Results Count ... everything else is conversation.: The “perfect storm” for an omnichannel explosion in India

Lessons learned from India's retailers … and changing consumers

Image Credit: noppasinw

I’ve been fortunate to spend the last couple of weeks in India, traveling to see retailers both in cities and rural areas. I was also a keynote speaker at the Omnichannel India Conclave (OIC) in Bengaluru. OIC attracted members of the C Suite from top online and physical retailers. It was an excellent opportunity learn firsthand about retail trends, challenges and opportunities in a country very different from the US. Online is currently estimated to be only 1.4% of retail sales. So, what’s all the fuss about omnichannel? Why is it projected to grow exponentially in India? Are there lessons learned that can be applied to global retailing?

Why this is important: While retailing has certain commonalities, there are unique patterns by country and culture. The one pervasive trend worldwide is that the omnichannel behavior of consumers is changing the future of retail forever.

India = A unique market of 1.25 billion consumers

By sheer numbers, India is the second largest consumer market in the world. India is truly a unique environment poised for economic and retail growth. But, the retail past of thousands of small shops is not the best predictor of the future for India's retail.

Much like China, India has mega cities with millions and tremendous population density. Delhi is the 3^rd largest city in the world, with a population approaching 17 million. And like China, India is a large country with vast expanses of country side, including arid desert regions and the Himalayan Mountains. This diversity and breadth poses unique challenges as well.

India's amazing diversity – Many think of India's crowded cities like Delhi, but to the delight of this photographer there are still vast forest preserves where the last wild tigers roam free.

Omnichannel versus Multichannel … what's the difference?

One of the takeaways from the Omnichannel India Conclave (OIC) was considerable discussion regarding the definition of omnichannel and what it means. A number of the OIC panels were specifically focused on defining the parameters of omnichannel, current state and how it will change India's retailing. Consistent with worldwide trends, there is continued debate on whether there is any difference between the term "omnichannel" and "multi-channel". And, more importantly, are there any distinctions that really make a difference?

Multi-channel retailing is not new. Retailers have been using catalogs, mail and phones to sell to consumers beyond store fronts for a long time. Much of the discussion at OIC focused on the fact that omnichannel goes beyond the "channels" in which retailers sell. Consumers today have unprecedented ability to shop and gather information from sources beyond retailers – especially from social media and websites.

Consumers today see shopping as a personal journey of acquiring information and making choices, seamlessly across many sources. Omnichannel not only refers to "many", but an "omnipresence" or activity by consumers 24/7/365. Some still argue its semantics, but OIC discussions highlighted an interesting and useful distinction:

Omnichannel describes the consumer behavior of shopping anytime and everywhere

Multichannel describes how retailers must organize to reach today's omnichannel consumers

Winds of change in India retailing … it's all about the consumer!

The vast majority of India's 20,000 store fronts are still very small "mom and pop" shops. India's consumers have historically been drawn to local merchants based upon trust and personal relationships. There are new opportunities emerging via ecommerce that have opened consumer's eyes to the breadth of options available online, often at much cheaper prices than what is available locally.

The growth of India's major online player Flipkart, as well as the presence of ecommerce giants like Amazon and Alibaba, creates rapidly changing consumers' perceptions of choice and convenience. The consumer shopping journey is suddenly changing from "store trips" to being able to virtually click to shop and compare anytime and everywhere. Like in the rest of the world, it is consumer's omnichannel shopping behavior that is driving retailing change.

Five factors creating a "perfect storm" for omnichannel in India

As mentioned previously, India's regulations and historical shopper preferences have resulted in a highly "unorganized" retail matrix of many small shops. In addition, less than 10% of Indian consumers use credit cards, which are a foundation for online purchases. As a result, online only accounted for about 1.4% of consumer retail sales in India last year. So, why all the fuss about omnichannel in India?

Simply put … India's consumers are rapidly entering an era of being empowered to shop and purchase where they want, how they want, and where to take delivery on their terms. Once empowered, consumers don't go back.

There are at least five key factors that are creating the "perfect storm" for explosive omnichannel growth in India.

Changing retail regulations – Government regulations have changed in ways that now enable foreign investment, national retail store chains, and new national ecommerce retailers. As a result India's major online player, Flipkart, is now growing in double digits. Amazon and Alibaba are now investing heavily in tapping the second largest consumer market. There is nothing like the vast array of products online to open consumers to the value of omnichannel choice. Great prices with 24/7 access stimulates consumer shopping anytime and everywhere.
Smartphone growth – Like Asia, India is a nation of mobile phone users. India's consumers are more likely to own a smartphone than a computer. A smartphone is literally the new portal for omnipresence shopping anytime and everywhere. Smartphones are not only the portal for online shopping, but the primary way consumers search multiple sources for information, and engage on social media about trends and products.

Smartphones everywhere in India! While driving through a vast tiger reserve, this tribal family literally living in the forest, was using their smartphone to connect from the middle of nowhere.

COD and payment options – While India have historically not trusted banks and have resisted using credit cards, ecommerce and enlightened store based retailers have rapidly evolved cash payment options upon delivery of the purchase (COD).
Click and Collect options – Omnichannel is not just about the growth of more channels, but how to optimize the customer experience, options and flexibility across channels. At OIC, not only did John Lewis present a case study of click and collect at store options in the UK, but Puma discussed how they are rapidly testing click and collect options, as well as selling direct from stores across India.
Incredible "last mile" delivery in hours – India has some of the densest cities in the world, with horrible traffic that rivals San Paulo, Brazil. I can personally testify that it can take hours to travel 5 kilometers in Bengaluru! Yet, Amazon just announced their "Now" service in Bengaluru, which provides essential household items in under 2 hours! How do they do that? The bikes and auto rickshaws have an incredible ability to get through traffic to make deliveries to your door faster than in the US!

Incredible "last mile" delivery – While India's cities are a traffic nightmare, the collection of bikes and rickshaws enable delivery to your door within two hours!

Let's be clear, India is not without its challenges. India is a huge country with vast rural areas where click and collect might be impossible, and delivery will take days not hours. But, on an interesting side note, drone delivery is already being tested in rural areas of China.

The key take away from India is much like the rest of the world … consumers are driving the change, not the retailers. The question of which retailers will survive is largely a matter of retailer's commitment and ability to innovate in multichannel ways that best serve the changing expectations of today's empowered omnichannel consumers, who increasingly expect options to have it their way … anytime and everywhere.

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