Development of Omnichannel in India:

Retail Landscape, Drivers and Challenges

Mohua Banerjee

Abstract This chapter presents the organised retail landscape in India with a special
focus on the retail growth in online trade and the retailers’ journey from physical
stores to e-commerce, multi-channel, and omnichannel retailing. It highlights the
steps that need to be contemplated by retailers moving towards building an
omnichannel strategy. The challenges that e-commerce players face while operating
in this retail landscape are examined. The characteristics of Indian consumers and
their behaviour are also discussed as they further define India’s markets and future
growth opportunities. The business models that are evolving as retailers explore
newer channel modalities to transform their businesses are discussed, along with the
logistics innovations that facilitate such retail operations. There is also a comparison
between the Indian and Chinese retail market. While India is a large market, with
many potential customers, and a growing middle class that implies business oppor-
tunities, there also major challenges, such as access and quality of the transport
infrastructure and logistics networks, as well as access to the rural population.

1 Introduction

India has a large consumer market and its retail sector is undergoing rapid changes to
meet market requirements. Digital channels are also expanding at an unprecedented
rate that is boosting the growth of e-commerce in the country. The mindset of
consumers is undergoing a major psychological shift and a significant number of
shoppers are buying online frequently. Consumers are now getting into a frame of
mind where they are consistently expecting retailers to provide exceptional services
in product delivery across all touchpoints. Implementing an omnichannel retail
strategy is an appropriate step for retailers at this juncture. Technology trends like
cloud services, big data, and real-time analytics will facilitate retailers in implemen-
tation though it will need substantial Information Technology (IT) budgets. The

M. Banerjee (*)
International Management Institute Kolkata, Kolkata, West Bengal, India
e-mail: [email protected]

© Springer Nature Switzerland AG 2019 115

W. Piotrowicz, R. Cuthbertson (eds.), Exploring Omnichannel Retailing,
https://doi.org/10.1007/978-3-319-98273-1_6
116 M. Banerjee

retailer’s eventual aim is to merge the information-rich experience and the conve-
nience of shopping online with the tangible atmosphere of shopping in physical
stores.
This chapter delves into the Indian retail growth story and the retailers’ journey
from physical stores to e-commerce and multi-channel retailing. It highlights in
detail the steps that may be ultimately contemplated by retailers towards building an
omnichannel strategy. The challenges that e-commerce players face while operating
in this retail landscape are examined. The typical nuances of Indian consumers are
also discussed as they further define India’s markets. The business models that are
evolving as retailers explore newer channel modalities to transform their businesses
are deliberated at length, along with the logistics innovations that facilitate retail
operations. This chapter is based mainly on secondary sources.

2 Retail Landscape in India

India has a population of 1.34 billion people. With total retail sales of $1.01 trillion
and retail sales CAGR1 of 8.8% over the period of 2013–2015, the country shows
prospects of a strong growth phase over the next coming years. Modern retail
(or organized retail) is still at 8–10% of total retail sales. Traditional retail which is
marked by kirana (or mom-and-pop) stores, wet markets, a public distribution
system (PDS), and cooperative stores, still dominate the retail landscape. The
evolution of organized retail is driven by the growth of an aspiring middle class
with greater disposable income who are now seeking choice, access to branded
goods, and an improved shopping experience. At the same time, the market is
restricted by local regulations which limit the entry of foreign modern retailers.
There were more than 15 million mom-and-pop stores in 2015. International retailers
in India are still confined to the cash-and-carry and wholesale formats like Metro and
Walmart, or the single-brand retail formats where 100% Foreign Direct Investment
(FDI) is allowed. Currently many new entrants are choosing between partnerships
with local companies (e.g. Gap, The Children’s Place) and company-owned stores
(e.g. Nike, IKEA, Sisley and H&M), as only 51% FDI is allowed in multi-brand
retail at the time of writing, though with riders such as 30% mandatory local
sourcing, minimum $100 million investment with 50% in the backend infrastructure,
among others.

1
Compound Annual Growth Rate (CAGR) is a measurement of growth over multiple time periods.
Development of Omnichannel in India: Retail Landscape, Drivers and Challenges 117

3 Market Penetration: Percentage of Traditional,

Organized and Online to Total Trade

The emergence of online trade (or e-commerce, e-retail) has further changed the
dynamics of the Indian retail sector, though the e-commerce market will remain
challenging in the near future. Until 2015, India had remained unranked in major
reports, such as A.T. Kearney’s Global Retail E-commerce Index. Indian online
retail is just 2.5% of the total Indian retail market (eMarketer Chart 2016). Only 69%
of India’s population has access to broadband and mobile Internet (A.T. Kearney
2015a, b). There are only 39 million online buyers in India, which is approximately
just 3% of the whole Indian population; this indicates potential growth in online
trade.

4 Online Retailing

Major e-commerce players are Flipkart, Amazon India, and Snapdeal. Their websites
serve as “Online Marketplaces” for other retailers and other companies to sell their
goods. Companies store their products in the online retailer’s warehouses, but
ownership of the product does not transfer to the online retailer. Companies pay
the online retailer a fee for the storage and distribution of its products and for access
to the website as a selling platform. In 2014, e-commerce spend in India increased by
27% to $3.8 billion, and it is expected to grow over the next 5 years by 21%, that is
slightly higher than the global average. A KPMG-CII report has identified the
e-commerce market in India at $27.5 billion in 2016 and is expected to reach $80
billion by 2020 with a CAGR of 31% (Tanwar and Doger 2016).
In the recent past, online retailers have wooed consumers with deep discounts and
promotions causing a substantial dip in the revenues of brick and mortar (physical,
offline) retailers, as the consumers shopped online. To cope with the competition,
physical retailers like The Future Group, Spencer’s Retail, and Aditya Birla Group
are gradually shifting to e-commerce (Table 1). While some are launching their own
websites, others are making their products available online through the marketplace
platforms like Flipkart, Snapdeal and Amazon. The concept of omnichannel retailing
in India thus originated as a response by offline retailers to mitigate the threat that
was posed by the pure online retailers.

5 From Multi-Channel to Omnichannel Retailing

Technically omnichannel retailing refers to integrated multichannel touch points for

consumers. The consumer decides where and when to shop and from which device.
A consumer can look for a product in the physical store and if it is unavailable,
 118

Table 1 Offerings from Major Retailers

Big Bazaar Food Bazaar More Reliance Fresh Spencer’s
Parent Organi- Future Group Future Group Aditya Birla Group (Aditya Birla Retail Reliance Industries RP-Sanjiv Goenka Group
zation (Retail (Future Retail (Future Retail Limited) (Reliance Retail (Spencer’s Retail
Arm) Limited) Limited) Limited) Limited)
Website bigbazaar.com Webpage avail- morestore.com reliancefresh.co.in spencersretail.com
able in:
futureretail.in
Online Separate website: No Link available on More’s website that Separate website: Separate website: spen-
Shopping bigbazaardirect. opens to separate website: mymorestore. reliancefreshdirect. cers.in
com com com
Mobile App Select cities only No No No Select cities only
Online Coupons No NA Limited discount coupons available Limited food coupons No
available
In-store Wi-Fi No No No No No
Source: Author’s own
M. Banerjee
Development of Omnichannel in India: Retail Landscape, Drivers and Challenges 119

browse for it on the website or through a mobile app to complete the order. The
consumer may then pick up purchase from the store, at a delivery location or through
home delivery, decide on appropriate delivery windows and is able to return
purchased products in any of the retailer’s physical stores without any encum-
brances. Customers connect across the range of platforms, searching for means to
integrate their buying experiencess, providing seamless interaction for the consumer
across the various platforms, when the lines between channels are disappearing and
focus is on brand, not channel management (Piotrowicz and Cuthbertson 2014). The
physical and online formats are seamlessly developed so that the consumer’s
convenience remains the focal point of the retailer’s strategy. Indian retailers are
still in a reactive phase and it may take a some years before they can fully leverage
the synergies between their physical stores and online presence to generate a
competitive advantage.

6 Online Retail in India

Online retail growth has been broadly envisaged as a disruptive business model
across the world. A disruptive innovation is described as “an innovation that creates
a new market and value network and eventually disrupts an existing market and
value network, displacing established market leaders and alliances” (Bower and
Christensen 1995).
The factors that cause retail disruption are the changing nature of retail compe-
tition, the increase in the digitally-influenced shopping experience, and the avail-
ability of the numerous technologies as enablers.

6.1 E-Retail Growth Phases

Similar to other disruptive business models, e-retail growth has revealed three
successive phases worldwide—the incubation phase, the inflexion phase and the
acceleration phase (Sharma and Flamind 2015).
The incubation phase in India lasted broadly from 2007 to 2012 when India was
marked by a period of slow growth in Tier-1 and Tier-22 cities, during which
e-retailers developed new capabilities in technology and infrastructure, investors
opened up funding the new businesses, and consumers adapted to the new forms of
consumption. CAGR was relatively low at 38% during this period.

2
Tier 1 cities are commercialized metropolitan cities and comprise of Delhi, Mumbai, Kolkata,
Chennai, Bengaluru and Hyderabad. Tier 2 cities are smaller cities hubs with a population of one
million approximately and are industrialized hubs or regional centers like Chandigarh, Bhubanes-
war, Lucknow. Tier-3 and Tier-4 cities are the cities beyond Tier-1 and Tier-2. This is based on
the X, Y and Z Classification of Cities by the Government of India.
120 M. Banerjee

The inflexion phase was from 2012 to 2014 during which point of time the
e-retailers reached the necessary level of development to match the market’s
needs. Growth increased remarkably with a CAGR of 80%.
The acceleration phase from 2014 onwards is expected to be a longer phase
during which the pace of growth will further increase, transforming e-retail into a
conventional market space. India has already passed the inflexion phase and moved
into the phase of accelerated growth. Presently though e-retail is less than 1% of the
total retail sales, it is a matter of contemplation to many as to how fast e-retail can
expand in this phase of development, given the huge size of the overall Indian
market.

6.2 Similarities and Differences with the Chinese Market

A study by A.T. Kearney of the top 30 developing countries for retail investment
ranks China and India at No.1 and No.2 respectively with scores of 72.5 and 71 (The
2016 Global Retail Development Index). Further comparisons of relevant retail-
specific variables reveal certain similarities and contrasts that exist between the two
countries. E-retail growth in India may be expected to mirror the growth path of
China as studies show that both countries have a number of similar fundamental
characteristics that facilitate its fast progression. In both countries, economic growth
has fuelled growth in the number of consumers who have greater spending power,
higher disposable income with more women entering the workforce, rising aspira-
tions to buy brands and to shop in modern store formats. However, for the majority
of consumers in both India and China, accessibility to desired products and brands is
difficult as the organized retail landscape is not adequately developed. Data shows
that organized retail is at 8% in India and 20% in China, while it has been more than
80% for over a decade in countries like the USA and the UK (Sharma and Flamind
2015). A plausible reason for this insufficient development is that both India and
China are vast countries and have consumers coming from diverse social and
cultural backgrounds, so it becomes very difficult for a retailer to address this
immense diversity with product offerings and grow their brand nationally. Rather,
the retailer expands their store footprint in distinct pockets where there is a higher
density of target customers. This leads to a demand-supply gap and fragmentation of
the overall physical retail landscape. It is possible for e-retail to meet this gap as it
enables consumers to get access to products and brands that would otherwise have
remained inaccessible to them through the existing retail stores. Another important
feature common to both countries is that smartphones have been instrumental to the
growth of online retail. As mobile internet usage is increasing, it is leading to the
growth of e-retail.
The marketplace platform is the major model through which e-retail operates in
India and China, as compared to the inventory-based model or the online website
presence of physical store retailers. In China, 90% of online sales happen through
marketplaces whereas the figure is only 20 to 25% in the USA (Sharma and Flamind
Development of Omnichannel in India: Retail Landscape, Drivers and Challenges 121

2015). Marketplace platforms enable online retailers to expand rapidly as in these

models it is the vendors present on the websites who are responsible for regularly
increasing their product offerings, sourcing and stocking their inventory. This allows
the online retailers to focus on improving their logistics infrastructure and delivery
operations, especially in countries that are marked by rudimentary infrastructure
mechanisms and inadequate accessibility to third party logistics (3PL) providers.
Another focal point for online retailers is to establish the network effect, in which a
greater number of visitors to the website attracts more vendors and vice versa. As the
retailers build positive feedback through the network effect, they gain scale and are
able to attract further investment for their business.
To attract visitors to their platforms, marketplaces initially offered deep discounts
and sustained heavy losses in the process. In such a hyper-competitive environment,
many small online retailers are forced to exit the market or consolidate and get
acquired by larger players. This phase is currently evident in India with major
players like Flipkart and Snapdeal acquiring not only other category specific
e-retailers (Flipkart acquiring Myntra, Snapdeal acquiring Exclusively) but also
companies that provide them with technological capabilities (Flipkart acquiring
AdIQuity, Appiterate and DSYN Technologies; Snapdeal acquiring MartMobi,
Letsgomo Labs) to capture the shift in customers’ preferences for shopping through
smartphones than from desktop computers and laptops.

6.3 Online Consumer Behaviour

In the Asia Pacific (APAC) region, the average millennial aged between 16 to
30 years spends 2.8 hours a day on their mobile phones. Across APAC mobile use
among millennials differs. While Thailand has the highest daily usage at 4.2 hours,
China is at 3.9 hours. India clocks 2.2 hours and Japan has the lowest daily usage rate
at 1.6 hours (Connected Life—TNS 2015). 46% of millennials spend their time on
mobiles browsing social media platforms, 42% watch videos, and 12% shop online.
When compared to the other BRIC economies, India has a higher proportion of
internet users between the age of 15 and 35 years though fewer women go online
(Ernst & Young 2016). In fact, the women internet-user population in India is the
lowest in comparison to the other BRIC economies. It implies that the ‘high earning-
high spending’ women population aged above 35 years are currently more comfort-
able shopping offline than online. Similar to the other BRIC countries, internet usage
in India is mainly an urban phenomenon though the user mix is currently shifting
toward rural areas. This has been driven by the easy access to smartphones in rural
areas. The rural segment is too significant for e-commerce players to ignore. A recent
survey of 700 online users across six cities by Ernst & Young reveals that in India
71% of online shoppers prefer cashless payments and 64% of online shoppers have
concerns about sharing card details. 55% do not want to pay for home delivery. 86%
regularly look for discounts and 96% of women consumers below 21 years of age
buy only for discounts. Most online high-spending individuals are above 35-years
122 M. Banerjee

and are predominantly from cities. Room for e-commerce growth in Tier-1 and Tier-
2 cities still exists.
It is also important to note that the older generations who generally have higher
disposable income and established buying patterns, are spending more time online.
This is where a major challenge is posed to marketers. They are exploring ways to
market to the digitally most-advanced millennial consumers on the newest digital
platforms and the need to make sure that they are focusing on the content-driven,
shareable campaigns that are effective with this group. At the same time marketers
have to bear in mind that the older customers cannot be targeted only through
traditional media as their patterns of behaviour are also shifting. A tiered marketing
strategy with tailored messaging and media plans that also takes into account the
higher spending power of the older generations will best address the digital divide
caused by the dual pace of consumer’s digital media adoption rates. To reach out
effectively to both segments, marketers will have to create relevant content for each
segment, communicate in a significant manner to each segment using the media
channels, and engage them with the brand.

6.4 Challenges Faced by e-Commerce Companies in India

Though the growth potential envisaged in e-commerce is promising, there are certain
challenges that render major impediments to the sector. Among others, four key
areas that can be identified are the Indian consumers’ buying habits, lack of
necessary infrastructure, predatory pricing strategies, and lack of readiness in
omnichannel technology.
Consumers’ Buying Habits Indian consumers have an innate preference to touch
and feel a product before buying which is impracticable to fulfil by e-commerce
companies. To some, shopping as an activity is not regarded as a chore but as a social
activity that allows them to interact with friends and acquaintances that cannot be
fully replicated in an online shopping environment. However, for customers who are
time-constrained, online shopping tends to be less stressful than conventional
shopping because it helps to evade delays in the queues and navigation of traffic
in peak hours. Shopping at flexible times from the convenience of their homes as
well as day-and-night product delivery services make e-commerce attractive to such
customers. It is also thought that consumers spend less while shopping online as
impulse buying happens predominantly while shopping in ambient environments in
physical stores. Online shoppers have doubts on the reliability of the websites in
portraying the actual product that they will receive after ordering. They are also
apprehensive about the return policies and money refund should the need arise.
Security of online payments also remains a cause of concern to buyers. Shoppers so
far do not tend to have loyalty to any specific e-commerce platform. They are price-
sensitive and compare prices between e-commerce platforms before choosing the
best deal.
Development of Omnichannel in India: Retail Landscape, Drivers and Challenges 123

Lack of Necessary Infrastructure As India has a relatively low internet penetration

of 34.8% of the country’s total population (India Internet Users 2016), browsing
products online and shopping is impaired. Success in e-commerce requires having a
robust supply chain in place and ensuring last-mile delivery at the lowest possible
cost. Distribution costs in Tier-2 and Tier-3 cities are very high as the physical
infrastructure for e-commerce, such as warehouses or fulfilment centres and tech-
nological infrastructure like global positioning systems (GPS), is still fragmented
and in a state of development. Road infrastructure is a critical issue. India’s road and
highway density is underdeveloped with many roads being unpaved and poorly
maintained in the hinterlands. There is no standardized street address system for
which building and street names and landmarks are often needed to locate a house.
Other challenges faced by e-retailers include supply chain issues relating to delivery
personnel and order-taking centres, inventory management, storage requirements for
diverse product categories, errors in delivery, and timely delivery of products in
good condition. A dearth of skilled manpower is another major challenge as
e-commerce companies require a talent pool of specialized digital experts. The
companies have to concentrate on building relevant capabilities by recruiting people
with the right capabilities, especially in marketing and sales teams.
Predatory Pricing Strategies A key cause of concern is that currently e-retailers
steeply discount their product prices to attract both online customers and customers
of brick and mortar retailers. E-retailers undertake steep discounting to acquire
customers, build customer loyalty, and increase their market share. Each player
hopes that once the customer finds the lowest price on its portal and makes repeat
purchases for a sustained time period, the customer will eventually stop comparing
prices and have a higher brand recall towards that particular e-retailer, thereby
building loyalty. But such steep discounting renders businesses unsustainable for
e-retailers without deep pockets and drives existing players out of the market while
creating a formidable entry barrier for new players. It also disrupts the physical
retailers who do not have the financial muscle and have no intention to operate with
severe losses. Product brand value is another issue for the physical retailers and
manufacturers, as with the heavy discounts offered on the same products by the
e-commerce players on their platforms, the image of the brand could be eroded. This
would lead to an inability to effectively price the product even in the brick and
mortar stores. It is a common perception that steep discounting is the result of the
undue amount of funding that e-retailers are obtaining. Flipkart has raised $3.4
billion and Snapdeal $1.7 billion through investor funding since inception in 2007
and 2010 respectively, while Amazon has invested a total of $47.43 million in India
since 2014. As Amazon continues to invest aggressively, Flipkart and Snapdeal
continue to spend heavily on discounts, advertising and logistics to defend their
market shares. To enable their activities the three companies require fresh funding at
regular intervals. In reality, the deep discounts that are funded by investors’ funds
erode the e-retailer’s bottom line, whereas the funds are ideally needed for invest-
ment in improving technology, hiring relevant talent, and acquiring new customers
in a creative fashion.
124 M. Banerjee

Lack of Readiness in Omnichannel Technology Customers are steadily becoming

channel agnostic and want a seamless experience across the channels that they
choose to shop in. Yet retailers have some distance to go in upgrading and integrat-
ing their back-end systems that will help them to deliver the customers’ expectations.
Currently retailers are exploring technology projects in silos, in their attempt to
providing new experiences to the customers, and not as part of an integrated
road map.
Retailers are realizing that their existing core systems of merchandise planning,
inventory management, order management, and POS (Point of Sale) will not be able
to support an exhaustive omnichannel transformation and provide them with the
long-term flexibility and agility that they will need to facilitate the transformation.
To elabourate, omnichannel implementation entails that the retailer build a single
view of the customer, of the product, of the inventory, as well as the orders. To
obtain a single view of the customer, retailers can store the data from their sources
like POS, merchandising, marketing, loyalty programmes, social media, blogs,
social shopping services, and websites, in a common customer database and develop
analytical capabilities to leverage that data. To obtain a single view of the product,
retailers need to bring together product information, such as product attributes and
descriptions, related content, such as manufacturer’s information and instructions,
digital assets like product images, and product relationships, such as recommenda-
tions and adjacencies, to enable better purchase decisions for the customers across
channels. To obtain a single view of inventory and orders, retailers must integrate
their supply chain, merchandising, store operations, and e-commerce solutions, as
well as their order management systems. This will help retailers to optimize the
location from which they select inventory to fulfil an order while minimizing costs
and ensuring speedy delivery.
However, retailers’ current systems have isolated software that result in
fragmented views of their operations. So for retailers, this omnichannel transforma-
tion means a fundamental change in investments. Major IT infrastructure investment
decisions need to be made and budgets have to be adjusted to factor in the transfor-
mation. These decisions need substantial deliberations as in the immediate future,
when the transition to omnichannel is in process, it may be difficult to measure the
individual contribution of the different channels to the retailer’s return on invest-
ment: for example, measuring whether increased footfalls in the store have been
caused by website communication or promotion in the store window. In due course
though when the transition to omnichannel has been put into practice, store Wi-Fi
devices and big data usage may help provide such answers.
Development of Omnichannel in India: Retail Landscape, Drivers and Challenges 125

7 Online Retail Terminology: Showrooming, Webrooming,

m-Commerce, Apps

A study of shopping behaviour by market research firm Openbravo reveals that 52%
of shoppers like to check the prices before selecting a product, 50% trust reviews and
information, 39% believe in taking the opinion of a family member or friend, and
30.2% are traditional shoppers who prefer the in-store shopping experience. It is
evident that consumer journeys are becoming increasingly complicated and that
retail terminology now includes words such as “Showrooming” and “Webrooming”.
Showrooming is when a customer is in a store and checks on a mobile device
whether a better price is available online. Webrooming is when a customer
researches a product online, makes a purchase decision online and goes to the
store to make the final purchase. Gradually consumers are seeking to control their
shopping experiences and marketers strive for the consumers’ loyalty by enabling
them with multi-channel experiences.
The spurt in growth of m-commerce is increasingly more important than desktop-
based sales. A report by Mary Meeker shows that India (at 41%) ranks higher than
China (at 33%) in its mobile usage as a percentage of total e-commerce sales. It has
also the highest share across major economies like Brazil (20%), Russia (13%), UK
(20.5%) and USA (15%) (KPCB 2015). With smartphones becoming cheaper and
more readily available, these upward trends are expected to continue further. A
strong focus towards the development of m-commerce infrastructure is essential for
a retail player as simply converting an active e-commerce website into a mobile
website will not yield the desired outcome. It calls for reinvention and establishing a
mobile-centric infrastructure. Providing targeted content such as personalized noti-
fications to the customer at the right time through mobile apps would be a key value
proposition. One major obstacle is the diverse regional languages in India. There is
limited usage of the English language beyond the Tier-1 cities and marketers will
have to invest considerably in localizing their content.
From the middle of 2014 e-commerce players have been promoting and offering
discounts to customers on purchases made through their mobile apps. While
smartphones are equipped with powerful web browsers that let a consumer do any
activity that was once confined to a desktop computer, navigating through a URL bar
on a mobile phone can prove to be a cumbersome experience. Online sites and
services provide the app in an attempt to provide users with superior control and
simpler usage techniques. Apps enhance the functionality in a simplistic yet more
user-friendly manner. A study by Nielsen has shown that users with expensive
handsets (exceeding INR 15,000) spend 1.6 times more time on shopping apps as
compared to those with cheaper phones, and some correlation exists between higher
time spent on mobile phones with higher spending in mobile shopping (Jha and
Varma 2015). Flipkart is the leader in mobile shopping apps in terms of both
penetration (35%) and engagement (60 min per month) followed closely by
Snapdeal (penetration 20%, user engagement 35 min a month). Amazon India
Shopping is a more recent launch and has ranked third.
126 M. Banerjee

With the emerging familiarity of shopping apps among consumers, it is an

opportune time for the organized retailers to take the cue and develop mobile-
based platforms and apps for their customers to browse, purchase, and have the
goods delivered to them without requiring them to visit the physical stores. This will
help the physical store retailers expand their markets.
Benefits of apps however do not negate the benefits of websites. A case in hand
was when online fashion retailer Myntra shut down its website to operate as an
app-only platform in February 2015 as its mobile sales had exceeded its sales from
personal computer figures. Myntra’s sales figures had indicated that 70% of its sales
were generated from smartphones. Shutting down the website meant that users were
not left with any alternative but to download the Myntra app. Within 6 months, the
app-only strategy failed as Myntra faced a loss of sales. A plausible reason would be
that the Indian shoppers were not ready to completely abandon shopping from their
personal computers or mobile browsers and found the app-only option too restric-
tive. Myntra has thereafter reworked and come up with a mobile site, which is a
lighter mobile version of its website, rather than being present on an app-only
format. As Myntra still relies on Google searches for new users, being available
on the website put Myntra back on the Google search platform.

8 Analysis of e-Retail Sector Using Porter’s Five Forces

Framework

In the ensuing chaotic market condition, it is necessary to assess where the power lies
in the e-retail sector. This analysis will provide an understanding of the e-retailers’
competitive situation in India and the position that they are attempting to move into,
as well as the profitability and the attractiveness of the e-retail sector:
1. Competition in the industry—Overall industry rivalry is high with a large number
of e-retailers entering the market who have low differentiation in terms of their
product offerings. A high degree of polarization is evident with larger players like
Flipkart, Snapdeal and Amazon existing with numerous small e-retailers. The
market is showing signs of consolidation with bigger e-retailers acquiring smaller
players who have developed certain competencies.
2. Power of suppliers—The suppliers in e-retail indicate the sellers, who generally
have moderate power. The marketplace model provides an attractive channel for
vendors to sell their products and they have several alternatives available to them
in the online landscape. Should the e-retailers choose to change the technology
providers to their websites, they will have to incur high switching costs. There is
also a dearth of skilled manpower in e-commerce. Nevertheless, this model lets
the e-retailer focus on being an efficient logistics provider and increase profit-
ability through low cost, high volume opportunities while also expanding rapidly.
3. Power of customers—The overall power of customers is high as the products are
seldom differentiated across the various platforms and there are few switching
Development of Omnichannel in India: Retail Landscape, Drivers and Challenges 127

costs. The differentiated services, like free home delivery for any billing amount,
are fundamentally unsustainable and e-retailers are opting out of such service
offerings. Mechanisms to lock-in customers are also largely absent.
4. Threat of new entrants—The threat of an existing player’s market share depletion
by new players joining the market is moderate. The regulatory framework is
currently being drawn up and FDI investment is restricted for an inventory-based
model. The number of product categories that are required to be developed for
e-retail requires time as the e-retailer has to build the infrastructure and compe-
tencies. Gaining consumer trust also is time-consuming for a new entrant.
However, compared to brick and mortar stores relatively low capital investment
is required for online retail in such a vast country.
5. Threat of substitute products—The threat from substitute services is relatively
low for e-retail. Though its market share is currently small, a lot of growth is
expected to happen in this segment. Traditional retail, direct marketing by
manufacturers, and tele-retailing exist as shopping substitutes to customers, yet
the advantages of e-retailing have generated profound interest among the
consumer base.
As the market is evolving, retailers are working out their business models on a
trial-and-error basis. Which of the retailers will profitably survive will predomi-
nantly be governed by their ability to innovate and evolve in ways that can best serve
today’s empowered consumers.

9 Migration of Business Model from Owned-Inventory

to Marketplace Platform for Online Retailers

Online retailers like Flipkart initially had a just-in-time delivery model where they
received orders from customers and then placed orders with their suppliers. The
existing courier partners lacked the organization, capability, scale, and capital to
meet Flipkart’s growing requirements which led to delays in delivery. In many cases
shoppers abandoned carts due to delayed delivery. This prompted Flipkart to invest
in its supply chain services. The distribution network in this owned-inventory setup
was a hub-and-spoke model that had fulfilment centres (FC) in the pan-India
metropolitan cities (Delhi in the north, Hyderabad and Bengaluru in the south,
Kolkata in the east, and Mumbai in the west). The FCs were around 250,000 square
feet each and undertook the initial sorting and packing. From FCs the goods were
transported to the mother hubs that catered to four or five major cities and several
smaller cities within a 200 km radius where additional sorting was done. From the
mother hubs the goods were moved to the hubs, which were around 2500 square feet
each, from which they were carried on motorcycles to the customers’ homes by the
delivery boys. Flipkart used algorithms to determine ideal warehouse locations and
invested in technology to track packages and provide text alerts to customers before
a scheduled delivery.
128 M. Banerjee

Flipkart had a Gross Merchandise Value (GMV)3 close to $1 billion in 2013 and
very soon its competition intensified with Snapdeal and Amazon India leading to
deep discounts and price wars. To meet the competition and enhance its market
share, Flipkart undertook a strategic change to shift to a marketplace model and so
opened up its platform to a large number of sellers. This thought process was
supported by observing Airbnb and Uber on a global platform which were pure-
platform companies that had scaled up using technology. The marketplace model
was expected to enhance revenues for Flipkart as the company would earn relatively
high-margins from the commissions that it charged on every transaction which
occurred through their platform, without incurring any cost of holding inventory.
Flipkart also proposed to earn substantial revenues from the search advertisements
and display advertisements of the sellers on its platform. Sellers relied on the
advertising on Flipkart’s platform to draw customers. They could use their
in-house labour for storing, shipping and packing functions for delivery or use the
services of Flipkart for storage, packaging, cataloguing, delivery, and payment
options, for which Flipkart charged the sellers a fee.

10 Shift from Multichannel Retailing to Omnichannel

Retailing

The rise of marketplace platforms does not indicate that the other online or offline
retail formats will become redundant in India. Rather, retailers are strategizing to
become omnipresent and make their products available through multiple channels so
that they can map their customers through the complete purchase process. An online-
to-offline integration is gradually developing in the retail scenario where online
retailers are opening physical stores. Simultaneously physical store retailers are
building their online presence through both their own platforms and through mar-
ketplaces. The retailers are building their competitive advantage by streamlining
their offers to ensure that consumers get the same brands at the same prices
irrespective of the channel that they use. ‘Online’ and ‘offline’ are not regarded as
mutually exclusive channels anymore but as highly integrated channels that can offer
a unique value proposition to customers.
This transition is largely because retailers have realized that their businesses can
no longer continue to connect with the customer in a unidirectional manner—from
themselves to the consumers. With the advent of the internet, information is accessed
and disseminated much faster, resulting in the customer being more conscious and
having greater expectations. Companies are adopting the omnichannel approach so
that they can remain engaged with the customer constantly and give the customer the

3
Gross Merchandise Value—The total value of merchandise sold in an established time period
before deducting fees or expenses. E-retailers use this measure to quantify business growth. It is also
considered as gross revenue.
Development of Omnichannel in India: Retail Landscape, Drivers and Challenges 129

option to decide when, where, and how to shop. It provides customers with a single
holistic view of the business through multiple channels that operate concurrently and
offers the customer a seamless experience. Thus customers gain visibility of
retailers’ inventory and availability in their preferred channel. The difference with
the multi-channel approach is that each channel in an omnichannel approach auto-
matically knows details of the customer’s interaction with another channel and uses
it to guide and carry on the customer experience. The brand takes into account how
one channel or message will affect the other and ensures that the experience is
similar across platforms. The customers are then able to switch adeptly between the
channels and receive a similar quality of experience wherever they go. According to
a report by IDC Retail Insights, internationally retailers utilizing multiple channels in
their marketing and retail activities saw an increase between 15 to 35% in average
transaction size, along with a 5 to 10% increase in loyalty customers’ profitability.
There is still a large number of people who prefer to touch and feel a product
before purchasing it and for e-commerce players, brick and mortar stores are a way
to capture the segment of customers that shop in physical formats. Physical stores
provide a place for the company to differentiate itself through its ambience and also
provide a network of after-sales centres where customers can get their purchases
exchanged, repaired or refunded. These are the factors that are compelling
e-commerce companies to look at establishing physical stores. Yet the road to
establishing an omnichannel strategy is not without its inherent uncertainties. Online
retailers have expertise in supply chain capabilities but lack an understanding of the
telecommunication technology crucial to this domain. Efficient technology usage
will help them make meaningful insights into customers shopping online. Also, the
deep discounting that is done by e-commerce players will not be sustainable in
physical formats. Hence they will need to identify the target audience, analyse how
to reach out to them, and communicate relevant messages to gather maximum
response. Providing customized solutions to customers based on real-time informa-
tion and consumer data are effective tools for building a customer base and helps the
companies bring the offline experience online to customers, though this can be a very
complex and costly proposition in an omnichannel strategy. Companies like Lakmé
and L’Oréal have been experimenting with apps like Lakmé Makeup Pro and
L’Oréal Makeup Genius where customers upload their pictures and use virtual
make-up to create different looks, receive suggestions, and purchase the products
used for those looks.
While retailers are making inroads into newer channel modalities for growing
their businesses, three trends are emerging as dominant: physical stores foraying into
online retailing, online retailers opening physical stores, and the hyperlocal
e-commerce model.
130 M. Banerjee

10.1 Physical Stores Foraying into Online Retailing

To compete with the threat posed by e-commerce, Future Group (the parent organi-
zation of Future Retail and Future Lifestyle Fashions) was one of the first physical
store retailers to have come up with an online strategy. While a normal Big Bazaar
hypermarket stocks 40,000 to 60,000 SKUs, the ‘endless aisles’ available online or
in the in-store kiosks offers more than 250,000 SKUs. The physical stores hold the
inventories and the products are home-delivered or customers pick them up from the
stores. An initial investment of more than $15 million4 over a period of 18 months
since September 2014 had been undertaken to implement the strategy. The same
discounts that are available in the physical stores are also available to the online
format and deep discounting is refrained from as incurring negative gross margins
will render the business proposition unprofitable. What it lacks in terms of deep
discounting, it hopes to compensate by mining the customer data of its 30 million
customers alongside the purchase data that it has accumulated through its loyalty
programmes. Big Bazaar caters to 20 to 30% of the consumer’s overall shopping
basket and aims to hike it to 60% of the overall basket, with the aid of the technology
and data analytics that are becoming an integral part of the organization.
In a parallel omnichannel business model Future Group has introduced the Online
Selling Agent model, where the agent plays the role of a trusted link between the
physical and online retail. Customers browse the products on a tablet that is provided
to the Agent and selects the products. The Agent places the order and a confirmation
message is received in the customer’s mobile. The agent only takes the payment
from the customer. Delivery of purchased products to the customer and any after-
sales queries are handled by the retailer through its Distribution Centres and the
agent is not involved in this part of the process.
To venture into e-commerce and compete with strong online players in the food
and grocery segment (like Grofers), RP-Sanjiv Goenka Group’s Spencer’s Retail
Limited (SRL) acquired 100% stake in Omnipresent Retail India, which operates
Meragrocer.com, an online grocery business that since 2014 delivers grocery items
to consumers in the Northern Capital Region (NCR) of Delhi and Gurgaon. Cus-
tomers can order online, through a mobile-app or interactive voice response (IVR),
and pay online through an e-wallet or through cash-on-delivery while choosing their
delivery slots. It is a scalable model and allows SRL to expand quickly into the
e-commerce space. The synergies between the two companies are being realized as
SRL is responsible for the merchandising and providing the back-end infrastructure
from the Spencer’s hypermarkets while Meragrocer is providing the technology
platform along with their e-commerce expertise. It has provided SRL an accelerated
learning curve in the e-commerce industry, as a green field venture would have taken
10 months to18 months to launch, along with significant cost-savings as the cost of
development of a green field e-commerce venture would have been significantly
higher (approximately $25 million) than its cost of acquisition. Currently Spencer’s

4
Exchange rate of $1 ¼ Rs. 66.5275 has been used for conversion.
Development of Omnichannel in India: Retail Landscape, Drivers and Challenges 131

has 122 stores across 35 cities with 1.5 million square feet space and 3.7 million
monthly footfalls. Spencer’s will not adopt the deep discount model. This online
format was initially providing grocery and food category only but will gradually
enter into other product categories like homeware, electronics, and apparel. The
online set-up would gradually provide delivery within a few hours while currently
offering delivery within 1 day. Also, it is available only in those cities where
Spencer’s has an offline presence as the online model is expected to supplement
Spencer’s catchment area with a deeper penetration in an existing market.
Departmental retailer K. Raheja Corp Group’s Shoppers Stop had invested in
their online platform thrice—in 1999 2008 and 2011, but had to shut down each
time. Shoppers Stop had been facing declining sales per square feet from Rs 8518 in
2010–11 to Rs 7837 in 2012–13, and a conversion ratio from 24% to 22% in the
same period (CRISIL Research 2014). Currently Shoppers Stop is taking concerted
efforts to implement their omnichannel strategy, to mitigate this declining trend.
Fortune India magazine had ranked Shoppers Stop as the “No. 1 Social Networth
Company” for 2 consecutive years (2011 and 2012) for its Facebook page and
Shoppers Stop is attempting to connect these customers to its stores through the
omnichannel route. The customer may browse through the trends on the store’s
Facebook page, view a YouTube video, shop from the physical Shoppers Stop stores
in the neighbourhoods or airport stores, or online from the e-store. Customers are
also able to shop online and exchange products in the physical stores. Shoppers Stop
has been awarded the ‘Most Admired Fashion Retailer of the Year: Omnichannel
Initiative’ by IMAGES Fashion Awards 2016 in recognition of its initiatives towards
implementing an omnichannel strategy.
Some apparel brand manufacturers like Raymond Group and the Aditya Birla
Group have launched their own e-commerce ventures (Raymondnext.com and
trendin.com). Competition from online players may not have been their reason for
getting into the online space and their e-commerce activities coincided with the
growth of e-commerce in the market. The compelling motive for them has been the
need to upgrade operations with investment in technology for which a centralized
warehouse and distribution centre was put in place.
To alleviate competition from e-commerce, brands like Van Heusen, Puma and
Allen Solly are also digitizing their stores. They need to keep reinventing themselves
which assists them in increasing store footfalls and average ticket sizes. They are
using technology solutions like digital display, summarizing day’s new styles and
fashion tips, booking trial rooms and selected items waiting in the changing room in
their flagship stores to improve their brand images and create excitement among
buyers. Brands undertake such initiatives to differentiate themselves and be per-
ceived as tech-savvy by customers. However these creativities may be more relevant
from the marketing perspective for creating enthusiasm among potential buyers
rather than providing any additional benefit to customers or improving their shop-
ping experience.
132 M. Banerjee

10.2 Online Retailers Opening Physical Stores

Online retailers are working on building their offline presence. India’s largest
e-commerce retailer Flipkart in conjunction with its logistic company eKart is
providing customers with ‘experience zones’ to facilitate buying and pick-ups for
consumers at their convenient time. In due course, these experience zones evolve to
offer value-added services like spot trials, reverse pick-ups, instant returns, cash on
returns, and exclusive product demos. The experience zone initiative stems from the
customers’ dissatisfaction with the delivery process due to unavailability of delivery
at preferred timings and restricted entry of delivery persons into office complexes,
gated communities, and educational institutions. Through the experience zones
Flipkart is also contemplating its rural expansion strategy as it proposes to expand
into Tier-4 towns and rural areas by making them serviceable from a pick-up centre.
This is a reliable alternative to door-delivery in remote areas where logistics add
significant costs.
Amazon, as a major competitor of Flipkart, has come up with a similar model and
added pickup services with BPCL’s In & Out stores and with kirana stores in
Bangalore for in-store pickups by customers.
A leading online baby products portal called Firstcry.com is expanding with an
offline presence and increasing the number of its stores, as a large proportion of baby
product sales still happen offline. Currently they have around 70 stores through a
franchisee model in Tier-1 2 and 3 cities across India. Similar to Flipkart’s experi-
ence zones, Firstcry’s stores act as experience centres and provide the touch-and-feel
factor for customers. The physical stores display 300 to 400 brands, whereas through
the kiosks in the physical stores customers can browse through approximately
70,000 SKUs, order online, and get the product in the store within 2–3 days.
The e-commerce industry is replete with examples of online retailers like Myntra.
com (fashion), Zivame.com (innerwear), Bluestone.com (jeweller), Healthkart.com
(fitness products), and Lenskart.com (eyewear), who are trying to start an offline
presence by setting up stores and trial rooms with different modalities. The physical
stores enable these retailers to reach buyers in smaller towns and cities as a major
segment of sales for these companies happen in the smaller towns. The stores help to
establish customer trust and build the brand as the buyers are reassured that there is
an actual store to go to if they face problems with the products. In the long run, this
offline strategy also helps the online companies to attract investors for funding.

10.3 The Hyperlocal e-Commerce Model

As per a report by retail consultancy firm Technopak, market share of the grocery
e-store has been estimated at less than $100 million but is expected to cross $25
billion by 2020, growing at a rate of 25% to 30% year-on-year in major Indian cities.
This segment has resultantly attracted funding and a few major players like
Development of Omnichannel in India: Retail Landscape, Drivers and Challenges 133

BigBasket, Local Banya, Grofers, Zopper and PepperTap have started operations in
this space. While companies like BigBasket source from wholesalers and stock their
inventory, players like Zopper, Grofers and PepperTap operate a hyperlocal model.
The hyperlocal model is an on-demand delivery model that takes groceries from a
neighbourhood shop and brings it to the consumer’s doorstep. Customers use the
website/app of the hyperlocal retailer to order groceries and the retailer delivers the
groceries through its delivery boys deployed at the mid-level grocery shops that have
tied up with it. For its services rendered, the hyperlocal retailer charges a commission
from the sellers. Ordinarily, the neighbourhood stores use their in-shop attendants to
double as delivery boys when required. The hyperlocal retailer offers the owners of
these neighbourhood stores professional logistics and technology support to attract
customers and helps the grocery stores to compete with both the developing modern
retail and e-commerce formats that are increasingly denting their business. For the
hyperlocal grocers, it is a very asset-light business model as they do not need to carry
their inventory (the products the retailers carry is their inventory), do not have any
warehouse requirement (the retailers’ shop is their warehouse), and does not involve
any high-cost delivery infrastructure. They divide the area of operations into differ-
ent zones, with one shop in each zone that caters to a catchment area of 3–4 km in the
immediate vicinity. The available stock items of the shop are accessible on the
website/app through which customers select their products.
Numerous challenges are faced by the hyperlocal retailer start-ups in identifying
the right local stores for supply, right talent for vendor acquisition and fulfilment,
maintaining the quality of the products to be delivered, logistics, retention of
delivery staff, maintaining customer satisfaction, and raising investment funding to
enable the growth of the company. Such business models have many crucial
components that must work in tandem and it calls for adequate strategic planning
to sustain the business. While Zopper with its focus on electronics category is
looking at expanding its city reach and doubling its gross sales, PepperTap failed
to raise sufficient funds to sustain its growth and closed down.

11 Logistics Innovations in the e-Commerce Industry

Currently there are 1 to 1.2 million transactions occurring daily in leading categories
like apparel (43%), electronics (24%), and books (22%) and the logistics sector
catering to e-commerce was valued at USD 0.2 billion in 2014 and is projected to
reach $2.2 billion by 2020 with a CAGR of 48% (Dogar and Tanwar 2015).
Logistics is a critical aspect for the success of an e-commerce company and until a
few years back it has been a fragmented process with scarce IT enablement and
insufficient investment leading to operational inefficiencies. E-commerce companies
are gradually foraying beyond the Tier-1 and Tier-2 cities and the emphasis on
logistics will naturally increase with this progression into surrounding areas. Com-
panies like Flipkart and Snapdeal reportedly get more than 60% of their businesses
from the hinterland. Logistics infrastructure is also expected to get a substantial
134 M. Banerjee

boost when international players like Alibaba (who has until now invested in
Snapdeal and Paytm) make a full-fledged entry into the Indian market.
Numerous e-commerce companies have invested in building their logistics net-
works and capabilities and the e-commerce logistics market is replete with both
in-house logistics firms (like Flipkart’s Ekart) and third-party providers. As the
emphasis shifts from standard to specialized deliveries, companies are growing
their logistics businesses in the e-commerce industry in the form of secure locker
deliveries, long-distance truck freighting, hyperlocal deliveries, software optimiza-
tion platforms, and reverse logistics, among others.
To help e-commerce companies solve the critical problem of an individual last-
mile delivery that is time-consuming and costly, new companies like QikPod are
proposing to use lockers in places where consumers live, work, shop or travel
through (like information technology parks, commercial and residential complexes)
to help e-commerce companies ensure faster deliveries. The products are shipped to
a secure locker and the customer is provided with a code through a text message to
unlock the locker. In this case, the consumer also benefits as they are not required to
stay at home or at work to receive a delivery and take recurrent calls from delivery
agents for providing them directions.
Due to the broken road-freighting system in India, e-commerce deliveries usually
take a week or more. To reform long distance truck freighting in India, Rigivo has
come up with a new business model. Truckers have signed up with Rigivo and the
company has set up pit stops (a stop during a trip for fuel, food, rest or for use of a
restroom) for them where drivers change but the truck does not stop. This relay
mechanism ensures that deliveries happen 50% to 70% faster while the driver returns
home the same day.
Specialized logistics provider for e-commerce like Delivery are investing in
newer capabilities and developing their automation sortation capacity, GPS map-
ping, and address systems to scale up to meet the demands of the e-commerce sector.
The address and mapping systems are broken and require innovations for efficient
delivery. Legacy logistics companies like Blue Dart have also taken initiatives like
cash-on-delivery, hand-held devices for on-the-move usage, smart trucks, and
mobile point-of-sale solutions for e-commerce. They commenced operations in
their first eFulfilment centre in Delhi in 2015 and are undertaking initiatives to
launch more such centres. Hyperlocal delivery businesses (like Opinio engaging in
food delivery within a seven kilometer radius) have started to play a pivotal role in
helping small businesses expand and build an online presence, though they too face
similar challenges of broken address and mapping systems. Flipkart had initially set
up its logistics arm eKart Logistics for its in-house deliveries only but now that its
technology infrastructure has been established, eKart has opened its services for
other e-commerce players and delivers packages for its competitors too.
Software platforms like Loginext provide solutions to logistics providers and
focus on improving efficiency for e-commerce companies by automating route-
planning through analysing their location, traffic, time, and carrying capacity. This
translates to more deliveries, fewer missed deliveries and kilometres travelled
thereby providing three to four percent cost savings to customers.
Development of Omnichannel in India: Retail Landscape, Drivers and Challenges 135

Reverse logistics is another crucial component in e-commerce as companies offer

returns and exchanges as a part of their product promise of an enhanced customer
experience, in an attempt to acquire and retain customers. Unlike conventional
logistics, reverse logistics is under-served and a lot of ambiguities exist in areas
like the condition of the product, packaging, how to deal with the owners. New
companies like Blu Birch focus on reverse logistics and propose to use technology to
improve efficiency across the reverse logistics chain by working on eliminating
factors for which returns happen. They want to provide their customers with insights
that will help the e-commerce companies reduce or eliminate product returns. Until
now reverse logistics in e-commerce has been traditionally controlled by sundry
middlemen and e-waste handlers.
Over the last 2 years the Department of Post through India Post has entered into
tie-ups with the country’s top online sellers—Amazon, Snapdeal and Flipkart-
Myntra for offering them last-mile connectivity in areas outside of large cities and
cash-on-delivery payments. India Post has unparalleled reach with 156 thousand
post offices in all, out of which 125 thousand are in rural areas. India Post has set up
57 modern delivery centres to handle the e-commerce traffic. The deliveries are
predominantly directed at Tier-2 towns and parts of the rural heartland. India Post
handled cash-on-delivery showing a jump of 200%, as per Mr. Ravi Shankar Prasad
(union minister for communications & IT).
The trend that can be observed is that the growth in e-commerce has led to the
development of new service requirements and created a new section of logistics
operators. All of the innovative logistics businesses are on a growth trajectory and
have expectations of future growth. In spite of the projected potentials, the compa-
nies are not contemplating operations only in e-commerce and are aspiring to expand
into new verticals and explore opportunities beyond e-commerce.

12 Recommendations and Conclusion

India is a country with extensive rural areas where online shopping may be difficult
and product delivery may be a time-consuming affair for retailers. Yet the country
has a market of 1.34 billion consumers who are discerning in their habits and view
shopping as a personal journey of obtaining information and indicating their prefer-
ences seamlessly across several platforms. It is paradoxical that it is the consumers
who appear to be orchestrating the change and not the retailers. The established
retailers appear to have a reactive, not proactive, stance in this market evolution. The
connotation of omnichannel suggests that the retailers be omnipresent to the con-
sumers. Yet cognizance of transitional market dynamics has allowed 100% FDI in
online retail of goods and services under the marketplace model through the auto-
matic route in an attempt to legitimize the existing businesses of e-commerce
companies operating in India. FDI is however prohibited in e-commerce companies
that own inventories of goods and services and sell directly to consumers using
online platforms. Also the marketplaces are prohibited from offering deep discounts
136 M. Banerjee

on the products and warranty/guarantee of the goods. These can only be offered by
the sellers and their contact details have to be displayed online in the marketplace
platform. Sales from an individual vendor in such a marketplace is capped at 25% of
the total sales. The e-commerce retailer can continue to provide support services like
warehousing, logistics, order fulfilment, call centre, and payment collection to the
individual sellers. These directives of the Government can potentially end the price
wars in the e-commerce space and level the playing field with physical stores. As the
retail players in the online space gear up towards implementing the transitions laid
down by the Government, it is evident that their transformative role in the Indian
market have been duly acknowledged. Over the next few years, it will be of much
interest to monitor the retail landscape and analyse the market dynamics that unfurl
among the dominant stakeholders.

Questions for Discussion and Review

1. Conduct a SWOT Analysis of the Indian e-retail sector. Match its strengths to
opportunities and indicate any competitive advantage that the sector may have.
2. A customer notices that a particular product available at the store is cheaper on
the retailer’s website and requests to get the same price at the store. The
salesman says that online offers are limited to those buying online. In this
context, discuss the implications of a customer walking out of the store and
buying online instead.
3. Analyse the evolution of e-retail as a disruptive business model and identify the
stage of development that India has currently reached.
4. Is China the most relevant benchmark for global CEOs who are attempting to
study future changes in Indian e-retail? Discuss.
5. Explain some of the current challenges encountered by e-commerce retailers in
India.
6. Discuss the strategies that are being taken by online and offline retailers to
build sustainable omnichannels for their organizations.
7. Delivery logistics is innovating to add value and provide delivery speed to
customers. Discuss its impact of delivery the e-commerce business.
8. Indian consumers often abandon their online shopping carts because of unex-
pected costs such as high cost of shipping, tax rate, accessory charges at the
point of payment. Explain how omnichannel retailing can help lessen this
problem?
9. Critically evaluate the factors that may make the Indian e-commerce sector
profitable in the long run.
10. Discuss the Government’s policy regulations that are shaping the overall retail
sector in India.
Development of Omnichannel in India: Retail Landscape, Drivers and Challenges 137

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Mohua Banerjee is Professor (Marketing) & Dean (Placements, Corporate & Alumni Relations)
at International Management Institute Kolkata. She had completed her M.Com in Accountancy and
Ph.D. from University of Calcutta. She teaches courses on Retail Marketing, Sales & Distribution
and Marketing Communication in Kolkata and courses on Digital Marketing and Consumer
Behaviour in foreign Universities like University of Bordeaux, Tours and Celsa-Sorbonne Univer-
sity in France. She has consulted in the telecom sector and has conducted practice-oriented retail
research with Oxford Institute of Retail Management, Saïd Business School, University of Oxford.
She had been actively involved in Retail Management curriculum development for National Skill
Development Mission, NITTTR, Ministry of HRD. Her publications include research articles and
cases in international journals and publishing houses. Currently she is working on a Joint Research
Project with Leeds Beckett University, UK as a part of the ‘UK-India Education Research Initiative’
(UKIERI) Research Grant, on “Fostering Entrepreneurship for Sustainable and lnclusive Agri-Food
lnnovation: A comparative analysis of lndia and UK”.