The way mushrooming e-commerce players are running in a mad scramble in India, it appears they’re chasing some kind of pot full of gold. Alas, all that glitters is not gold.
Challenges galore. Online shopping is not yet an accepted norm in India. E-commerce outfits are not doing enough to win buyers’ confidence. Most are drowned in deep losses. Some are having a ball on external investors’ money. Flagging economy is already exacerbating the digital vendors’ pains.
Add all this up and you get a real picture of the present state of affairs. Well, in a word, blurred.
But here’s a new company American Swan that enters the Indian e-commerce market with the belief that it can bring some order to the chaos.
How? Anurag Rajpal, Director & CEO of American Swan explains in an exclusive interview with RMN Digital managing editor, Rakesh Raman.
Here we go:
1. Are online stores poised to push out touch-and-feel shopping option or will both the buying models coexist?
One of the most important aspects to online shopping is the tangible aspect of the product – consumers need reassurance, the “touch and feel” of products before committing to buying them online.
However, there are strong incentives of online shopping: competitive pricing, speed, convenience, variety of products, home delivery and ease of shopping from anywhere at any time. The growing numbers in e-commerce are testimony to the success of the format.
It is not a battle of online vs. retail: rather both formats, if strategized well can mutually benefit and support each other. There is a potential for (R)etail Shift: where online and retail experiences are evolving.
Call it a hybrid model or the click-and-brick model: the reassurance of a retail presence combined with the convenience and reach of online to create an omni-channel world of brand presence.
2. Which factors inspire consumers to prefer online buying?
Online shopping offers users very strong benefits of convenience, speed, competitive pricing, comparative shopping, ability to assess reviews & ratings and home delivery. Add to this the consumer-friendly benefits which until recently were available only to retail purchases: multiple payment options, gifting options, convenient returns policies, and cash-back and EMI schemes.
Online shopping and the players are working out innovative methods to woo customers through not just product but service-level offerings. They are creating opportunities out of challenges: the try and buy option to combat touch-and-feel and size aspects; loyalty and referral schemes to incentivize brand patronage; intelligent customer purchase mapping to alert users to new arrivals, and offers on their preferred category or products.
3. Are there some financial risks involved for the consumers while trying the digital channels for shopping?
That could have been the case a few years back. The industry and consumers have now matured to nullify any risks in online shopping. Right from brand warranties, returns, replacement and service level guarantees, combined with consumer forums to address any lapses: it is a fair and safe field for anyone to purchase online.
In fact, for any new entrant in the e-commerce domain, it is important to not only get processes and policies in place but to also clearly communicate and ensure the same to the consumer.
We have seen brands proactively address consumer issues through feedback on-site as well as invite resolution on social platforms like Facebook and Twitter. Online and social media monitoring is an important aspect that all brands are using to actively seek out both positive and especially negative sentiment and to be able to address and resolve the latter.
4. What is the business model of American Swan – including procurement, delivery, payments?
We realized that there is a tangible shift in the way people are shopping: we are shopping more, but we want our experiences as well to provide more – not merely the convenience of online shopping or a trip to the mall, but rather an experience.
American Swan is based on a hybrid model: combining the best of retail and online to be able to offer our customers ‘An Experience That Delivers More.’ We have strived to combine a retail footprint alongside an online presence through top online aggregators as well as our own portal americanswan.com.
Today, brands need to focus on using multiple channels not only to position the product/service but to also identify, engage and acquire the right audience. This approach helps create the right buzz, is available on more than one channel and delivers the product to the customer instantly.
Our competitive positioning is based on an identified market gap: gap of international designs and styling at affordable pricing. We aim to be aspirational, accessible, and affordable.
We have positioned ourselves as a premium global fashion & lifestyle brand that offers a range of authentic, smart casual wear. We aim for a differentiation through our brand relevance and positioning: To offer affordable luxury to an aspiration-led audience that seeks international quality and fashion.
In the areas of procurement, delivery, and payments we have aligned with the best-in-class service providers and vendors. We have a company-owned distribution center with well-defined systems and processes to ensure timely delivery and inventory management.
5. How do you attract and retain eyeballs on your site and how do you encourage buyers to buy products from your site?
The American Swan marketing strategy is to build a customer base through a strong digital marketing and activation approach. We are very focused on our core target audience, which is the 20-30 year old urban and semi-urban youth, which is digitally savvy and connected.
Online retail has seen a heavy overlap with social networking and online search due to aggressive marketing and strong inclination towards social commerce. The industry can expect a larger portion of online retail from social commerce with India positioning itself as one of the fastest growing social-networked user base and also larger size of social groups.
This insight has been the driving force behind American Swan opting for digital marketing as the primary channel to build the brand as well as drive trials and purchase.
We have sustained online activations and media plans to achieve brand visibility and awareness as well as drive purchase and trials. However, getting visitors is only half the battle: engagement and conversions are the backbone for any e-commerce website.
We have worked towards building an interface that not only provides users with detailed product information through images and videos, but also offers engaging content through our blogs and trends that add to the user experience. Content we believe will be the true differentiator for an e-commerce brand to stand out and succeed in the highly competitive market.
6. Can an e-commerce business be successful in India, as it’s commonly observed that most e-commerce outfits are operating in the red and mostly surviving on external investors’ money?
An e-commerce venture can definitely succeed if every aspect of the business is well thought-out, planned and executed. The e-commerce market in India also needs to move into a mature lifecycle like in China and in the West.
Comparatively, we are still in a nascent stage where the medium is growing and patterns are evolving. The biggest challenges that e-commerce businesses are facing today are: high customer acquisition costs, issues pertaining to cash on delivery (COD) as a payment option, the ‘deals & discount’ mindset of the buyers, high media spends required to achieve visibility and customers, low loyalty of customers, high fulfillment costs, etc.
The e-commerce segment will soon see consolidation in the number of players and only the ‘fittest will survive’. In contrast to the euphoria in 2011, we are now seeing caution in e-commerce funding.
Valid metrics of differentiation, sustenance, scalability and profitability are being posed to e-commerce players. By 2015, the online commerce segment will see a fair stability with distinct offerings and formats.
Differentiated brands/players built now which are bootstrapped, can show scale to investors and can sustain a three-year and beyond operations, will have a higher success rate.
7. Which factors will hamper the growth of e-commerce market? And how do you propose to overcome the present and future challenges?
Logistics and fulfillment are the primary challenges of e-commerce in India. Cash on delivery (COD) is a necessary model in a nascent market like India, with low card and online banking penetration.
For this to remain viable, a company has to carefully manage the COD sales process owing to lower margins. Coupled with potentially higher product returns, it can have an adverse impact on profitability. The other important factors are quality of goods/services and on-site security: these are very critical trust factors, which need to be addressed.
We, at American Swan, try our best to overcome the above challenges through regular monitoring. We manage COD as a part of the overall payment mix, while simultaneously incentivizing prepaid purchases to drive the ‘mature’ online consumer.
On the consumer trust factor we try to ensure stringent quality checks for our products; a sound logistics process to ensure delivery time and quality. We provide clear, detailed information on product, pricing as well as our policies since transparency on this front is critical and essential.
Moreover, we adhere to a set of core values and business practices driven by the principle that what’s best for our customers is what guarantees our success.
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Anurag Rajpal (pictured above) is the Director & CEO of The American Swan Lifestyle Company. With a professional career of over 15 years with some of the leading fashion houses and retail organizations in India, his areas of proficiency are retail expansion and business development with core competencies in new product development from concept to commercialization.
This interview is published under the RMN Digital’s “Thought Leaders” series in which top tech market leaders of the world express their views on different burning issues and market trends.