Amazon, Alibaba leads in the formation of retail tech oligopolies
India is fast becoming a retail test-bed because of a large base of existing e-Commerce users, 110 million, and the presence of retail Global Centers of Excellence (GCoEs) over 25 as well as a large number of start-ups focusing on retail tech, estimated to be over 465.
These findings came from a study by Zinnov which says 1/8th of the world’s digital talent is expected to be based in India by 2030, given the significant digital talent in the country.
Retailers across operational formats are being disrupted by e-Commerce start-ups in the space of Online Groceries, Social Commerce, etc., but the greatest disruption comes from Amazon, Alibaba, and other platforms, who are forming retail tech oligopolies, according to the study “Digital Engineering in Retail”.
The opening up of the regulatory fabric (especially around FDI) and OSP (Other Service Providers) licences are further bolstering the momentum for the Retail sector in India, it said.
Shrunken data costs, soaring digital economy, and hyperlocal demand due to COVID-19 have further propelled ahead of digital adoption by Indian retailers.
“With the Retail sector undergoing a transformational shift, India is poised to be at the forefront of the ongoing digital acceleration, with 3 levers propelling it ahead – a market with the potential for massive growth, a vast pool of skilled digital talent, and a rich ecosystem of emerging and established players,” Zinnov CEO Pari Natarajan said on 9 Nov 2020 in comments on the analysis.
“Our analysis clearly shows that the number of India’s e-Commerce users is expected to cross an impressive 350 million in the next five years, priming the country to be a test-bed for Retail giants, Retail MNCs, and tech start-ups.
The solutions these players are working together on are mostly pilots of local solutions that can potentially be scaled globally. Retail GCoEs will be poised to take up end-to-end design and development of digital applications, shifting the core of Digital Engineering to the East,” said Natarajan.
Further, the recent relaxation to the OSP guidelines will allow for the transition of IT-BPM portfolios to tier-2 cities, creating significant cost leverage for GCoEs, he pointed out.
“GCoEs in India have multiple avenues – to use India as a test-bed for local-to-global digital solutions and expand Digital Engineering portfolios.
“Actioning these, however, will require investment in foundational capabilities such as product management, intrapreneurship, product maturity, etc., which will hold the key to unlocking India’s retail potential,” said Natarajan.
Globally, the retail sector’s spend on Digital Engineering grew steadily at 26% year-on-year in the pre-COVID era.
However, the pandemic accelerated the spending to US$25 billion, a 100+% increase, signalling exponential future growth.
With COVID-19 accelerating digital transformation and adoption across industry verticals, Zinnov estimates that the Retail sector alone has invested in 3 years’ worth of digital transformation within a span of 6 months. Founded in 2002, Zinnov is a leading global management and strategy consulting firm, with a presence in Santa Clara, Houston, Bangalore, Gurgaon, and Paris. Over the past 18 years, Zinnov has successfully consulted with over 250+ Fortune 500 enterprises and technology companies to develop actionable insights that help them create value – across dimensions of both revenue and optimization. #online #retail #technologies #investment /fiinews.com
