Is India Ready for E-commerce?





Is India Ready for E-commerce? Date: Tuesday , March 02, 2010 American youngsters buy nose studs, belly chains, and temporary tattoos from India. Canadians are hugely fascinated by Bollywood fashion. The culture capital of the world, France, is an avid buyer of desi antique gramophones, flutes, and decorative wall hangings (eBay India Census 2009). Cross-cultural and geographical buying and selling has never been so easy. The Internet has become the undisputed leader in this arena, providing the perfect platform for buying and selling. E-commerce has invaded this domain, and currently there is a plethora of online markets catering to any product one could possibly imagine. From books, clothes, and jewelry to mobile phones, cars, and bikes, everything is just a click away. So what is it that makes the World Wide Web the ideal trap? The answer lies in simple statistics. More than 25 percent of the world population uses the net regularly. India has surfed her way to be placed in the fourth position in the top 20 Internet users’ category by Internet World Stats. In countries like the United Kingdom, even grocery shopping takes place on the Web. Websites are the new brochures. Not surprisingly, sellers have taken to the Internet in a big way in addition to the traditional method, if not as the sole medium. Successful Selling on the Web The success story in the Indian context probably started with the boom in travel websites, which have contributed nearly 80 percent to the online trade. The best in the business attribute success to the good old ‘right place at the right time’ truism. “Credit card and Internet penetration had just started and low cost carriers like Air Deccan, SpiceJet, and Go Air had launched at around the same time. With the kind of supply in the market, booking was becoming a hassle. But, with the travel websites one can conveniently choose and book without waiting for the travel agent,” says Noel Swain, Vice President, Marketing, Cleartrip. They have due responsibilities towards their business customers and consumers. On the one hand they need to get the right kind of content for their customers. On the other, they have to ensure the consumers of convenient and cost-effective purchasing and ensure quality at the same time, as consumers cannot touch or try the products unlike in regular shops. “70 percent of our consumers are repeat consumers. We have to act as a valuable distribution channel to our airline and hotel partners and bring them both the repeat and new consumers. At the same time, we cannot disappoint buyers. It is our duty to give the right perspective to them, which is why we take complaint management seriously. If we receive three or more complaints against a particular hotel, we don’t work with them anymore,” Swain explains. Online fashion retail is an emerging trend in this segment as apparel ranks as one of the most popular commodities in e-commerce. Fashion and You is one such undertaking which offers the world’s top fashion brands like Salvatore Ferragamo, Hugo Boss, Escada, Stella McCartney, Tag Heur, Paul Smith, and DKNY at special ‘members only’ prices on their website www.fashionandyou.com. Pearl Uppal, CEO and Founder, Fashion and You, is of the opinion that online retail will be 15 to 20 percent of the luxury and high fashion industry sales in India in two to three years from now. “Though it is in a nascent state in India, globally it is a big domain and over the last few years shopping clubs like Venteprivee.com in Europe, Gilt.com in the US, and Netaporter.com in the UK have created big success stories in this space.” Online Marketing As marketing is an important precursor to selling, many companies have entrusted the responsibility to professional Internet marketing organizations. The basic functions of these organizations include positioning the client on the Internet, developing campaigns for them, and defining them as a thought leader in their vertical. Acmic Interactive which caters primarily to the hospitality and banking sectors, and whose clientele consists of the Marriott group of hotels and the Asian Heart Institute, has been doing precisely the same for a year. Ravishankar, CEO, Acmic Interactive talks about how such companies get into the mode of relationship management for their clients. “We build a rapport between the business customer and consumers. In a way we become the extended marketing arm of the client.” They also explain to the clients why the Internet is an important tool of marketing, identify the key media, and develop campaigns for them. “We constantly enhance their site and promote them on other sites. We integrate that data from them and balance the marketing costs as well.” As opposed to traditional brick and mortar marketing, virtual selling could cost you as little as Re 1 per day. eBay, the largest online market place in India that operates in 2471 Indian cities offers free listing for the first 20 days, after which the sellers have to shell out a meager Re 1 a day till sale, with no registration fee. The revenue setup is divided as one percent commission for technology, five percent for lifestyle, and six percent for media (with no listing fee for media). Uppal explains how online selling is more cost-effective. “We source the products directly from the brands. We place a lot of emphasis on not only our procurement costs but also on the quality of merchandise we source through an experienced team of buyers and merchandisers. Given that online selling is way more cost efficient than physical or ground retail, we are able to create significant savings in retail costs and bring the price benefits to the consumer’s wallet.” Deepa Thomas, Senior Manager, Corporate Communications, eBay India calls e-commerce a crucial platform. “As the biggest auction platform in the world, our focus is completely on transactions. Our success is measured on the basis of sales of our customers. We have become extremely scientific and value the net buyer. We run promotions and use assured free gifts to attract consumers.” The Extent of Online Buying The eBay.in census is an interesting study of trends and unusual purchasing patterns. 3.3 million Indians shop actively on eBay, which translates to a buyer a minute if it were a regular shop. In the 2009 edition, Delhi topped the list of e-commerce hubs, followed by Mumbai, Chennai, Jaipur, and Bangalore. Though India does not feature among the list of top 10, with the debut of Lakshadweep, all Indian states and union territories are now hooked to online marketing and buying. The most net savvy countries in this realm are the United States, United Kingdom, Australia, Canada, Germany, France, Spain, Italy, Netherlands, and Belgium. The most exciting stories come from rural India. Artisans from Jodhpur and Ludhiana chose to sell their crafts online to metros and even export them to the West, thereby overcoming inefficiencies in distribution. Rural India featured in the census for the first time with places like Bundi (Rajasthan), Thevaram (Tamil Nadu), and Tezpur (Assam) witnessing active buying and selling. In addition to this, 181 rural towns are active entrepreneurship hubs, selling to a worldwide market. Another heartening trend that is emerging is that six out of the top ten cities are profit making cities, which means they sell more than they buy. Spheres of Online Publicity The aura of e-commerce is so all-encompassing that even films and politics cannot escape it. One of the most tech-savvy election campaigns in recent times has been that of the President of the United States of America, Barack Obama. Apart from utilizing social media spaces like MySpace, Facebook, and Twitter, his Internet campaign lent fuel to fund-raising, as much of the campaign funds were generated through small donations over the net. In fact, his Internet strategy is touted to be a significant reason behind his success. Closer home, most big parties here have embraced this strategy. Among the immediate ramifications of the upswing in e-commerce, the most evident is the rising power and convenience of the consumer. As Ravishankar puts it, “The parameters have changed. Companies have to listen to the people. The people, on the other hand, have become more practical. They are talking to each other and are more aware.” He also accentuates the role of a community manager whose importance has been on the rise. Consumer Security Security concerns are a fixture in any new innovation and online shopping is unfortunately not insulated from it. Frauds are always ahead of security measures and awareness is the most important weapon of the consumer. Sellers have, on their part, taken precautions. The international online wallet PayPal, an eBay venture that nudged out all competition in the online payment space is the best example. However, it is yet to fully reach India. Thomas suggests PaisaPay as an alternative. “Though the onus is on the seller, eBay provides 100 percent buyer protection. If the product doesn’t reach you in three days, we offer a pay back. In the event of the need to make an exchange, we mediate and cover the buyers up. In fact, we are in the picture till the product reaches the buyer.” She also advises discretion by choosing trusted websites. Future: Exceedingly Promising As for the future of this phenomenon, experts predict an upward trend. Internet marketing has already changed the dynamics of e-commerce. Though it is in its emerging stage in India, once there is broadband penetration in homes, the pinnacle of e-commerce and Internet marketing will arrive, Ravishankar emphasizes. Adapting to different lifestyles and social and cultural differences within the country is a challenge that needs to be addressed. Uppal concurs, “In India, the Internet medium is maturing. The geographic spread of the medium is no longer restricted to the metros and tier-1 cities. In terms of ad spend, online is growing at a healthy year-on-year rate of 50 percent. With e-commerce now beginning to take off rapidly in India, online marketing initiatives from local and global brands will get a further boost and marketing and retail feed each other. I am confident that the success of the online travel industry in India will be replicated across many more industries where marketers are able to capture value for the consumer in the online space.” Swain adds, “The structure, ‘trackability’, adaptability, and the agility of the platform will ensure its popularity.” In the age of online shopping malls where SEO and SEM are the new buzzwords and products travel from one continent to another in a matter of minutes, e-commerce is evidently here to stay.