Regulatory processes of cross border e-commerce need to shift to a B2C perspective
Rajat Wahi, Partner, Deloitte India, believes that returns, payments, shipping, etc. are major bottlenecks for e-commerce companies. This is because most policies for payments, returns, etc. of the e-commerce firms have been set up looking at large volume B2B businesses, where there are fewer larger transactions. However, the dynamics are different for cross-border B2C e-commerce.
IBT: What role does e-commerce play in India’s cross-border business? What are the opportunities do e-commerce sales have vis-a-vis retail?
Rajat Wahi: E-commerce is likely to play a larger role in India’s cross border trade and business, and this is evident from the reach it creates through the virtual connect with customers. India already has already crossed US$ 1billion in exports this year alone for cross border e-commerce. A case in point is the ‘Single’s Day’ sale in China, which is expected to have clocked up close to US$ 150 billion in sales between 1st and 11th Nov ’19, and where buyers and sellers from 70-80 countries had participated. Some of the big platforms have already expressed their goal in terms of their total cross border retail business in the next 5-10 years as US$ 10 billion.
IBT: How does the cross border e-commerce trade work in terms of payment options, return and shipping policy, etc.? What challenges exist in its operations?
Rajat Wahi: Returns, payments, shipping, etc. continue to be major bottlenecks for companies looking to expand the cross-border business through e-commerce. This is because most policies for payments, returns, etc. have been set up looking at large volume B2B businesses, where there are fewer larger transactions. However, the dynamics are different for cross-border B2C e-commerce. There can be millions of cross-border B2C transactions every month, making it very challenging for e-commerce companies to operate.
The work needed in terms of the paperwork and regulations to comply with all the rules not only makes it very difficult, it also significantly increases the costs of operation. The entire regulatory and compliance process of looking at trade between countries needs to shift to a B2C perspective for the entire value chain so as to make it easier for e-commerce trade to grow between countries.
IBT: What are the key commodities that are traded across borders on e-commerce platforms and what are the markets that they cater to?
Rajat Wahi: Most categories other than FMCG products, have seen a huge increase in cross border e-commerce over the last 5 years, and this is likely to continue to grow. Categories like apparel, electronics, personal care/cosmetics, accessories, books, handicrafts, etc. continue to see strong growth and this is likely to only increase as ease of doing online business between countries improves.
IBT: How has COVID-19 impacted India’s cross border e-commerce trade? What are the reasons for the same?
Rajat Wahi: COVID-19 has impacted India’s and many other countries’ cross border (inter-country and intrastate) trade. As lockdowns forced offline retail to stay closed or operate with lots of restrictions around timings, social distancing, etc, e-commerce has filled the gap by allowing customers/shoppers to order products online from their homes from across the country and the world, and to get it delivered to their homes in a sterile and hygienic way.
This has been a great opportunity for online/e-commerce players to scale up and has also helped to form new habits for consumers as they are likely to continue to shop from their homes and access global e-commerce platforms to get the widest assortment of products at the most competitive prices.
IBT: How can Indian investors be attracted to invest in India’s e-commerce sector?
Rajat Wahi: E-commerce is likely to be the fastest-growing segment in retail in India in the coming 5-10 years as more consumers are expected to shop for a wide variety of products online. From approx. 3% of total retail that e-commerce accounts for, it is likely to reach between 10-15% of total retail in the coming 5 – 10 yrs. So, many investors are looking at this channel as the most attractive for investments, and they need a clear, uniform and long term policy to ensure that their investments are secure.
IBT: How can the contribution of e-tail to India’s GDP be enhanced in the next 5 years? What can the government facilitate the same?
Rajat Wahi: This can be done by enhancing the overall infrastructure and eco-system for e-commerce. This includes sourcing and manufacturing, logistics and warehousing, payments eco-system, cross border regulations and access, export and import processes for cross border movement of products (inter-country and intrastate), etc.
IBT: Why is China the world leader in cross border e-commerce trade? What inspiration can India draw from it in order to be among the top 5 countries in the world in terms of cross-border e-commerce trade?
Rajat Wahi: China is the leader in e-commerce as it has facilitated all of the above points and created a strong eco-system for enabling online buying and selling, not only in China, but also globally. This has allowed its companies to access 70-80 countries today. That, along with the growing per capita income in China, has spurred e-commerce, and it accounts for close to 25% of total retail sales in China today.
Having an experience spanning over 25 years, Rajat Wahi has worked with numerous global consulting and CPG companies at senior management positions prior to Deloitte. These include KPMG India (S&O Practice, EMA Consumer Business Head, and India Head Consumer, Retail and Agri sectors), Indeed Strategy Consulting India (MD), Faces Cosmetics, Canada & India (COO & International President), Revlon Cosmetics, London (General Manager & EMA Head) and ITC Moscow (Sales Head).
Rajat has done his MBA in Marketing & Intl Business (University of Akron, OH), B.Com Hons (SRCC) and High School – Doon School. His areas of specialization include Corporate Strategy, Route to Market and Entry Strategy, Sales & Trade Marketing, Distributor Management, Shopper insights, SalesForce Effectivity & SFA.