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e-Commerce in India - The time is ripe

business Updated: Sep 23, 2011 20:19 IST
Vivek Jain
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The year was 2002. I was just settling into college life. A big John Grisham fan, I used to check out all his latest books at the Oxford book store in CP, Delhi.I remember thinking that however enticing they maybe, they are not really worth the Rs. 350-400 price tags they came with (which was a direct conversion of the global $10 - $15 tag). So every time I checked these books out at Oxford, I'd come back, go into the local bookstore a few blocks away and rent the recycled edition of the same book at about Rs. 5/- a day. There was not much of reading pleasure but the books served their purpose.

One day I happened to stumble upon an offer on the home page of a big news and entertainment portal - a 15% discount and free home delivery for John Grisham's latest, a semi autobiography titled 'A Painted House'. The offer seemed tempting and worth a try. The problems: 1. I had never made an online purchase (nor had anyone in my circle) and 2. I did not possess a credit card. So that evening I had to be on my best behavior in order to convince my dad to lend me his credit card. That he did oblige despite the high credit card fraud rates prevalent then, it was a testimony to my power of conviction if not his undying love for books. The book reached me in 17 days (each passing day it seemed more likely that the book was lost somewhere and there was absolutely no way I could find out).

Cut to 2011. I read in the paper about the latest book to win the Booker Prize. I am smitten by the Amazon.com reviews of this book by Siddharth Mukherjee, a hitherto unknown name. I pull out my Xperia smartphone, open the Flipkart app, find the book and place the order. The book reaches me in less than 18 hours. The paperback edition priced Rs. 499/- in stores sets me back by only Rs. 299/-, a neat 40% discount. And I pay cash on delivery.

The point I am trying to drive home through this narrative is the evolution of eCommerce in India. This, as everyone seems to be prophesizing is the second coming of eCommerce. And though, whether it is here to stay only time will tell, it is certainly back with a vengeance.

We all know how the economy is growing and despite occasional bumps it is still expected to become one of the largest economies in the years to come. The internet and mobile penetration is increasing all the time (71% mobile penetration at last count). Clubbed with it the fact that we are moving slowly but surely towards a capitalist economy means pocket by pocket, the consumerists are taking over. The philosophy of saving for a rainy day is slowly, but surely giving way to - have money, will spend.However, ahigher propensity to spend does not indicate an automatic shift from physical to electronic commerce. If anything, I as a consumer would still be skeptical to experiment.

This is where the novelty factor comes in. The retailers and merchants venturing into eCommerce are leaving no stones unturned to ensure that the consumers have a great experience. Most of the eCommerce ventures now offer you a choice of Payment Gateways as well as the flexibility to pay cash on delivery. Now club this with a returns policy that allows one to return the product bought within 15-30 days (depending upon the portal you made the purchase from) and substantial discounts over identical items stocked on shelves. Also, this is a business that thrives on delivery efficiency. One bad delivery can negate in one go all the credibility you gain from 10 good deliveries. Some of the firms have realized this as they are growing in size and have in fact, gone on to use their own courier services to have total control on delivery. And it seems to be working, at least for now. Scaling up may be a tough ask though.

Selling today is no more a one way process. It is imperative that the customer is fully integrated as part of the value chain. The basic premise that governs human buying behavior is that we trust fellow consumers more than the retailers. So if I find 20 favorable reviews for a camera purchase made on Target USA'seCommerce portal, I'd put my money there with more conviction. The more engaged one can keep the consumer, the more is the probability of conversion rates in the future leading to revenue generation.

The other thing that is interesting to note is the different kinds of business models being adopted. While Flipkart, Infibeam and Letsbuy are venturing into multiple categories (similar to Amazon), we also have emerging business models specializing into certain categories. For example, urbantouch.com is carving a niche only in cosmetics - including global brands that are not stocked on shelves. And then we have fashionandyou.com and exclusively.in that are looking at designer labels, apparels and jewellery.Moreover, snapdeal.com is very similar to groupon.com, a discount deals focused venture that is structured a little differently from other online offerings. There is no formula here. In the US, Amazon (diversified) is successful and so is Best Buy (Electronics only).

The success of eCommerce in India is inevitable. Physical stocking costs money andreal estate in our metros is not cheap. And even if it is, getting footfalls in the wake of poor infrastructure, more and more traffic and lack of time is going to become a significant challenge. Skeptics say that this is not a sustainable model. The argument being that as discounts dry up, the businesses will begin to fold. I beg to differ.

The essence is and will continue to be customer experience. Many consumers are adamant on the look and feel of the product before they buy it. That's understandable. The key for retailers here is to create a Blue ocean - carve out a new market - a market yet untapped! Make people aware of the fact that there are sellers who are willing to get stuff you like to your doorstep. And they are willing to take it back too, if you don't like it. In addition, they give you substantial discounts too. Make them used to making online purchases.

And so, the question that is pops up in the consumers' mind is not '


'; rather, it is '

why not


Vivek works as a Strategy/Operations consultant with Deloitte Consulting. He is an Engineer from Delhi University and MBA from IIM Ahmedabad. He can be reached on Twitter


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. Views expressed in this article are his personal ones.