This is the second article in our 3-part series on how small businesses can prepare for the festival season. In this article we look at assessing the various distribution options that businesses must consider to ensure their products reach their customers.
India is one of the fastest-growing e-commerce markets worldwide. Internet penetration in India has grown from just 4 per cent in 2007 to 35.03 per cent in 2017, registering a CAGR of 24%. By 2021, internet penetration is expected to rise to 45%, of which, between 70% to 90% of users are expected to buy goods and services online.
Today, we can buy almost anything online, anything from toothbrushes to high end laptops or expensive watches. For SMEs, the following best-selling online product categories should be of the greatest interest.
With the increasing awareness of latest fashions among Indian youth across demographic profiles, online stores are doing booming sales in apparel targeted at young buyers. Online stores offer greater variety of styles and the ability to ‘try out and return’ which has increased adoption. The leading players focused on the Indian apparel industry are Myntra.com, Jabong.com, Limeroad.com, etc.
Purchasing groceries online has become quite common these days among busy working millennials. Apart from traditional items, people are adopting new products based on diet & nutrition trends; this includes products like health drinks, green tea and other detox items. Some of the market leaders in this segment are bigbasket.com, grofers.com, zopnow.com, herbalife.co.in, etc.
Home furnishing market in India is projected to cross Rs. 40,000 crore by 2020, on account of rising demand for designer and innovative furniture. There is a huge growth opportunity in the online furniture space as more of India's largely unorganized furniture market moves online. The leading players in the online Indian furniture industry are pepperfry.com, urbanladder.com and fabfurnish.com.
With more and more department stores and supermarkets opening up, the consumer's preferences reveal an interesting feature. While there is an increasing preference for big format stores, local kirana shops still exist and run successfully. It is seen that customers prefer to purchase groceries and utility products from department stores due to the constant discounted prices in these items. They form a large part of their monthly budget and there is ease of bulk purchase and quality assurance. But, it is seen that when it comes to fruits and vegetables, we prefer to buy fresh ones from the local and dedicated vegetables outlets.
The consumer looks for discounts, fairly priced products, captivating options accompanied with better look and feel – all these are fulfilled by modern supermarkets. On the other hand, the small retailers satisfy the personal requirements and convenience of the neighbourhood. The bonding developed over the years with their customers sustain their small businesses. Therefore, both these retail formats enjoy their own space and flourish today. There is a small grocery store for every 50 households whereas one modern retail outlet for 1500 households.
As can be seen from the above discussion, multiple choices exist for small businesses to get their products to the customer. For most products, using just one distribution channel does not work. It is important for business owners to understand the different options available to them and how customer behaviour is changing. For instance, young people are increasingly buying furniture online which means that furniture companies should know how their customers mix and match their chairs in their drawing rooms so that they can photograph it in an appealing setting for listing online.
You must go where your customers are or they will go where your competitors are!