E-retailers shifting focus to unit economics, customers

24 Jun '16
2 min read

India e-retailing companies are gradually shifting focus on turning unit economics positive and customer retention instead of previously focusing on gross merchandise value, which is the total sales value of goods sold through a marketplace, says a new market research study.

This could have been a result of limited availability of capital, making companies to focus on cash generation, observes the study by Kotak Institutional Equities. After government regulations that curtailed discounts, companies too seem to have done away with the same; and now most discounts seen online are offered by sellers or brands themselves, it said.

Most companies surveyed during the study were found to be evaluating other revenue streams such as advertising and online content to better leverage their platform. Customer retention, recall and loyalty are key metrics monitored by companies now, the report said.

In a bid to keep customers engaged to their platforms, more and more e-com entities are focusing on improving customer satisfaction by shortening delivery times, offering wide product assortments and improved service

“Delivery is another substantial cost component for most e-commerce companies, and hence its optimization is a key area of focus”, the report noted.

Demand prediction, delivery-linked payments to delivery staff, as well as infrastructure sharing are various options evaluated by companies to rationalise delivery costs.

Cash on Delivery, and tier II and III cities remain big segments for e-retailers as they constitute a sizable chunk of sales of e-retailers, the study observed.

The report also suggested that with discounts being curtailed, e-retailers will need sustained focus on product assortment, delivery and service to distinguish themselves from the competition. (SH)

Fibre2Fashion News Desk – India

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