E-retailing companies are focusing on turning unit economics positive and retaining customers as opposed to their prior focus on gross merchandise value, a recent report said.
“We believe this may be a function of limited availability of capital, leading companies to focus on cash generation. Post government regulations that curtailed discounts, companies seem to have done away with the same; most discounts seen online are being offered by sellers or brands themselves,” said a study by Kotak Institutional Equities.
Gross merchandise value is the total sales value of goods sold through a marketplace.
Most companies surveyed are also evaluating other revenue streams such as advertising and online content to better leverage their platform, it added.
Customer retention, recall and loyalty are key metrics monitored by companies now, the report said.
Companies are also focusing on improving customer satisfaction by shortening delivery times, offering wide product assortments and improved service, in a bid to keep customers engaged to their platforms.
Delivery is another substantial cost component for most e-commerce companies, and hence its optimisation is a key area of focus, the report noted.
Demand prediction, delivery-linked payments to staff, and infrastructure sharing are various options evaluated by companies to rationalise delivery costs.
Cash on delivery, and tier-II and III cities remain big for e-retailers.
Tier-II and tier-III cities constitute a sizable chunk of sales of e-retailers, and hence remain a key focus area, the report noted.
Further, with discounts being curtailed, e-retailers will need sustained focus on product assortment, delivery and service to distinguish themselves from competition, it added.