongside. So, the manufacturer may begin to look at short-term
goals and may or may not adhere and aspire for consistent quality. This can
prove fatal and can bring a negative image to the 'Make In India' product on a
scale much larger than ever before. Impressions can spiral out of control in
the e-commerce world. Secondly, a spurt in demand, easy access to the customer
and easy entry into the playground can lead to players who are less than
genuine, to enter the e-commerce field.
They may not understand
the product and the market or worse still, spoil the market dynamics with cheap
and fake and unrealistically priced products that may affect the genuine and
the organised sector. The first loss will be the consumer's. On a wider level,
it can lead to the death of the coveted 'Made in India' dream that today many
countries cherish, source and appreciate.
Third, this can lead to a glut of
products. A flood of products can be counter-productive to fashion retailers
and generate an unrealistic market that is non-sustainable and self-defeating.
Failure to adhere to quality and meet rising demand may prevent some able
manufacturers from going beyond India. This will be a loss to the globalisation
potential of the 'Made in India' product.
The 'Make in India' wave is not
only much-needed for the economy but is on a very efficient and productive
platform today. The positivity around it can only be fuelled and serviced by
the perfect synergy or e-commerce. All those involved in this need to remind
themselves repeatedly that there is no place for fly-by-night operators. The
benefits are not short-term and therefore, the means must not be.
We must welcome this marriage of Indian heritage and technological opportunity and make it work on fair and just grounds. At the end of the day, the consumer and the Indian economy must emerge winners.
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