Indian consumers are increasingly turning to Amazon, with 80% shopping with the US-based titan between February and March of this year, and only 65% shopping with market leader Flipkart, according to recent survey of 2,000 urban Indian consumers by Forrester reported by the Times of India.
Amazon overtook Flipkart in customer preference for the first time last year, when the number of consumers shopping at Amazon hit 75%, but stood at only 70% for the Indian e-commerce company.
Amazon Prime’s benefits are a huge value proposition to customers in India:
- Factors like fast and cheap shipping, low-cost products, and a good return policy are crucial factors to Indian consumers when choosing an online retailer. So, the perks of a Prime membership — such as free shipping and exclusive deals — resonate strongly with these customers.
- Moreover, Prime Video is especially valuable in India, where 90% of households have only one television and mobile devices are often used for individual entertainment. This makes the video streaming service in Amazon’s app a huge draw for customers and Prime's fee of 499 rupees ($7.79) per year a better deal.
Amazon is also closing the gap with Flipkart on mobile — a key indicator of overall engagement in India. Amazon accounted for 30.3% of mobile e-commerce users in March, up 46% year-over-year (YoY), and putting it on track to overtake Flipkart, at 30.7%, in the near term. Mobile devices are the primary source of internet for most Indians, and mobile accounts for 79% of all web traffic, meaning almost all customer engagement will take place on a mobile device.
As Flipkart struggles to drive growth, it is likely that Amazon will lead in market share soon.The US company has made immense progress in the country — the number of products ordered through Prime in India has grown 70% since it debuted a year ago, while unique purchasers increased 113% YoY in Q1 2017. Meanwhile, Prime Day in India was a huge success this year, as its 23,000 sellers saw their sales volumes double from 2016’s edition. Amazon is now poised to outgrow Flipkart in its own market, and with a $5 billion capital infusion promised to its efforts in India, it's likely to take the lead sooner rather than later.
Brick-and-mortar retailers are caught on the wrong side of the digital shift in retail, with many stuck in a dangerous cycle of falling foot traffic, declining comparable-store sales, and increasing store closures. Over 8,600 retail stores could close this year in the US — more than the previous two years combined, brokerage firm Credit Suisse said in a recent report. Meanwhile, e-commerce pureplays are riding the rise of digital commerce to success — none more so than Amazon, which accounted for 53% of online sales growth in the US last year, according to Slice Intelligence.
In response, many brick-and-mortar retailers have started to use omnichannel fulfillment methods that leverage their store locations and in-store inventory in order to better compete in e-commerce. These omnichannel services, including ship-from-store and click-and-collect, can help retailers manage the transition to digital by:
- Increasing online sales by offering cheaper, more convenient delivery options for online shoppers.
- Limiting the growth of shipping costs as online sales volumes increase by leveraging store networks for delivery.
- Keeping stores relevant by turning them into fulfillment centers that pull customers in to pick up online orders.
However, few retailers have mastered these new fulfillment services. While these companies have spent years optimizing their supply chain and logistics networks for delivering goods to their stores or directly to customers’ doorsteps, most have yet to figure out how to profitably bring their store locations into the e-commerce delivery process.
Jonathan Camhi, research analyst for BI Intelligence, Business Insider's premium research service, has laid out the case for why retailers must transition to an omnichannel fulfillment model, and the challenges complicating that transition for most companies. This omnichannel fulfillment report also detail the benefits and difficulties involved with specific omnichannel fulfillment services like click-and-collect, ship-to-store, and ship-from-store, providing examples of retailers that have experienced success and struggles with these methods. Lastly, it walks through the steps retailers need to take to optimize omnichannel fulfillment for lower costs and faster delivery times.
Here are some of the key takeaways from the report:
- Brick-and-mortar retailers must cut delivery times and costs to meet online shoppers’ expectations of free and fast shipping.
- Omnichannel fulfillment services can help retailers achieve that goal while also keeping their stores relevant.
- However, few retailers have mastered these services, which has led to increasing shipping costs eating into their profit margins.
- In order to optimize costs and realize the full benefits of these omnichannel services, retailers must undertake costly and time-consuming transformations of their logistics, inventory, and store systems and operations.
In full, the report:
- Details the benefits of omnichannel services like click-and-collect and ship-from-store, including lowering delivery times and costs, and driving in-store traffic and sales.
- Provides examples of the successes and struggles various retailers have experienced with omnichannel delivery.
- Explains why retailers are having trouble managing costs with their omnichannel fulfillment efforts, which are eating into their profits.
- Lays out what steps retailers need to take to optimize costs for their omnichannel operations by placing inventory where it best meets customer demand.
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