E-tailers reach Indian masses with technology innovation
India's $15 billion e-commerce sector is growing by leaps and bounds. The country’s online population is tipped to reach over 500 million people by the end of 2017, as reported by the Internet and Mobile Association of India. Retail e-commerce sales in India are expected to increase to approximately $45.17 billion by 2021. The dramatic growth of Indian e-commerce may have been influenced by the government’s demonetization move that left consumers with little choice but to shop online.
In an interview with Enterprise Innovation, Sujayath Ali, CEO and Co Founder, Voonik explains how Artificial Intelligence and Fuzzy Logic is helping e-tailers reach the masses.
How was Voonik set up?
Before Voonik came into the picture, the Indian fashion e-commerce market was dominated by e-tailers such as Myntra and Jabong who focused on bringing well-known brands to the fashion-forward, brand-conscious and relatively affluent online shopper. They did not address the masses who were not brand-conscious but were driven by variety and price points. The only online shopping options available for these consumers were Amazon and Flipkart, who sold clothing as one amongst hundreds of categories, along with mobile phones and kitchen mops.
In the offline world, these mass women shoppers had always been relegated to hot, crowded street side stores because they could not afford the branded stores in an air-conditioned mall. It is interesting how this offline paradigm was replicated online, with the same barriers in place for them.
Voonik was born out of the realization that technology allows us to remove all these barriers for this mass Indian shopper.
On the supply side, India has millions of unbranded garment producers, who thus far had largely fought price-wars on horizontal ecommerce sites. Voonik created a visually-rich, fashion marketplace app, bringing together this 'real woman' shopper and unbranded garment supplier, while delivering the experience they both deserve. We have created an AI-based, curated feed which is based on an algorithm that factors in body shape, lifestyle and skin-tone, amongst other parameters.
The importance of technology and innovation at Voonik
Voonik started off with a mobile application followed by a website. In the e-commerce industry, web and mobile play an important role equally. While 90% of our customers’ shop via mobile, it is crucial to deploy adequate resources for the website as engagement is high with respect to creating wish lists, prepaid orders among other things. The personalization algorithm that Voonik uses for product recommendation takes into account consumers’ body type, height, shape, skin color and the latest fashion trends to show a highly relevant feed. Technology is at the core of our business and the growth depends on it as well. We use solutions like fuzzy logic based search to identify customer searches, engagement based messaging, unified view of the customer to provide an optimum experience to the customers and solve their fashion marketplace dilemmas.
How is India’s e-tail market growing?
Indian e-tail is a growing market, powered by booming mobile data and smartphone penetration. The Biggest strength of e-commerce in India is a growing consumer base. More than 50% of our population is below 35 years of age. These young people are consistently adding to the working population and have the money and exposure to buy new things online. At the same time, with initiatives such as Make in India, GST implementation, the government is making it easier to start and run businesses in India. This, in turn, is adding to the supply base of the country.
Cyber Security and customer data privacy remains one of the biggest challenges in the e-commerce industry. Customers are wary of the online payment channels and use cash on delivery options. Also due to the overall marketing by the early players, e-commerce is still viewed as a highly discounted channel for retail. Even when customers want to make a purchase, they want prices below their nearby retail shops. This keeps putting pressure on the players to keep their margins down to push volume.
Indian telecom companies are in a fierce fight to lower mobile data charges and increase penetration. As a result, few players are even giving free data for the initial subscription period. This has in turn pushed app and video downloads from the Tier 2 & 3 cities of the country. With a push towards digital transactions and transfer of subsidies directly to eligible accounts, the government has increased the spending power of small cities and rural districts. As media penetration is high across these cities, the increase spending power is resulting in the increase in online purchase pattern. Too early to celebrate, but these are definitely strong trends for emerging e-commerce adoption.
Your thoughts on the entrepreneurial ecosystem in India
Indian entrepreneurial ecosystem is in the best phase since evolution. The government is all set to support the environment, young talent is keen on taking risk and investors are looking for the right business model to invest in. Companies are launching breakthrough products and services using cutting edge technology. A few years ago, recruiting good candidates was a nightmare for startups as candidates feared the uncertainty. But now, many startups are favorite recruiters across the leading business and engineering campuses across the country.
Though we still need better policies, faster implementation of government projects and a more liberal taxation system, we can still say the the entrepreneurial ecosystem in India is one of the best across Asian countries.
New Age Technology
New startups have scaled largely on technology and have come about several techniques to help e-commerce users shop and find better products online. They have rapidly progressed in the field science and technology which has significantly expanded the scope of innovation in production, helping entrepreneurs explore new grounds and launch new ideas.
New Policy Help
Realizing the potential of businesses in creating jobs, successive governments have lent policy support to entrepreneurs as well. New policies towards encouraging micro or small businesses such as making loans easier for them has changed the face of entrepreneurship in India. With GST implementation, the taxation will get more transparent and will thus help both businesses and customers.
Financial crisis as a reality check
The growth of startups could be mainly attributed to the factors such as large domestic market, increased M&A activity and access to capital through investor funding. With young entrepreneurs dominating the market, most of the startups have gained foothold following a strong consumer-centric approach and with B2C business model. A bit of financial crisis is good to bring back the focus from mad acquisitions to a realistic and sustainable customer experience.
Inflow of investors
With vibrancy in the entrepreneurial ecosystem, start-ups today have access to multiple sources of funding from venture capitalists (VC), private equities (PE), angel investors, banks and financial institutions as well as incubators. With startups betting high on the ecosystem, there is a significant maturity observed in terms of funding.
About Voonik's future plans
Voonik, with its unique propositions, plans to become profitable by next year. Our focus would revolve around improving customer experience and logistics along with onboarding more sellers on the platform to create a better catalogue and offer more options to our customers.