Jochelle Mendonca & Neha Alawadhi, The Economic Times
About 39 million Indians shop online, according to an April report by research firm AT Kearney. Though it is a small proportion of overall population, it is growing fast. Traditional retailers are realising it is a market they cannot afford to miss. Technology firms such as IBM, Oracle and SAP are gearing up to win new business.
"In last two years, since the recent ecommerce business started, we are seeing brick-and-mortar stores are realising the need for omni-channel offerings. They have started making investments on omni-channel strategies," Kamal Singhani, executive director – enterprise applications and mobility leader at IBM India, told ET. Singhani added that Indian retailers would need another 12-18 months before strategies become competitive.
An omni-channel strategy implies that a retailer’s customers get the same buying experience and treatment in both physical stores, online and through mobile devices. It requires significant investment in the back-end to tie-in inventory and logistics to make it work.
Future Group has been the most vocal with its plan to spend Rs 100 crore on its omni-channel strategy over the next year. CEO Kishore Biyani has said that to implement the strategy, the retail business would have to become more technology and big data-focused. Future Group partnered with SAP to drive its omni-channel venture. Reliance Retail, Shoppers Stop, Pantaloons, and even the Tata Group are investing to win a slice of the online shopping space.
But experts say these are baby steps and retailers still have work to do on technology to compete with deep-pocketed online players such as Flipkart and Amazon. "While retailers are investing in systems, the kind of capital expenditure required to actually build the whole omni-channel experience has not happened yet," said Devangshu Dutta, chief executive at retail and consumer products consultancy Third Eyesight.
"One of the first things is that they should look to move away from in-house hosted systems to cloud-based solutions. Otherwise it is a very, very large investment, and time taken is significant."
A sales executive with a multi-national technology firm said the competition to win deals in the retail space has become increasingly fierce, as companies expect retailers to spend several hundred crores of rupees to boost their online sales.
"For Indian retailers, the writing is on the wall. They have seen some electronics retailers struggle in India since e-commerce arrived, and now they want to defend their turf. Most haven’t pulled the trigger (on giving out contracts) but they will start," a sales executive with a multi-national technology company said. He declined to be identified because he is not authorised to speak to media.
Companies with analytics offering are expected to benefit greatly when the buying process begins. "According to an industry study, the company website is the most-used method for communicating with shoppers.
Sales analytics, customer analytics and web analytics lead the way in priority order for retailers with marketing analytics not far behind," said Mukesh Mathur, executive director at Oracle Retail.
The Indian analytics market is expected to reach $2.3 billion by 2018, according to Nasscom, driven by increasing adoption in retail, ecommerce, banking and telecom.
(Published in The Economic Times.)