Friday, April 19, 2013

ONLINE RETAIL...SAME DAY DELIVERY

The growing demand of the Smart phone segment has created a revolution among various small and medium industries to expand their business. In this research article I find a substantial growth opportunity where the retail market of any economy can expand without having the burden of increasing cost. Moreover I find that a substantial investments needs to be made for distribution for expanding the retail business. Smartphone and laptops plays a pivotal role behind the growth of the online retail industry.

In my research finding from tow well developed economies I find that there is tremendous growth opportunity taking shape. As we all know that Chinese economy is shifting from an export driven economy into an internal driven consumer based economy. This leads to a stupendous growth for the online retail industry of china. Smart phone and updated technology is 1000 time advanced in china as compared to India hence the growth of the business is stupendous.

In china the consumption pattern among the middle class is changing which means that now they purchase more of a symbol of affluence and wealth than necessity. They buying online and this online retail industry have lead to a revolution for the industry to grow. China's Ministry of Commerce reported last year that online retail sales in 2011 totaled 782.56 billion yuan ($125.9 billion). If the same is compared in U.S. online retail sales it grew to 15.8% in 2012 to $225.5 billion, according to the U.S. Commerce Department. According to Macquarie Group Ltd., part of Australia-based financial services firm Macquarie Group Ltd china's e-retail sales will reach $258.2 billion in 2013 and $331.7 billion in 2014. Customer loyalty will only increase only with price since price competition is the key driving force for the online retailer business.

Drilling further we find that there are 570 million Internet users, 42% of the population of 1.354 billion, and 220 million online shoppers in China, according to eMarketer a U.S. based market research firm. With the growth of the Chinese middle class followed with several small towns and villages getting developed the demand of retail keeps amplifying. Simply by creating an online smooth well streamed online business portal would spook up the consumption pattern as well as bridges the gap between long distance shopping. The best example in Indian context is the Flipkart type of companies.

If we drill further I picked out some companies in china which will reveal the type of growth the retail space achieves through e-commerce. Alibaba's the online retailer whose only two marketplaces account for more than 80% of e-commerce sales in China. Alibaba reported in December 2012 that it has surpassed 1 trillion yuan ($160 billion) in sales on its two marketplaces in the first 11 months of 2012. Same story is being found with Tmall whose sales for 2012 totaled 200 billion yuan ($32 billion), double its 2011 sales. Hence there is a flood of online retailers or ecommerce business in china which gives substantial opportunity for the industry to tap the IPO market in china. Since online space is not sufficient alone to keep the competition alive efficient distribution is equally to make the goods reach to the dirtiest remote places. Another prominent form of online retail business in Indian context is the advertisements which are being given in TATA Sky TV. Well those who have TATA Sky they know this better than me.

The days of shops are now being replaced with online retailers but the gap of distribution is also being taken very seriously by the e-commerce segment. While doing research in US I found that many companies are trying to deliver goods on the same day. They have taken substantial investments in distribution network since only getting more orders would not replace the hard core traditional shops competitions.

In my research I found that Since last October 2012 , Wal-Mart Stores Inc. has offered Walmart to Go, using its own trucks to deliver online orders the day they're placed by picking up goods from Wal-Mart stores in five metro areas—Northern Virginia, Philadelphia, Minneapolis, San Jose/San Francisco and Denver.

Also in October, eBay Inc. rolled out eBay now, a mobile app for managing local courier pick-up and delivery services that retailers such as Target Corp., Macy's Inc. and Best Buy Co. Inc. are testing their models in New York and San Francisco. For India it’s far from imagination to deliver goods on the same day. We are just now in the initial phase of purchasing goods through Flipkart and other websites.The concept of same delivery in online retail business is going to be a proven strategy for winning customers or boosting profits. Participating in a same-day delivery service requires the retailer to extend its inventory updates beyond its own network to the couriers who will make the deliveries.

Most of the orders in these countries are being placed by the working class followed with smart phone since orders are being placed while one is on the street. In my research I find that 28% of marketing e-mails were opened on a smart phone in November 2012, according to a study of 2.85 million e-mails by mobile marketing firm Knotice Ltd. The web accounts for 8.1% of total retail sales in China, according to the Internet Retailer Asia 500 guide, compared to 5.2% in the United States. Online retail market followed with smart phone and same day delivery model has created a revolution for the online retail business.

Many IPO would come up in the Chinese market and also in the US since online retail market is now under tremendous revolution.In India also we are about to witness such an revolution and that day is not so far when companies like FlipKart and other will come up with an IPO.

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