Market penetration is the major challenge for online retailers, in the case of Amazon, entry in India and Australia was the major challenge. In India, homegrown companies like Flipkart, Snapdeal, Paytm, etc. were already competing with each other in the ever-growing Indian market and Amazon launched the Indian operation in June 2013. The Indian market in 2009 was around $3.9 billion dollars and in 2013 it grew to $12.6 Billion. Market has seen tremendous growth even in Tier 2 and Tier 3, thanks to Indian railway booking system which has been the real tutor of the e-commerce business for the consumer experience where tickets were booked online with minimum effort and the ticket status could also be checked, which was quite different from the traditional way of enquiry where consumers had to wait for hours just to get the status of their ticket booking, standing in an ever-growing queue outside the booking counter.
Now, the picture is clear, India is a growing e-commerce market, and with slow growth in the west, it is quite challenging to capture the market. Snapdeal posted a loss of 2960 Crore (2015-2016), Flipkart rs 5223 crore and Amazon 3571 crore total of 11,754 crore loss, this means if we give the same amount to our Indian Space research they would launch the mission to Mars.
During this stage of penetration, only the advertisers seem to be growing, online advertisement has reached the bottleneck and now the battle seems to have transferred to the traditional means of advertisement like billboard, newspaper advertisement, etc. Even the common auto seems to be advertised.
Market development is the key focus in Online retail, if we compare Flipkart and Amazon, delivery point has been the major areas in which development has taken place. For example, Flipkart use their own delivery system for major cities which helps in the cost-effective way of handling the order and shipment. Speed of delivery has been the major market development and ease of return is now the key to market development.
Markets are now being delivered by the more competitive affiliate system which marks the backbone of the major online retailers. Email marketing and other traditional means are the major breakthroughs for the major online retailers to connect with traditional and new trend buyers.
Internet advertising is becoming more competitive and rising cost has made the online retailers to develop the new market for cost-effective ways of marketing.
Many online retailers have already developed new products like Paytm with their mobile payment system which saw a major rise in the use of its service during the year in which the government has stopped usage of the old currency and this lead to digital payment system adapted even by the local chai wala or pan shop. There was ease of use, with no paperwork anyone with a mobile was able to do transactions when the currency was not available in the ATM or bank.
Amazon launched their Pay system; Amazon Pay was able to tap few of their existing loyal buyers.
Amazon has also developed the Kindle system and Amazon Prime which primarily focuses on new market and their existing market base. Yes, you guessed it right, this is the cost-effective way of advertisement.