The Real e-commerce is long way

Date:   Wednesday , November 04, 2009

My family was looking to buy a new washing machine; the old one was more than a decade old! Several offers by various retail chains during Diwali prompted us to speed up our decision to buy.

Being a tech-savvy person, I couldn’t miss the opportunity to check out various portals selling products online. Unlike the U.S. portals from where I have bought electronic gadgets, none of the Indian sites were helpful to let me know what kind of a washing machine that I may need. All I could do was to go through the portals and see the features and prices of the models/brands suggested by neighbors and relatives. Like most others, I too noted the prices of select models and then went to visit various retail chains across Bangalore.

To my surprise, each chain had different prices for the same models along with promised goodies. And even surprising was the fact that the portals were selling at much higher price! Why would someone like to pay a higher price for the same product? This should explain the reason why e-commerce or specifically e-tailing hasn’t really taken off in India. Not only the price, the portals couldn’t give any details of the newly launched products.

If you look at the e-commerce landscape in India, only nine per cent of the 35.09 million Internet users buy products online as most of them do not have credit cards or do not trust the medium. Out of the Rs 9000 crore market, the travel players contribute nearly 80 percent. Indian Railways’ IRCTC sold Rs 3,400 crore worth of tickets last year making it the largest contributor to e-commerce in India. Not all of those are from the travelers. A significant portion comes from several agents and cyber cafes spread across in India—a strong online platform is complemented by a strong offline presence.

However, growth of non-travel category just doesn’t seem to be happening. That’s a real cause of worry.

Though there are many e-commerce companies sprouting in the country, we need to evolve the right business model and an efficient supply chain system to make it a viable option for customers in India. Online retailers also need to tap the potential of social media as customers are spending more time on such networks thereby moving from a transactional experience to a social one. Unless this is done, we cannot hope to see any real action taking place here.

Please do let us know what you think.

Pradeep Shankar