The rapid growth of online shopping companies in the last decade was marred and radically changed by the rather unique dynamism of purchasing behaviour of consumers. The positive response of consumers towards digital buying in the past decade had motivated the online shopping companies to opt for indiscriminate funding from both from the domestic and international investors. Millions of dollars were pumped into the Indian online shopping business by private equity players of various developed countries; they invested heavily with the confidence that the dynamic nature of Indian Economy will provide certain decent return in the midst of tepid growth of world economy.

During the initial period of business, the companies, which received funds responded well by showing rapid growth at least in GMV and the consumers also especially youngsters indeed delighted about the service, price and products offered by digital marketing companies, almost all the companies including the poster boy of Indian online shopping business Flipkart, Shopclues, Snapdeal, e-bay and Amazon had witnessed huge surge in their business. These companies achieved billion dollar of business within the shortest period of time and some of them became as unicorn.

2. ISSUES UNDERTAKEN FOR THE STUDY:

In the recent years, the attraction towards to online shopping companies descended in a significant manner which effectively downgraded their valuation as Flipkart witnessed their valuation moved south in recent period of time. The deep trouble sensed in the business of online shopping companies due to reduction of profit and their inability to turn their business in a profitable way and in some companies, situation got worsened, unprecedented changes happened as the founders were thrown out from the helm of the affairs by the Investors.

This case study analyzed the reasons that why once celebrated companies now become nightmare for the investors and other stake holders

3. REASON FOR FAILURES:

The comprehensive analysis of the ground level situation indicates that there are two reasons mainly contributed the downslide of online shopping companies

1) Lack of trust among the consumers towards the operational strategies of online shopping companies

2) Failure in the part of companies on maintaining sustainable and repeated buying as long term patronage is missing.

3.1 Lack of Trust:

Until 2014, the situation was normal in terms of sales and growth of online shopping industry. The trouble started after the special promotion schemes such as big billion days had been introduced by the companies especially the warning bell was triggered in Indian poster boy of online shopping industry Flpikart, its strategy of big promo got backfired because of inefficient execution. It never expected the overwhelming response of this big promo as millions of consumers thronged the company website at the same time that leads to crashing of website. The Indian consumers always prefer Touch and Buy, slightly got convinced about the online shopping business as it can be witnessed from the initial euphoria found among them about online shopping. The greediness, pressure from investors and some extend the marketing myopia had forced the Indian online shopping companies to adopt the big promo with superstitious commitments but unfortunately these companies never fulfilled it, that created trust deficit in the minds of consumers. The inefficient execution of half cooked initiative like this created deep anxiety and doubt about the selling pattern of these companies. With the initial excitement got disappeared like mist because of lack of inability in the part of companies to exactly match the expectations, indeed created by the Big promos, they understood that the damage already done in the areas of Image and Brand. By sensing this, the companies have involved in various activities to bring back the trust in the consumer’s mind but the stigma of Touch and Buy and initial experiences are preventing them on returning to online shopping. It is imperative to note that the companies have to work overtime for the longer period in the areas of appropriate pricing, products to create momentum in the consumer mind until that period, the sufferings continues and this analysis found there is no relief for them in these aspects in near future. Further, they should not concentrate in short term sales by announcing radical discounts through high cost promos. Instead of that, if they have to adopt rational pricing with superior service to bring back the consumers in their fold.

3.2 Sustainable Buying:

Unlike in the western world, the Indian consumers never buy the products continuously through online shopping because still, it has not been become as habit due to various reasons. Despite of repeated attempts taken by online shopping companies, the removal of barriers related to buying through digital mode from the consumer mind still as challenging one and no strategy in sight to prevent the consumers from the habit of analyzing the websites for pricing, product information and buying from Brick and Mortar outlet. Hence the sustainable buying is missing. The companies have to involve in the personalized promos in the ground level through colleges and schools in cities, Tier-I and Tier-II towns by having tie up with them and by sponsoring their programmes as they are the future consumers. In addition with that, the companies should not create the impression that their platforms meant for low cost buying which leads the consumers to think badly about them.

4. CONCLUSION:

This analysis recommends the online shopping companies to opt for reversed direction of rational promotion strategies, reliable product and pricing methods to create optimistic mind set in the consumer mind. It is essential for the companies to understand that they are far away from the consumers in terms of trust and satisfaction. If they worked in these twin aspects, the online shopping business would get revamped as expected by the investors and notably consumers.

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Received on 15.01.2017 Modified on 11.03.2017

Asian J. Management; 2017; 8(3):439-441.

DOI: 10.5958/2321-5763.2017.00070.1