Indian E-commerce Industry: What does the future hold? Date:   Thursday , June 09, 2011 Let’s start with a question. Is ecommerce very big in India yet? My answer is not really, but we are getting there. Ecommerce by definition means buying and selling of services/products over the electronic medium, like Internet. In reality not many businesses in India are purely ecommerce. Even hugely successful companies like makemytrip or shaadi.com have physical stores to reach out to consumers who do not have access to Internet or those who have access to internet but do not trust the online medium yet to make their purchases. This is now a necessity for most businesses that in the west have been traditionally internet based. The question one would tend to ask is why is there this disparity? Though India is a huge market, internet is still available to a very small percentage of the population and is mostly restricted to the top few cities. Most of the active users of internet in the smaller cities access it at cyber cafes, which are frequented by students who are not really the target audience for most ecommerce businesses. The other disheartening fact is that the usage of internet by this profile of people is heavily restricted to emails, social media and job portals. But if the numbers are not so good why is there so much noise about ecommerce? Well there are various reasons, the primary one being that we are growing faster than most other countries in the world. The metros alone are bigger markets than many of the developed European countries! More people in India have mobile phones than the entire population of UK. Facts like these make India a really interesting story, but of course with a lot of new challenges. A mere copy paste of a successful model from the west would not work in India. Innovative solutions are required to solve problems faced by the target audience. For example, since a lot of users who do not have access to internet but are still target audiences for many ecommerce businesses, last mile connectivity in terms of physical stores or reaching them out through telephone becomes important. Many OTAs have provided software solutions to the local travel agents to book flight tickets and make hotel reservations using their platform. This kind of approach though difficult to implement exposes the business to a market beyond the traditional internet users. While it helps in increasing the user base it also helps in bringing to all the real time availability of seats a win-win situation for all! Each ecommerce business in India is faced with a unique challenge, for the OTAs it was reaching out to the users, for bus ticketing it was integrating the bus operators on a single platform, for online retail it was integrating the distributors on a single platform and devising ways of managing the supply chain. In case of online food ordering we face a challenge quite unique to this industry. Every individual is hungry at almost the same time, typically during a 2 hour window during lunch and dinner. So unlike any other industry where the orders/customer queries are usually equally spaced out during the day we receive all our orders during only these four hours. Another big challenge is that the orders have to be fulfilled within the next few minutes, again unlike any other ecommerce business where the fulfillment is usually expected to be done within a day or even multiple days. To top it up more than 85 percent of the restaurant industry is fragmented and in most restaurants the level of education of the employees is very low, thus making a single solution which works for all impossible. When we started the business five years ago we imagined a hypothetical world where all the restaurants could be connected by internet and orders received by our platform could be passed on to them seamlessly. Soon we realized our folly and have ever since been working on different solutions to cater to different types of restaurants. Most of the restaurants are what we call as "mom and pop" stores, the constraint at such restaurants are: 1. Real estate is expensive so most restaurants would have an extra table rather than having a computer. 2. Internet is misused and hence many restaurant owners are wary of having a connection at their outlets. 3. Education level of employees at unorganized restaurants is often low so the solution has to be very easy to use. 4. The environment at a restaurant requires a rugged system; sophisticated devices will get damaged very easily. 5. The industry is plagued by extremely high attrition and zero accountability. Theft and pilferage is very common. Since these restaurants got the bulk of the orders it was necessary to automate the process of order passing to these if we had to make a scalable business. We came up with a small GPRS based device (which can run on batteries) which is installed at a restaurant to automatically print the orders placed online. While this works extremely well at the small restaurants it could not be put to use at the bigger chains that already had a legacy system of their own. We came up with separate solutions for them which would integrate with their systems for seamless routing of orders placed on our platform. The key learning from our experience is that an ecommerce business is not just about building a website. While the importance of a good website cannot be understated it is often the backend processes which would give the users a good experience and hence a reason to return for repeat business. Having said this, another challenge which is quite similar to many other ecommerce businesses in India is to build trust among users to make them place orders for their food online. Compared to the west, ecommerce is still relatively new here. Moreover it is a big habitual change for the users to shift from using their phones or visiting the nearby stores to place orders for food/books/groceries to a website. To tackle such challenges increasingly ecommerce companies rely on mass media like Radio, TV and print to make their brands popular. This is a difficult nut to crack but with time the general perception towards ecommerce is changing. While I am certain that if we would have been operating in the west we would have reached bigger scale in half the time, I am also certain that we might have had to deal with huge competition and probably would have been biting the dust. The benefit of being in a market like India is that we have plenty of time for trial and error. Things have been changing for better and the future looks very bright. The author is Founder & CEO, JustEat.in