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Goa, India, November 18, 2016

Gartner Says India's Digital Commerce Players Needs to Find a Sustainable Growth Model

Key Trends in the Digital Commerce Industry Are Being Addressed at Gartner Symposium/ITxpo 2015, November 2-5, in Goa, India

Digital commerce sales in India have remained flat, so digital commerce companies need to need to identify a sustainable growth model that can be achieved in a defined timeframe, according to Gartner, Inc. One of the challenges was that leading marketplaces cut back on promotions and discounts after the regulation banning price competition came out in March 2016.

"Digital commerce is at an early stage in India, and consumers are value-conscious, so they are enticed when there are big promotions and steep discounts." said Gene Alvarez, managing vice president at Gartner. "However, sales stalled once incentives were not present, challenging the performance of digital commerce players. This is partially a result of the continuous discounts at online marketplaces that are competing fiercely to gain market share, and which sets them to an incentive-driven growth model."

None of the digital commerce companies in India are profitable. They typically earn between 5-15 percent commissions of product sales, but the massive discounts on top of the investment needed to expand to more geographies saw those companies losing money. This can be a serious problem when the capital market tightens up.

"The problem is being neglected when there is plenty of funding, and companies can live off sufficient capital. Once the market tightens, it is a survival game that only those that watch the bottom line and cash flows will win in the end", said Mr. Alvarez, "There is a need to go back to the basics, that is, to operate on a sustainable growth model. Of which, customer experience and data-driven incentives are two fundamental factors." 

  • Customer Experience: This is the most important differentiator of a digital commerce service as price becomes transparent across sites. Discounts will only retain customers as long as the promotion lasts, while good customer experience will make people come back and purchase more even when there is no promotion. Good customer experience will also entice new customers as word-of-mouth spreads, and visitors experience the service themselves. Customer experience goes beyond a frictionless shopping experience on the website or in the mobile app, and includes delivery, custom service, returns, retail discovery, customer ratings and reviews.
  • Data-driven incentives: Promotions and discounts are still important techniques to drive sales. However, they need to have positive return on investments (ROIs). Businesses can not only recover the cost of incentives but also make a profit. This requires businesses to personalize incentives based on shoppers' profiles and purchasing propensity, and only give out the amount that is enough to trigger a purchase but not too much to lose money. This capability takes time to build as it requires data analytics and personalization technologies, built on the data collected about the shoppers.

Key trends in the digital commerce industry are a main focus at Gartner Symposium/ITxpo 2016, November 15-18 in Goa, India. Members of the media can register for the event by contacting Sony Shetty at sony.shetty@gartner.com.

About Gartner Symposium/ITxpo

Gartner Symposium/ITxpo is the world's most important gathering of CIOs and senior IT leaders, uniting a global community of CIOs with the tools and strategies to help them lead the next generation of IT and achieve business outcomes. More than 23,000 CIOs, senior business and IT leaders worldwide will gather for the insights they need to ensure that their IT initiatives are key contributors to, and drivers of, their enterprise's success.

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February 28-March 2, Dubai, UAE

About Gartner

Gartner, Inc. (NYSE: IT), is the world’s leading research and advisory company and a member of the S&P 500. We equip business leaders with indispensable insights, advice and tools to achieve their mission-critical priorities today and build the successful organizations of tomorrow.

Our unmatched combination of expert-led, practitioner-sourced and data-driven research steers clients toward the right decisions on the issues that matter most. We are a trusted advisor and objective resource for more than 15,000 organizations in more than 100 countries — across all major functions, in every industry and enterprise size.

To learn more about how we help decision makers fuel the future of business, visit gartner.com.

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