Even as the big boys of Indian e-commerce splurge on “reaching out to consumers”, spending crores on marketing and advertising, the e-tailers unanimously agree on technology being the backbone of their business.
By Sayan Chakraborty
Be it hiring professionals at a premium or driving innovation through in-house technologies, the virtual platforms can not do without constant improvisation in technology.
E-tailers have successfully deployed non-relational databases like MongoDB, open-source storage software framework like Hadoop, Big Data and analytics to acquire and retain customers, manage logistics and payments, making technology a key component of their scale up plan.
“For any scalable business, which wants to become efficient and bring value to customers, technology is the most important lever. Otherwise, one will not be able to compete in the market,” said Sanjay Sethi, co-founder and CEO of Delhi-based online marketplace Shopclues.com.
According to Sethi, the technology boom in the past decade has been a boon to e-commerce businesses, having opened up avenues to gain scale. Be it managing the army of over 60,000 sellers on Shopclues marketplace, monitoring the movement of over 9,000 SKUs (stock keeping units), collaborating with courier partners or predictive planning, Sethi owes it all to technology.
“Everybody is using technology, especially big data analytics. Just that some are doing it better than others. Businesses should be built with technology in mind. If something can be done with technology, it’s better not to do it any other way. It might take a little longer, but in the long run, it is worth it,” Sethi added.
Essentially, technology plays an instrumental role in e-commerce when it comes to search, personalisation and customisation, which entails in-depth analysis of a consumer’s buying and surfing habits, apart from streamlining payment processes and order management. Technology also plays a key role in overall administration, including merchant management, price determination and dispute resolution. With the large volumes of data generated in the process, an efficient data analytics mechanism is also of paramount importance.
Consequently, e-commerce companies end up spending a considerable chunk of their revenues on shoring up their technological capabilities, both in terms of research and development and investing in manpower. The investment is more for players like Flipkart and Snapdeal which drive in-house innovation rather than outsourcing their technology needs.
“Honestly, we project ourselves as a technology company and the basic foundation of our business and the services we offer to our customers are enabled through technology only. Every single initiative taken by Snapdeal to improve the experience of buyers and sellers thrive on technology. And all the technology is developed in-house,” said Ankit Khanna, senior vice-president—product management, Snapdeal.com.
“Starting from consumer discovery to supply chain, everything is driven by technology. The thrust keeps changing from time to time, depending on what we want to do,” Khanna said, adding that at present Snapdeal is focusing on building technology for the sellers. Besides, mobile is another area of focus, resulting in continual addition of new features, as Snapdeal draws around 60% of its orders from mobile. “We are also spending a good amount of time with big data,” Khanna added.
For Shopclues.com, technology spend accounts for 10-15% of its overall spend, while Shopyourworld.com spends around $250,000 on tech spends annually. “Technology helps us understand the user behaviour, how users interact in our site and what minor tweaks can help them find their right products. We have a wide range of vendors from the US and managing their stocks and prices on a real time basis and syncing it to our front end is pretty challenging task. With the tech advancements we have managed to do a fair job but there’s still scope to improve the entire user experience,” said Sandip Shah, co-founder and managing director of Shopyourworld.com.
With the $3.1-billion domestic e-commerce market poised to grow five-fold in the next five years, Indian tech czars have taken a keen interest in the sector. While Wipro chairman Azim Premji has invested in online fashion store Myntra.com, Infosys’ Narayana Murthy will put his money in a joint venture with global e-commerce major Amazon. Even Ratan Tata, Chairman Emeritus of Tata Sons, is reportedly contemplating
investment in another online marketplace, Snapdeal.com.
A similar interest has been evinced by another Infosys co-founder Kris Gopalakrishnan. The Infosys vice-chairman expects technology to become a big enabler for the growing e-commerce industry in India. “E-tailing is still very nascent and our initial reaction is to copy from the physical world. However, technology is going to change the way we do things and make the entire experience better,” he said.