The worldwide spread of the COVID-19 pandemic has disrupted how people buy products and services and how they perceive e-commerce. The standardized lockdown rules across India and the growing hesitation among consumers to go outside and shop for essential goods have tilted the nation towards e-commerce.
Consumers have switched from shops, supermarkets, and shopping malls to online portals for the purchase of products, ranging from basic commodities to branded goods.
Since the norm of social distancing has been initiated for almost the entirety of 2020, the scope of online purchases and online businesses is expected to surge. Many people are embracing the concept of online retail and the surge in FTUs (First Time Users) on e-commerce sites is visible.
Analyzing the first impact on e-commerce
COVID-19 has been exceptionally different from what we have ever witnessed. As the world was forced into complete shutdown, it’s safe to say that e-commerce was the saving grace, helping millions of people stay home and procure what they wanted at their doorstep.
“Customers want to avoid stepping out unless it’s very critical. We are helping customers who are stuck in that situation, and we are able to play a small part in helping (cater) to their needs,” – Gopal Pillai, Vice President for Seller Services at Amazon India.
According to IBEF, the market opportunities for online commerce in India are expected to touch $200 billion by 2026 from $30 billion in 2017. The report also states that the Indian e-commerce industry is expected to overtake its US counterpart to become the second-largest market for e-commerce in the world by 2034.
As of today, China is the largest e-commerce market in the world, with a value of around $672 billion.
Business data platform Statista stated that the consumer retail segment is expected to see an increase in losses ranging from 3-23%, depending on the market. The report even included that the average retail e-commerce revenue per user in the nation was $50 as of 2018, and is expected to go up till $75 by 2024.
In the downside of things, lack of productivity during the nationwide lockdown resulted in the loss of jobs, pay cuts, and finances. Shutting down of shops and family-based businesses has made many people sway towards online retail to meet their financial requirements.
Optimizing your e-commerce business for the ‘New normal’
E-commerce involves more than just having a brand name and selling products online. Finding the right target audience, product niche, and connecting with your customers is vital because it allows you to cut down unnecessary costs and provide products that are most suitable for your customer base.
The initial steps taken to develop and launch your store paves pay for the growth of your business. Since there is no face-to-face communication with the buyer, you have to compete with other online stores in terms of price, products, and offers to remain relevant. As the consumer behavior of people is changing due to the shift to digitization, there are various factors to address before you think about success.
Things to consider before setting up your e-commerce business:
- Since the pandemic has made online shopping prominent, you can have a distinct advantage over others by offering niche products that aren’t available at other online stores. Having a niche product line limits the expenses incurred and gives you an edge over your generic competitors. Furthermore, by filtering out your market, you can find sections that haven’t been tapped into by your competitors
- There has to be an established inventory blueprint to cope up with the sudden increase in the demand for products and services in the country. Having the right inventory blueprint makes it easier for you to store, organize, summarise, and track all your orders. There are e-commerce platforms with built-in features that allow you to manage inventory efficiently as well
- The risk of RTO (Return To Origin) orders and the cost incurred by it should be taken into serious consideration. Since the Indian economy is still a cash-oriented market, RTO costs can be high in cash-on-delivery orders and any mishandling regarding such orders becomes a burden on your business
- In a world where online shopping is slowly becoming the norm, you should make sure that your business has fully adapted to all online payment methods. Since the payments are done through the tap of a button, it breaks any geographical constraints regarding the order, induces trust in your business, and also helps in making any recurring payments more convenient as there is no involvement of large sums of hard cash
- According to certain insiders in the industry, more than 60% of e-commerce orders in India are processed through cash-on-delivery payments. So, the addition of a pre-pay cash-on-delivery option to reduce any impulse orders and to convert visitors to customers is highly recommended to mitigate your unnecessary costs, increase traffic, and monitor the expenses of your business.
- Since the e-commerce platform is filled with competitive businesses, it’s very important to do a thorough analysis of your competitors to get a better understanding of the market realities. This also acts as a rectifying tool if you aren’t as compatible as your competitors, and also helps you in formulating better strategies for your business
How Thirdwatch powered e-commerce stores during COVID-19?
The journey of Thirdwatch during the course of COVID-19 has been nothing short of a rollercoaster ride. At the start of COVID-19 and for a few months afterwards, cash-on-delivery rates were negligible. However, post-June 2020, after the lockdown regulations were eased, e-commerce began to accelerate and CoD began to pick up quickly, too.
In fact, we at Razorpay Thirdwatch, observed that 60% of all orders placed in India are still placed via cash-on-delivery! So, how did Thirdwatch power e-commerce stores during COVID-19?
- Reducing returns: With the help of an AI engine, Thirdwatch enables e-commerce businesses to identify and profile risky orders with ease
- Profiling fraudulent users: Thirdwatch’s advanced engine helps in recognizing fraudulent users across platforms. Thirdwatch uses ML and harnesses network effects to profile users across different websites
- Increasing profitability: During the lockdown, we saw a massive increase in impulse purchases and unexpectedly cancelled orders. With Thirdwatch, businesses can increase their profits by tracking down and curbing additional losses before shipping the order
- Offering CoD without consequences: Cash-on-delivery has been a preferred mode of payment for customers, but that’s not the case for online sellers. CoD poses a variety of risks for the retailer and Thirdwatch helps in minimizing these with features like Order Confirmations and PrePay CoD.
Setting up a new e-commerce business is no easy task, but the prospect of having one is more attainable than ever.
With so many businesses going online to satisfy their wants and needs during the year, the focus on digitalization and innovation has taken centre stage and is expected to do so for years to come.
Get started with Razorpay Thirdwatch and monitor all your online sales here.