Simplifying E-commerce with Technology: Khanaz KA, CXO, Simpl

The rise of Direct-to-Customer (D2C) brands is significantly impacting the industry, especially in the rapidly evolving e-commerce landscape of India. With the D2C market projected to surpass $60 billion by 2027, companies are seeking alternative avenues to connect with India's expansive consumer base. D2C merchants are benefiting from increased autonomy and control over customer experience and brand establishment. However, challenges such as product discovery, building consumer trust, and non-standardized user experiences persist.

Simpl, a Merchant First Checkout Network, is proactively addressing these challenges through its AI-led offerings, providing solutions such as Instant Checkout, Simpl Checkout, Early Settlement, and Checkout Suite.

In an exclusive interaction with Khanaz K.A., CXO at Simpl, Khanaz sheds light on the significance of D2C brands in the e-commerce landscape, Challenges Faced by D2C Merchants with Technology, Return to Origin (RTO) Processes with Simpl's RTO Intelligence Tool and leveraging of 1-Tap Checkout for Enhanced Customer Experience.

Excerpts

DQ: What is the significance of Direct-to-Consumer (D2C) brands in the e-commerce landscape, and how are they differentiating themselves from marketplace giants?

Khanaz: India is currently experiencing a significant shift in the e-commerce landscape, known as the 'Unbundling of E-commerce'. Direct-to-customer (D2C) merchants are at the forefront of this transformation, exploring alternative avenues to connect with India's expansive consumer base by building their e-commerce platforms to build a connection with customers, offer convenience, and improve business performance. According to KPMG, the Indian D2C market is worth approximately $12 billion in 2022. It is projected to surpass the mark of $60 billion by 2027, growing at a CAGR of 40 percent. Interestingly, the D2C segment garnered roughly half of all investments in the e-commerce industry in the third quarter of the financial year 2023, in a testament to the segment’s growth potential.

The benefits of this unbundling are manifold for D2C companies. Firstly, it allows them to emerge from the shadows of e-commerce marketplaces, thereby granting them greater autonomy and control over customer experience and establishing their brands. Additionally, it enables them to forge direct and personalized relationships with their customers, fostering trust and loyalty, which is one of the biggest pain points. Moreover, D2C brands can achieve cost savings by availing services from individual service providers while maintaining the marketplace experience for customers. This enables them to reinvest in enhancing product quality and driving innovation. However, D2C brands encounter their fair share of challenges in this dynamic landscape.

One prominent hurdle is navigating the complex terrain of product discovery in the digital marketplace. Building consumer trust from scratch is another formidable task, requiring consistent effort and transparency. Furthermore, the non-standardized user experience across various platforms introduces friction into the online customer journey, posing additional challenges for D2C startups. One critical aspect of the customer journey where friction often arises is the checkout experience. This phase encompasses everything from product selection and customization to seamless checkout processing and order placement.

Common issues include transaction failures and convoluted user journeys, which can detract from the overall shopping experience. For D2C brands, striking a balance between accessing e-commerce marketplaces for exposure and nurturing direct customer relationships is paramount. While exposure on these platforms is essential for visibility and reach, fostering direct relationships with customers is instrumental in building long-term loyalty and trust. As a Merchant First Checkout Network, Simpl offers a host of artificial intelligence-led solutions, tailored to the needs of D2C brands.

Common issues include transaction failures and convoluted user journeys, which can detract from the overall shopping experience. For D2C startups, striking a balance between accessing large e-commerce platforms for exposure and nurturing direct customer relationships is paramount. While exposure on these platforms is essential for visibility and reach, fostering direct relationships with customers is instrumental in building long-term loyalty and trust. Simpl, a pioneering organization, offers a solution tailored to the needs of D2C merchants.

DQ: How does technology play a crucial role in addressing challenges faced by D2C merchants, especially in terms of managing costs?

Khanaz: D2C brands in India today are facing hurdles involving navigating the complex landscape of product discovery, trust deficit and the lack of a standardized experience from scratch proves to be a formidable task for these merchants, and the lack of standardized user experiences compounds the issue, particularly evident in the crucial checkout phase of a customer journey. Moreover, the return-to-order (RTO) is another significant pain point for these brands, requiring careful management and resolution to maintain customer satisfaction and loyalty. Our estimates suggest that the cumulative annual losses incurred by merchants due to Cash on Delivery (CoD) orders alone amount to a staggering figure ranging between $6-7 billion.

Simpl proactively addresses these challenges through its cutting-edge AI-led offerings. Firstly, by leveraging its vast user base of over 7 million registered users, Simpl offers platform visibility through its mobile app, thereby maximizing exposure for merchants. Secondly, the company offers a suite of solutions including Instant Checkout, Simpl Checkout, Early Settlement, and Checkout Suite, which includes RTO Intelligence. These comprehensive offerings aim to enhance conversions, diminish cash-on-delivery transactions, and minimize returns for merchants, all while prioritizing convenience and trust for millions of customers. These solutions help reduce the losses and interest burden of D2C brands, thereby fostering growth and efficiency within today's competitive landscape.

DQ: What challenges do D2C brands face in managing Return to Origin (RTO) processes, and how can Simpl's return-to-origin (RTO) intelligence tool, help streamline these operations?

Khanaz: Cash on Delivery (CoD) remains the dominant checkout method in Indian e-commerce, cornering roughly 60% of all transactions. However, despite its widespread use, merchants face significant challenges of increased costs, and grappling with financial uncertainty. According to an industry report by Unicommerce, Cash on Delivery (CoD) transactions have led to a slight uptick in order returns, climbing from 9.8 percent in FY22 to 10.4 percent in FY23. The core issue lies in customers' ability to cancel or reject orders upon delivery, triggering the undesirable cycle of return-to-origin (RTO) scenarios. This not only disrupts transaction processes but also strains the financial capabilities of D2C brands. With the e-commerce landscape maturing, striking a delicate balance between convenience and financial stability becomes increasingly crucial for D2C brands.

To tackle this challenge, Simpl offers a return-to-origin (RTO) intelligence tool, which allows merchants to decide whether to show a CoD option based on user behavior at checkout time. This innovative function is aimed at reducing returns and fraud, both of which can adversely affect a merchant's finances. Additionally, the checkout suite provides an 'Address Intelligence' feature to assist merchants in assessing the quality of the address and identifying any associated risks.

DQ: What benefits does a 1-Tap Checkout solution provide for e-commerce companies, and how are brands like Myntra and The Souled Store leveraging this feature through partnerships with Simpl?

Khanaz: E-commerce marketplaces and Direct-to-Customer platforms are emerging as the primary retail channels for new-age customers seeking a convenient and hassle-free online shopping experience. The digital-first mindset has spurred innovations from brands to ensure an unmatched user experience, thereby enhancing retention and loyalty. Among these innovations is the simplification of the checkout process for users. A survey by Pickrr revealed that approximately 60% of users abandon shopping from a brand due to a prolonged checkout experience.

Today, Simpl is at the forefront of this trend by providing 1-Tap Checkout solutions that offer convenience for e-commerce companies, streamlining the purchasing process and enhancing the overall customer experience. By enabling customers to complete transactions with just one click or tap, these solutions significantly reduce friction at the checkout stage, leading to higher conversion rates and increased sales. Additionally, they save valuable time for customers, making the shopping experience more convenient and efficient.

Currently, thousands of small, medium, and large fashion brands across the enterprise including Mynta, Nykaa Fashion, Meesho, and D2C which includes, Snitch, The Souled Store, and Bewakoof utilize Simpl’s 1-Tap Checkout and Simpl Checkout solutions. The benefits for fashion e-commerce platforms are manifold - from enhanced convenience in checkout without the hassle of OTP, pin, CVV, and offering near-zero transaction failures, to increase in conversions and reduced returns.

DQ: What role does technology-enabled convenience play in retaining e-commerce customers, and how are companies adapting to the changing preferences of online shoppers? 

Khanaz: Today, convenience stands as a pivotal differentiator in e-commerce, alongside selection and affordability. Simpl recognizes the critical role of technology-enabled convenience at the checkout stage in attracting and retaining customers. By offering innovative solutions like 1-Tap Checkout, Simpl simplifies the checkout process for enterprise and D2C brands, thereby addressing the evolving preferences of customers.

Simpl has developed and strengthened its artificial intelligence-powered technology platform, seamlessly facilitating consumers' checkout journeys and assisting brands in improving their businesses. For enterprises, we offer 1-tap checkout as it allows customers to purchase with a single tap, which is becoming increasingly important as a growing number of customers seek convenience across the board when transacting online. For D2C merchants, Simpl Checkout offers one login, prefilled addresses, order tracking, and customer support. This improvement in conversion and average order value leads to an enhancement in Return on Advertisement Spend (ROAS), consequently driving down Customer Acquisition Cost (CAC) and keeping costs in check. By focusing on convenience through technology, Simpl enables merchants to drive customer satisfaction, foster loyalty, and thrive in the competitive e-commerce landscape