Yevheniya works in e-Commerce and Shashwat - in strategy at PepsiCo. Yevheniya has almost 10 years of experience in sales and marketing across e-Commerce, organized retail, technology and non-profit. Shashwat has worked across functions in his seven-plus years stint at PepsiCo. Prior to PepsiCo, he was working as an equity research analyst focusing on technology and commercial services companies. He is keen to develop cross-functional expertise in the consumer goods industry. They both hold an MBA from ISB Hyderabad.
Adapting to change is often a tough nut to crack for businesses. With almost 400 million+ Internet users, most of them accessing the web via a mobile phone, one out of every 3 Indians is now online. As Internet usage rises, Indians are slowly moving from the passive content consumption to online shopping. India’s smartphone user base is only burgeoning, thereby driving the internet penetration. The total number of smartphone users in India grew to 300 million at the end of 2016 and is expected to double by the turn of the decade.
If you are a large consumables manufacturer, are you ready for the digital Indians, who are moving towards shopping online for your grocery portfolio?
There are two key aspects of the journey to becoming a strong online player: building the right portfolio and developing the e-commerce muscle. If you did not start out as a company in the last 3-5 years, with online as one of the first channels that you activated, both concepts will be counter-intuitive and potentially difficult for your organization.
First, what assortment are you offering to the online shopper? The households that buy groceries online are evolved: on average, they read more and know more about the world, thus seeking healthier options. Some players are answering to this demand: today in Bangalore a search for “steel cut oats” on Amazon returns 53 results, and for “organic vegetables” – 83 on BigBasket; this is a much wider selection for such niche asks than you can find even in the most premium supermarket. Every marketer knows that offering the right product to the shopper is a battle half won - stay tuned to the emerging trends on e-commerce such as a demand for the healthier choices should be of importance to the decision makers.
If you consider your assortment from a practicality perspective, two aspects stand out. First, is the price point of your product justifying the cost of the e-commerce last mile delivery? and, second, is your packaging sturdy enough to endure the last mile? Given the low scale of e-commerce within the larger businesses, there is a tendency to leverage existing offline portfolio, which may not be fit for the online shopper and does not make sense from the cost-benefit point of view for the e-commerce partner. You can resolve this hurdle by either creating larger pack sizes or bundling smaller single portion packs into bundles. Packaging though requires further thinking. Almost always designed to stand out on a shelf, the packaging for a single India’s F&B product is almost never optimized for a long trip alongside other products in one box or crate. As the channel grows, it is important for the players to consider trading off the looks for sturdiness.
From an organization perspective, if your organization grew up on a harsh diet of building a vast distributor network, managing a large workforce and shaping large brands, online may not come naturally to your organization. Barriers to entry into the online game are low: with basic certifications, access to manufacturing and ability to supply a product in durable packaging in one location any newcomer can sell to the exact same audience as a large sophisticated manufacturer. Consider these three aspects of how well developed your e-Commerce muscle is:
Does the online channel have the right environment to succeed? A team that competes with fast and hungry startups has to be a match for their prowess. This team must be set up to operate in a similar environment: allowing the team to experiment, learn on their feet and fail is important. A team has to be ready to roll with the punches and quickly figure out the ropes as the industry continues to evolve. Just giving space to your e-Commerce team is not enough - the team has to be important to the overall business beyond boardroom presentations. The team has to adequately resourced and given enough importance by the senior management for other functions to support it.
Further, the support functions should be ready to accommodate various "special needs" such as small loads (initially), over investing and differential demands for special assortment. One interesting way to resource and use the team beyond sales is to allow for a proportion of the digital media spends to rest with the team. As the digital RoI is typically evaluated in terms of CPC and CPM, the team should be responsible for structuring and running campaigns that focus on rupee sales as the key metric.
Finally, ignoring the smaller number of shoppers who spend like the global elite may be unwise for the larger companies. Leaving the opportunity of knowing the pulse of this cohort to smaller and more nimble players may be frugal in the short run, but may close off opportunities in the long one: BCG and Google in a joint report released in 2017 predict digital commerce in India to be US$45Bn by 2020. Right or wrong, only the time could tell, but would you abandon the opportunity to your competition?