Mixed signals emanate from e-tailing

India has 80 million Internet users of which roughly nine million shop online.
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First Published: Thu, Aug 23 2012. 07 06 PM IST

Updated: Thu, Aug 23 2012. 10 47 PM IST
A friend who lives next to a cluster of malls in south Delhi has taken to buying online. Top of her shopping list are clothes and footwear. It’s an absolutely surprising disclosure, considering barely two years ago she confessed to being a mall rat. Having bought close to 100 books online in the last one year, another acquaintance has graduated to purchasing mobile phones, fragrances and sundry other items on the Internet. He says his current bank balance is below the permissible deposit limit because of his predilection to shop online. He claims he sees his colleagues doing the same—not just surfing websites but ordering as well. A row of delivery vans (and scooters) from these shopping websites parked outside is the proof he points to.
However, not all buyers are young or logging in from their workplaces. A young colleague’s homemaker mother has got hooked to coupon sites in search of discount deals at salons and restaurants.
Examples such as these would have you believe that India’s e-commerce business is on a roll. It’s true that today everything from diapers to diamonds is available online and the rush of entrepreneurs entering this sector is showing no signs of slowing down. However, the reality is that despite the buzz around e-commerce in India, the country does not feature in the top 10 emerging markets, according to AT Kearney Retail E-commerce Index released last month.
China, which is ranked No.1 with an estimated online retail market at $23 billion, is followed by Brazil, Russia, Chile and Mexico. The Retail e-Commerce Index analysed the infrastructure, regulatory and retail-specific variables for retailers interested in investing in emerging markets. China has 513 million Internet users and 164 million online shoppers, spending mostly on consumer electronics, apparel and beauty products.
Brazil, which spent $10.6 billion online in 2011, shops more for appliances and consumer electronics rather than clothes. The fashionable nation prefers to buy clothes at brick and mortar retail stores. Russia’s 15 million online shoppers surf the Web from their mobile phones. There are 1.8 mobile phones per person in the country, according to the report.
An earlier study on the digital consumer by Avendus, a financial services provider, pegged India’s Internet users at 80 million of which roughly nine million shop online.
This number is expected to increase to 38 million by 2015.
There may be several reasons for India’s dismal performance in the e-commerce sweepstake. Right now, the sector itself is in a flux. Business models of most e-tailing companies are less than sound devouring too much capital. The cost of customer acquisition remains high and margins are pathetic as consumers have been lured by hefty discounts. Needless to say, most of them are living from funding to funding and few will eventually survive.
But that is at the business end. There are concerns at the consumer end too. Seen through the eyes of Toshik Anand, a young professional who has just moved back to India from the US where he was primarily shopping online, the experience here leaves much to be desired. For a start, with its focus on cash on delivery which has been driving volumes for India’s e-commerce companies, payment gateways remain an issue. The “checking out process” is an irritant as very few websites store your credit card data. It is inconvenient to repeatedly feed your details for every transaction on the same website. In the US, websites throw up your details even after a single transaction, says Anand.
Secondly, most Indian websites are hawking similar stuff and the choice is narrow. The 28-year-old, who incidentally works for an online retailer, failed to find squash shoes online as most sites had listed them under tennis shoes. Besides, all of them had the same pairs, he complains. Eventually, he walked into a store to buy.
It’s true that the accent of India’s e-tailing sector has been on discounts rather than on choice or range of products. Probably unlike in the US, e-commerce in India took off because of deal sites and serious price-offs on products selling online. Guess that’s why diapers are the most popular products selling online on babycare sites as several of them offer up to 30% discount.
Except for the top three or four shopping sites, most others have service and delivery issues, too, especially if you happen to be living outside the metros. These processes need to be refined. In short, what is needed is better service, better choice and not necessarily better offers.
Jatin Modi, who works for Yebhi.com agrees that the sector has been discount driven. But he claims websites such as his are leaving no stone unturned to improve service quality. The company has introduced its own carriers called Yebhi Champs who are educated and knowledgeable about the product they deliver. The company’s newly introduced “try and buy” policy allows consumers to order more than one size or colour in a product, try them and pay for only what is kept back. The rest is returned with the Champs. “It’s like getting the trial room to your doorstep,” Modi says. The demand from tier 2 and tier 3 cities is swelling with women over 35 taking the lead in shopping online, he claims.
He believes despite the glitches e-tailing is here to stay. The gentleman with the low bank balance agrees—buying online is like an addiction. It increases slowly.
Shuchi Bansal is marketing and media editor with Mint. Comment at whatwebuy@livemint.com
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First Published: Thu, Aug 23 2012. 07 06 PM IST