2014 will be remembered as a defining year when rapid changes happened that will shape the Indian marketplace of the future. Although online shopping existed earlier, it was mostly limited to the busy and tech savvy, willing to make a purchase merely based on the display picture and reading the specifications of the product. However, all that seems to have changed this year giving the impression that very soon if not already, online shopping is poised to hit critical mass, especially after Indian e-tailers such as Flipkart, Amazon and Snapdeal received huge additional funding from investors. The additional funding meant they could scale up and be more customer centric while removing hindrances that existed in their operations especially in logistics and payment gateways. Of course in their zest to grab market share most e-tailers went overboard and outspent each other with their newly gotten cash and crossed the line in terms of ad spends, even if it meant risking the customer with continuous spam, as if shopping is the only thing in the life of the customer.
With most part of the Indian festival season out of the way with the exception of Christmas, market share figures should start to trickle in, that should tell us as to how much dent e-tailers have made into the traditional brick and mortar business. But really without waiting for the figures, a smart businessman would have already sensed that the e-commerce boom is very real and became deafening this year, even louder than the Diwali cracker. Most e-tailers are still making the initial losses, but should be able to break even very soon, unless they press a self destruct button and continue with their ridiculous undercutting price policy. That seems unlikely because most e-tailers are run by smart intelligent people and they will fix their follies faster then we expect.
Once in a while, disruptive innovation take place which captures the existing market by surprise, disrupts it, and makes way for new technology to take over. Initial indications suggest that ecommerce will not entirely disrupt the brick and mortar business, but the ones that will be able to survive the online onslaught are the ones who have their work ethics in place, especially in the way they deal with their customer. Most Indian businesses will evolve to this new reality and think of innovative ways to initiate and maintain contact with the customer, in ways an online platform will not be able to. The real test comes in places like Goa where most (not all) businesses have taken the customer for granted and are guilty of not treating them very well.
Goa is the only place in the world where a shop owner, for example, gives a feeling to a walk-in customer that he has done a big favor to him by providing the required goods or services. Exactly opposite to a portion of quote attributed to Mahatma Gandhi “We (businessmen) are not doing him (customer) a favor by serving him, he is doing a favor by giving us an opportunity to do so.” This pushing of the customer on the defense has been possible because Goa has always been an artificially created seller’s market. Sellers by creating artificial scarcity in the market have always had an unfair advantage over the customer. Right from buying school text books to a simple cloth material, a customer has always had to jostle among the crowd to get the minimum basic. So by the time the customer completes his transaction, he is too exhausted to analyze if he got the best deal, or was treated well. All this was possible because most Goan businesses had to deal with ignorant customers, that would revere the shop owner or the service provider and seek his advice on the product to buy, little knowing that the advice would depend on which brand gave the shop owner the fattest margin.
All this has suddenly changed or changing at a fast pace, with most customers now walking up to a shop, equipped with a smart phone, check and compare the price and specification in real time. Gone are the days where a Goan customer had to deal with glum faced owners take it or leave it attitude, or park his car a mile away just because the owner had decided to park his car in front of the shop. Still there are shop owners unable to come to terms with reality that their customer has made a transition of using the smart phone from updating statuses on Facebook and Whatsapp to checking product prices and specifications. It is these shop owners who run the risk of getting endangered. In their effort to fight back some old school egoistic businesses will use their influence and try to convince politicians to use regulatory hurdles, such as entry tax on courier, as a means to stop this deluge. But that will turn out to be temporary especially because the Prime Minister’s reputation is on the line, his ‘Make in India’ project will receive a severe jolt if he is seen taking measures that discourages competitiveness.
No politician can save a business which faces game changing innovation, but a loyal customer may perhaps. When Goa had a Chief Minister from Margao, most shop owners from Margao would make time and visit him with flowers to wish him on his birthday. How many of them even thought it fit to make a call and make a birthday wish to their top customers. That would have gained them some customer loyalty and an advantage to counteract the e-commerce deluge. Does not mean every brick and mortar business is on the verge of collapse, the new e-commerce platform has just raised the bar in terms of service, and the sincere and nimble that adapt the fastest, control their costs, focus on value addition and develop an honest customer relationship will not only survive but even thrive, which means the customer is all set to have a ball.
Television could not kill the radio, electronic news did not end newspapers and clicking selfies is definitely not ending the careers of photographers, similarly Generation Next brick and mortar businesses will not close down altogether. But to survive, one will have to learn the art of reinventing by staying relevant, for that to happen a strong focus on customer service might just be the start.
(Plastino D’Costa is a business consultant)
