Digitise or dissipate – The Financial Express

The Financial Express
Online sales are expected to surpass 25% of the total sales pie across major retail categories (excluding grocery) by 2026, reaching a total of $163 billion, according to a report by RedSeer Consulting.
The report, “Digital Disruptors”, evaluated over 1,000 companies with over 2,000 brands across key consumer product categories to identify 75 companies that made a mark in 2022. The top 3 brands in the electronics & appliances sector were boAt, BBK, and Asus, while Aditya Birla Fashion and Retail, Puma India, and Wakefit ruled the fashion & home sector. Hindustan Unilever, L’Oreal India, and Licious took the top positions in grocery & personal care.
Over 45% of digital disruptor brands are digital-first companies that began as online ventures and built scale by expanding into new sub-categories. These companies are expanding operations into brick-and-mortar trade to capture a larger market share. With digital-first brands accounting for 25% of the online sales, traditional brands have new challenges to grapple with. The report suggests that legacy companies need to focus on building digital capabilities and adopt an omnichannel approach to stay relevant in the digital age.
Saurav Kumar Chachan, director, Redseer, says, “Traditional brands across categories have recognised the criticality of e-commerce to stay relevant. While some have been able to mark their presence in the space, many have struggled to adapt to the agility and financial parameters of the online market. Currently, digital-first brands typically derive over 75% of their sales online, while traditional players garner less than 30% of sales from online transactions.”
The research highlights the factors that helped digital disruptors to achieve the right balance. These include:
Strategic focus: Digital disruptors put the focus of leadership and their investments behind the e-commerce strategy, rather than treating it as just another channel. Also, they recognise that online is a different market than offline and requires distinct strategy, sales and marketing approach, and financial expertise.
Dynamic pricing: They align their price proposition to online customer segment needs while managing conflict with other channels; they also track and frequently adjust the prices and discounts to account for changing demand, festive spikes, and competitor moves.
Agile organisation: Digital disruptors promote an agile organisation and hustle culture that enable constant innovation, and market tracking to disrupt and grow faster. They also build deep capabilities in analytics and data science to take quick decisions and adapt strategy and tactics to rapidly changing needs of the online consumer.
Brand/product portfolio: They offer a wide and often distinct range of SKUs online as compared to offline, while also thoughtfully launching and acquiring distinct brands to address diverse customer segments. They invest in understanding the rules and success factors of online games and align their approach to the respective platform’s algorithm to create a virtuous flywheel of discovery and purchase.
Best-in-class digital marketing: They create strong relatable brands and communities across social media and on e-commerce platforms to build a loyal online customer base to drive organic search and reduce the cost of sales. Additionally, they build deep in-house digital marketing capabilities and strategies to drive visibility and performance across channels to drive sales at optimum costs.
Mohit Rana, partner, Redseer, said companies were divided into four distinct quadrants. The early movers or the ‘Tigers’, legacy players, or the ‘Elephants’, ‘Rabbits’ that are yet to scale, while legacy players with a lower online market share are the ‘Turtles’.
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