Planning to Invest in E-commerce? Here are 5 Potential Challenges to Keep in Mind

Around 14 years ago when I started my journey in the field of digital marketing and advertising, e-commerce was my favorite segment to explore.

To date, the e-commerce universe fascinates me. The way it has evolved in the global and Indian markets and continues to do so, it’s simply a great sect to take marketing lessons from!

Global e-commerce giants like Amazon, Alibaba, Shopify, Flipkart are holding a major chunk of the industry. Despite initial losses, with insightful strategy, they managed to operate and perform well day by day.

We have also seen some downfalls like Jabong but then there’s Myntra- a brilliant example of an e-commerce fashion brand that is one of the topmost players in the industry currently despite a huge failure. Revamping its marketing and advertising strategy, Myntra has evidently done wonders.

I personally feel Nykaa is also doing amazingly well. Started off as an online beauty store, it has gradually and successfully moved into fashion and retail segments. Making strategic marketing additions, one at a time!

“New studies projected that worldwide retail e-commerce sales will reach a new high by 2021. Ecommerce businesses should anticipate a 265% growth rate, from $1.3 trillion in 2014 to $4.9 trillion in 2021. This shows a future of steady upward trend with no signs of decline”, as quoted from eMarketer.com.

Now, where these figures look lucrative for business, in a country like India, where there are so many languages, diverse preferences, and considerable lack of digital knowledge, e-commerce is yet to flourish as opposed to estimations.

“India’s retail market is estimated to be worth $600 billion. Today eCommerce comprises only 5% of the total. Compare that to the 15% stake e-commerce has in the US market, and it becomes clear there’s still plenty of room for growth. Despite efforts like ‘Digital India’, affordability of smartphones, and data packages, vast sections of India’s population have yet to come online.

India’s total internet user base is set to grow from 665 million in 2019 to 829 million by 2021. So, the inherent potential of the market is undeniable. And, yet, eCommerce remains highly underpenetrated with only 50 million online shoppers, of whom only 20 million are active monthly purchasers”, as quoted from Economic Times.

This sudden pandemic has undoubtedly compelled citizens across the country to shift to the commerce domain for buying essentials and what not! They can’t afford to go out to retail outlets or local shops due to the contagion. So, this scenario is an added advantage to the e-commerce sector in India. But there are basic 5 challenges that you need to keep in mind if you are planning to invest in e-commerce.

Suppressed logistics infrastructure causing a delay in timely deliveries resulting in loss of trust. “E-commerce in India has endeavored to streamline payments and logistics, yet returns and exchanges despite everything pose an issue. Since most e-commerce companies are liberal with customers showing dissatisfaction for products paid for online, swindling returns and exchanges are on the rise online”, as quoted from eVanik.com.

Another appended issue is shoppers in India are more traditional than modern. ‘Touch and feel’ constraint is also there. To sort this out, Myntra’s ‘Try and Then Buy’ (T&B) offer proved to be a decent solution. But for this as well, the logistics infrastructure needs to be very strong.

A dearth of skilled professionals to handle and manage customer service requirements post the purchase. Catering to the needs of the current and future consumers India’s tier-2 and tier-3 cities with different linguistic backgrounds is a hard nut to crack, successfully

Unlike global markets, the rivalry (yes, deliberately using this word and not competition) between e-commerce players is cruel. Bengaluru-based Flipkart is India’s largest home-grown e-retailer, with a gross merchandise value of $10 billion and a track record of raising $3.15 billion in venture financing. But Amazon India has given Flipkart a run for its money since arriving in 2013. India is providing Amazon with its largest number of new customers after the U.S., and Amazon India’s Q4 2015 sales were equal to its total 2014 sales”, as quoted from Entrepreneur.com.

Indian consumers need to shift to the digital economy. Knowledge and awareness of online payments are necessary. “While GoI has ventured out the execution of the Unified Payments Interface (UPI) framework, further endeavors are required by means of the development of formal banking and simple credit offices for the populace”, as quoted from eVanik.com

· Last but not the least, for Indians, security for their ‘khoon pasine ki kamai’ tops the priority list. Most of them don’t trust digital payment gateways.

“While big e-commerce players can afford to have security software that offers enhanced security for its customers while transacting online, many small e-commerce setups and small business owners ignore the importance of authentic security software. Transacting at such platforms can be extremely risky and is prone to the Trojan and malware attacks comprising a user’s financial details’ insecurity”, as quoted from Auxesisinfotech.com

(Image source: The Hindu Business Line)

So, in a nutshell, I am not saying that the future of e-commerce in India doesn’t look promising. Considering all the factors, evolving purchasing traits, reports and current scenarios, the e-commerce sector in India will not look back for a loss. But then there are some barriers yet to overcome.

Let me know what you feel? Love to hear from you in the comment section below.

And tons of love for following the space.

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Agam Chaudhary

Agam Chaudhary

15 Years in Digital Marketing & Technology | Currently in E-commerce, Digital Assets, and Metaverse space | Expertise in business growth & team management

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