E-tailing in india..

Apart from booking flight / train tickets/ paying bills (as tht’s cumbersome process offline), buying books from amazon (after noting that the book is not available at local book shop) or booking movie tickets(it’s cool to surprise your counterpart with the “smartness” of “online booking”) the country is not yet comfortable to transact online. Reliability is the core, that lacks currently. Then comes the after sale service… replacement as well as smooth / uncorrupted money transaction. online business has to earn the faith of people.. As stated by the blogger Sriram Vadlamani ” I have booked train tickets on IRCTC, bus tickets on Redbus and ordered books on Flipkart. That was a neat little circle I have drawn around me for eCommerce. For the first time, I came out of my comfort zone and ordered a Samsung camera on Yebhi.com. What followed is my biggest nightmare and probably the nightmare of many consumers as well….”

Zinnov consultancy report has placed  e-commerce at only 12 per cent of total retail sales in India.

here’s a report as published in The Hindu newspaper:

Only a small fraction of the roughly 5 million Internet users in the late 1990’s even transacted online. Faltering dial-up connections and text-only browsing made the purchasing process cumbersome. Credit card usage was limited to a few, and even fewer were ready to disclose their card details over the Web.

The economics of online commerce, however, have changed so much since then, that Rana Athreya is now attempting to cut the Gordian Knot of e-commerce — setting up an Internet pet food store.

In 2011, Mr. Athreya co-founded Dogspot.in, a Gurgaon-based start-up that shipped over 35,000 kg of dog food last year.

A number of factors over the last decade have given us the chance to prove that the pet category can be successful online,” said the 30-year-old entrepreneur. Dogspot.in hopes to break-even next month, ending the year with sales of Rs.3 crore. Online pet stores are always mindful of the tale of Pets.com Inc, a publicly-traded firm in the U.S. that sold pet products online and then went onto become a popular victim of the dot-com bust over 10 years ago. The California-start-up, founded in the late 1990’s, raised over a hundred million dollars and went public in 2000.

After spending millions on marketing, it burnt through most of its cash and laid off over 200 employees — eventually shutting down in late 2000. Today, Dogspot has 10 employees compared to the 350 that Pets.com had and aims to become a $40 million company by 2015. A combination of factors, including a better ecosystem, increased credit card penetration and a jump in Internet users has made this possible.

A new litter of online-only niche product stores, including groceries, women’s apparel and sporting goods have emerged over the last two years.

Backed by venture capital firms in some cases, these start-ups represent how the economics of selling merchandise over the Internet have evolved since the late 1990s. Over the last ten years, the cost of almost every aspect of launching an e-commerce website has plummeted.

Plummeting costs

A large part of dropping costs comes from the boom of a tech-ecosystem that takes care of website creation, site hosting and the servers that are required to create an e-commerce portal.

Overall, it is ten times easier to launch an online retail business than it was a decade ago, says Suneet Manchanda, former Business Development Head, SifyMall Ltd.

Back when we were setting up SifyMall, the technology and people who could build a website were hard to find. Furthermore, the companies who could create it were expensive to source from, it was a costly nightmare,” he said.

The rise of businesses such as Amazon’s web services allows companies to rent computer power and storage, reducing the need for start-ups to buy their own servers.

Mr. Manchanda said it cost anywhere between Rs.20 lakh and Rs.25 lakh to start up SifyMall and took over six months before it could go live. Now, it would cost Rs.3 lakh and could be live in 10 days, eliminating the need for investors or loans. Mr. Manchanda, last year, founded an online luxury women’s apparel store (ladyblush.com).

Easier logistics

Another advantage is the growth of a cottage industry that helps in logistics, mainly storing and shipping of products. A common complaint of the Indian e-commerce industry is the huge damage and losses that companies incur in shipping while using India Post.

New shipping start-ups such as Delivery.in or Chhotu.in, however, offer logistics that are better tuned to the e-commerce industry by reducing damage losses to less than one per cent, calling customers before delivery and charging their clients only when they make a sale.

Something that sets us apart from India Post or even major courier companies is that we are a straight business-to-business company. This allows us to reduce our capex, letting us charge much lesser rates.

We are a natural logistics extension for e-commerce companies,” said Navneet Singh, CEO, Chhotu.in.

Right now, close to half of our customers are start-ups. Our services complete this whole ecosystem that lets them really thrive,” he added.

According to Abraham Koshy, who founded an online sports goods store last year, it took less than Rs.3 lakh to launch the company, excluding buying inventory. He was able to hire outside software engineers to create the website, shopping-cart system and paid a few thousand rupees for Internet service. Setting up warehouses has also become relatively easier, with third-party companies charging a storage and per-shipment fee, allowing start-ups to reduce costs.

It’s become increasingly easy to join the field without large investment. Take a simple thing like payment gateways for example. The (payment gateway) charges on customer credit card use have dropped from 6- 8 per cent to around 2 per cent over the last ten years or so,” said. Mr. Koshy, who left his job at Amazon Inc two years ago.

While competition has become increasingly fierce due to dropping costs, there are already signs of consolidation among the bigger players in the market.

Flipkart bought Letsbuy, a rival firm, for a reported Rs.100 crore. A few months later, Snapdeal bought online sports retailer Esportsbuy.com, for an undisclosed amount.

A info-graphic by Track.in : 

Where Does eCommerce Stand in India ???

e-commerce • n. commercial transactions conducted electronically on the Internet.

The dawn of the internet era has significantly changed the way people and organizations around the world interact with each other. What was earlier only a medium of transferring data or communication has now been replaced by a wider range of application termed as e-commerce. Products and services are now just a click away. Secure online transactions provided by vendors Visa and Mastercard as well as online bank transfers have only added to the confidence of audiences willing to participate in online commerce. The emergence of web 2.0 only fueled this trend even further. Vendors around the world have started setting up shops over the web. Entire market places for trade and commerce have sprung up online.

The story in India is no different. In a country where entrepreneurs are born in every nook and corner, e-commerce provides a low investment high return opportunity. Traditional businesses have taken their wares over the net and profited immensely from it. Now the whole world is their “bazaar”. It started slowly with bazee.com leading the way. Slowly trade portals and online travel portals joined the bandwagon. After e-bay acquired bazee.com, the level of access that users had to e-commerce increased significantly.

Although by most references India only accounts for approximately 2% of the e-commerce in the Asia-Pacific region, the amount in figures is staggering. It was estimated at around $2.1 billion in 2008 and predicted to grow to around $6 billion by 2011 (data compiled from multiple sources). This despite the fact that only 3.7% of the Indian population has access to the internet (sourcewww.internetworldstats.com).

If one were to segregate the e-commerce sector, most transactions would fall into the following categories.

  • Business to Users:
    o Where businesses and organizations directly offer their products and services to the users over the net. Airlines, movie theatres, publishing houses and travel agencies are predominantly present in this category. A lot of SME’s have also started offering these services to their customer base. (eg.www.makemytrip.com)
    o Certain organizations use this mode to gain access to talent and freelancers over the internet and carry out projects for a global clientele. (eg. www.chillibreeze.com)
    o In India banks have now almost entirely migrated to accessing through e-commerce. There is now a fee charged to customers for transactions carried out through the branches or for the physical documents provided.
  • User to User:
    o Web 2.0 has given rise to unique opportunities to this type of transactions. Bazee.com (which was later taken over by e-bay) kicked off this trend in India. A number of other community and forum sites have also sprung up catering to this category.
    o Currently newer opportunities to use web 2.0 in terms of interaction of agencies (eg.insurance agencies) are being explored.
  • Online Resource transfer:
    o This transaction majorly deals with transfer of resources (in most cases money)over the net. Many businesses use this mode of e-commerce to eliminate physical documentation and reduce transaction time. (eg. Paypal, banks, western Union)
  • Trade portals:
    o Similar to User to user format trade portals are meeting point for trade agencies to interact and promote or search for specific products for import-export purposes. (alibaba.com is among the more popular sites in this category)
  • Ad-space sales:
    o Sale of ad-space is an attractive way for earning money. Although an outright purchase would be similar to buying of media space there are popular formats which make use of pay-per-click to ensure the right value of the ad-space. (Google Ad-sense has gained an expertise over this format). There are individuals who make a career out of this format.
    o Another variation of this format is the presence of “invisiads” wherein games are designed by portals for companies as a part of their branding strategy. Users join in to play a game but end up leaving with information being propagated about that particular brand.
  • Content Access:
    o Although still in the nascent stage in India, content access is a major share holder in the e-commerce traffic in India. Many sites provide limited access to free users and retain the full usability of their sites for premium paying customers. Market research agencies and publishing houses are major users of this format. With the arrival of internet TV and pay-per-view access in India, this category is expected to grow.

Present Influence:-
Apart from the obvious impact that online stores like e-bay have had on the Indian users there are a few traditional sectors in the Indian scenario which have been influenced by e-commerce and its applications.

Airline Sector:
One of the most significant impacts can be seen in the airline sector. This industry has been predominantly dependant on physical documentation and the presence of branches (or travel agents) for reach. However with the advent of e-commerce in India industry players have drastically changed their modus operandi.

Physical tickets have almost entirely vanished from the airline sector in India. Travel agents no longer hold a major impact on the business. The whole process has been brought online thanks to e-commerce. Apart from the web-sites of individual airlines, there are also portals which provide details of multiple airlines on one portal for the users to choose from. The balance of power has now shifted to the consumers.

Banking Sector:
As in the case of the Airline Industry the banking sector has been predominantly dependant on physical documentation and the presence of branches

For banks e-commerce has provided a major area of cost cutting. The number of branches and personnel required per area has drastically decreased. The integration of the ATM networks allows users to access their funds through multiple sources. The Core Banking Solution pioneered by ICICI bank has even allowed these banks to reach out to the far corners of India with innovative and practical solutions for low income rural families. This particular solution has given a major impetus to kick start micro-finance in India.

E-commerce promises to open up many more opportunities for businesses across sectors. What we are witnessing now is only the tip of the ice-berg.

Placement Agencies:-
The area of Human resource management has been completely redefined. Sites like naukri.com and monster.com have given recruiters direct access to talent from across the country. Never before had such a wide talent pool been available to recruiters. Users could now break away from the grip of placement agencies which provided commission based services and actually select jobs they want to apply to online.

Matrimonial Sites:-
This is a business that could only work in India. With arranged marriages being predominant in India this business model was uniquely prepared for the Indian market. Migrating from family pundits to online profiles was readily accepted by the Indian family. Today a number of Matrimonial sites are prospering (eg. Shaadi.com) and with tools like e-kundali to support them, they seem to be here to stay.

Opportunities Galore:-
There are two requirements to allow e-commerce to prosper in a market.

  • A population with technical understanding to operate it.
  • User base with spending power.

The great Indian middle class fulfils both these criteria. Add to that the immensely entrepreneurial programmers that our current system is churning out, the foundations of growth have already been laid. With online gaming as well as retail being identified as a prospective sectors and constantly improving broadband connectivity, things have started looking up for the e-commerce in India. This seems to be only the tip of the ice-berg with a promise of great things to come.

Chillibreeze’s disclaimer: The views and opinions expressed in this article are those of the author(s) and do not reflect the views of Chillibreeze as a company. Chillibreeze has a strict anti-plagiarism policy. Please contact us to report any copyright issues related to this article.

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