Varun Jain, The Economic Times
New Delhi, 5 February 2015
India’s North-Eastern states are fast emerging as the drivers of growth for some leading e-commerce companies, which claim double-digit growth in the market after having overcome last-mile delivery challenges.
In this region, where hilly terrain and limited road and flight connectivity have posed hurdles for companies wanting to expand operations, demand for goods online is being fuelled by unavailability of certain products and the deep discounts being offered by e-commerce companies on a host of goods, including branded products.
Snapdeal’s VP – operations, Ashish Chitravanshi, said the North-East region is not only an important market for the company but also has the potential to be at a par with Delhi and Mumbai, in terms of business potential.
"The region is among the fastest-growing markets in the country for us. We have been steadily growing in double digits monthon-month in the North-East markets, with a steady increase in the number of orders from the region," said Chitravanshi. "As we take our reach deeper into the region we anticipate this number to grow phenomenally."
While Snapdeal services large parts of the North-Eastern region covering more than 1,100 pin codes, its rival, Flipkart, serves customers in over 80 cities in the region in partnership with logistics players eKart and India Post.
Flipkart has seen healthy growth in the region in recent years and is now scaling up its supply chain capabilities and support facilities to create a seamless shopping experience for customers there, a company spokesperson said, adding that the region has a relatively younger customer base as compared to the rest of the country and categories like apparels, games, music and books are popular.
Similarly, as much as 15% of Fashionandyou’s revenue comes from the North-East, said Manav Narula, its GM for marketing.
Sanjay Sethi, CEO and co-founder of ShopClues.com, said that though the percentage contribution to gross merchandise value(GMV) is in single-digits, the company expects it to grow to 10-12% in the years ahead.
Devangshu Dutta, chief executive of retail consultancy Third Eyesight, said taht due to logistical constraints, managing a network of physical retail points is cumbersome in the North-East, while e-commerce is at a specific advantage in this region, since it allows a virtually unlimited range of product offering to be presented rapidly to the customer at a relatively low cost.
India’s largest fashion e-tailer Myntra established its distribution centre in Guwahati a year ago, followed by a centre in Mizoram’s capital Aizawl. "When we started the Aizawl centre, it showed us 500% jump in sales," said Ganesh Subramanian, head of new initiatives at Myntra.
For Myntra, a year ago, the North-East region was growing at 1.5 times the overall growth of the company and the business coming from this market is currently in line with the company’s overall growth, Subramanian added.
But it is not just mass e-commerce players who are seeing traction from this region. Specialty and niche players are also in the game to conquer this still untapped region.
Gaurav Singh Kushwaha, founder and CEO, Bluestone.com, an ejewellery company, said the region contributes to about 11% of the company’s revenue. Also, the average selling price from the North-East is higher than the average selling price from other non-metros, he said.
FirstCry.com, a retailer of children’s products that has four service centres in the region, of which the ones in Agartala and Guwhati are owned by the company, plans to add another two distribution centres in Silchar and Shillong in a few months, said founder and CEO, Supam Maheshwari.
The region’s difficult terrain has thwarted efforts to build roads and improve airline connectivity. This, in turn, has hindered growth of offline retail and availability of branded products. "It is the ideal use case for e-commerce where customers are not buying because of discount but because of lack of availability of options and variety" said Kushwaha of BlueStone.
Some e-commerce players see this region as a game changer if the logistical challenges are addressed.
Chitravanshi of Snapdeal explains, "The region forms 8% of India’s landmass and has only 4% of country’s population, which means the population is thinly spread across a largely mountainous area. This certainly presents a logistical challenge in terms of connectivity and cost involved to all e-commerce players."
Vipul Sharma, director of ecommerce Association of India, feels that the development of IT infrastructure at a faster pace can really turn the tide for the region
(Published in The Economic Times.)