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Online convenience: Click shopping gains consumers

business Updated: Mar 03, 2014 10:01 IST
Anita Sharan

Motorola's new mobile phone model, Moto G, is selling in India only via Flipkart.com. Mobile phone brands are widely available with e-commerce sites.

Sameer Bhatia, director distribution, BlackBerry India, explained why: “The online retail medium is, by far, one of the most potent tools to grab eyeballs and create an early spike in sales. The concept of pre-ordering smartphones has worked wonders in allowing brands to create aspirational value and excitement for their next big launch.”

According to CRISIL’s ‘e-Tail eats into Retail’ report, e-commerce, growing at a compounded annual growth rate (CAGR) of 56% over five years, will grow at 50-55% CAGR over the next three years. Driven primarily by books, electronics and apparel, it has now added on grocery, jewellery and furniture. CRISIL expects e-commerce to account for an 18% share of organised retail by 2016, from 8% in 2013. Its share of the overall retail is over 1%; organised retail’s share is 7%.

Bhatia said industry estimates indicate that India’s e-commerce industry will have a 7% share – US $60 billion – of the retail market by 2023. “Given that the broader retail industry has been largely unorganised till now, this growth is significant.”

Thanks to convenience, ease of access, greater choices, attractive prices, all riding on growing internet penetration and mobile internet access, e-commerce is definitely impacting consumer behaviour.

“E-commerce is creating convenience, and giving people greater access to products, especially in tier II and III towns. Guntur has become a top location for e-commerce,” said Anand Ramanathan, associate director, management consulting, KPMG in India. “This trend will increase, propelled by youth who experiment much more, even as high real estate prices will rationalise the growth of brick-and-mortar store networks.”

CRISIL’s director - industry research, Rahul Prithiani, added: “In the past four-five years, competition from online retailers has eaten into the revenues of physical retailers, compelling many to go online.”

KPMG’s ‘Emerging Consumer Segments in India’ study found that for fashion and apparel sites Jabong.com and Myntra.com, small town revenues account for 50% and 55% respectively of annual revenues.

Siddharth Singh, professor marketing, Indian School of Business (ISB), enumerated e-commerce’s impact on consumer behaviour: “There is a shift of power away from companies to consumers, with the democratisation of information and feedback beyond experts, friends and family, to a wider universe of consumers. Expectations are much higher, benchmarks have changed and consumers are more conscious of the values being offered. This will force transparency from brands.” Trust and delivery issues will see sharper attention by e-commerce sites.

“E-commerce in India has broken the demand-supply deadlock – it has always been more about lack of supply than demand. With fashion, we are actually selling what you don’t really ‘need’, yet Jabong.com has grown in double digits every month,” said Arun Chandra Mohan, CEO, Jabong.com. “It’s about creating desirability.” So Jabong has tied up with Lakme Fashion Week to showcase designers whose labels it will stock, and is exclusively bringing in international label, Dorothy Perkins, to India.