E-tailing in India

chillibreeze writer — Shaila Rao

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During the dotcom boom – Ecommerce was the sunrise industry, the one that would change the face of the world. While Ebay and Amazon – the twin pillars of Ecommerce in US did bring about paradigm shift in USA, the tech pundits in India are still a bit iffy about Ecommerce in India.

The Ecommerce market is expected to touch 9210 Crore INR in 2007-08, E Tailing or E RE-tailing market is only about 1150 Crore INR according to a survey conducted by Internet and Mobile Association of India and Indian Market Research Bureau (IMRB).

For the purpose of this article E-tailing is defined as Ecommerce sites including auction sites that sell groceries, apparel, CD’s, books, electronic items, gifting item etc but exclude travel, digital downloads and online classifieds sites.

The top E-tailers in India are indiatimes.com, fabmart.com, rediffshopping.com. They have managed to retain their lead due to innovative business strategies, supply chain model and changing urban lifestyles

Why is Ecommerce so important?

E commerce and ETailing, from a business perspective offer an opportunity to cater to consumers across geographies, no operational timings, unlimited shelf space – and all this with miniscule quantity of infrastructure. For a country like India, this business model is a good way of growing the consumption driven economy.

Growth Drivers

The growth in the E-tailing market is driven by the need to save time by urban India. Besides with over 2.5 billion internet users, access to internet has also played an important role in growing the markets. Changing demographics (youthful India), changing lifestyles and exposure to the developed markets sure give a fillip to this fledgling industry. The soaring real estate costs in India have certainly inspired many an online venture. Also E-tailers have developed many innovative promotions to lure customers and there by growing the market.

Barriers to Growth

But then all is not well in the E-tailer’s paradise. The cost of customer acquisition is pretty high in India – about 1100 INR/customer which eats into the margins, as most goods retailed are low value items such as books, CD’s and electronic gadgets. High margin goods such as apparel are not very popular because of the touch and feel factor. Most Indian’s are not comfortable using their credit cards for shopping and there is always a fear of “what you see may not be what you get”. There may be a problem with complaint resolution, especially after receipt of wrong goods or delayed delivery.

The Real Issues

The Indian Retail industry has always thrived on personalization. The grocer, tailor or even the mom n shop apparel store owner knows the preferences, remembers customer’s taste, budget and previous purchases. They sense the customer’s mood too – which no CRM software can claim to do.

Trying to personalize each customers experience – might be one way to grow.
The Indian consumer is still very need oriented, not very impulse or deal oriented like the American counterparts. Hence it might make sense to create real consumer centric promotions constantly that provide real value to the Indian consumer. Slowly but surely this is happening in India.

There have been horror stories about receipt of bad or wrong goods, delayed deliveries, no response from the company – which adds up to not trusting the online retailers. Through this changing – albeit slowly, thanks to automation and technical integration.

Touch points to focus on

1. Customer is the King – A good 24/7 customer service through email, chat and toll free phone is what the E-tailers are providing. Customer complaint resolution – whether, delayed delivery, product quality, wrong product delivered will certainly work towards long term customer relationship, retention and acquisition.

2. Supply Chain
Most customer complaints and delivery returns can be traced to the supply chain vendors or merchants. They are in fact the most important internal customers. It is important to have the supply chain vendors or merchants well integrated into the system – both technically and strategically.

3. New Business Models
E-tailers always search new and innovative business models. Case in point being US based Power Reviews – where it provides free review technology to E-tailers and all it asks in return is that the reviews collected on the retailer’s web site are syndicated, which is then aggregated on the Buzzillions.com, its sister website. Some Indian sites simply collect orders over a period of time say a week, order in bulk from the vendor and finally ship it to customer at a discounted rate. The customer is told beforehand about the delivery date, of course.

4. Comparison Shopping and Customer Reviews
All the E-tailers are present on comparison shopping sites is of paramount importance – especially since people now visit these sites before they place the order. Being present on well known sites such as compareindia.com and wize.com is a very good idea. Also they encourage customer to write the product reviews – nothing authenticates their offering to an undecided customers like a good product review.

The Conclusion
Though much is yet to be achieved, remember E-tailing is a new industry in India. With broadband internet access still accessible to entire population, this industry may see an explosive growth. Most growth drivers are in India’s favor – demographics, economy, changing lifestyle, exposure to new ideas. It is just a question of creating a sustainable eco system for E-tailing, which is at an inflection point. Time to fasten the seat belts!

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Shaila writes for chillibreeze.

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