Travel related e-commerce has been the toast of consumer online business in India recently. But how has the non-travel consumer online business – B2C e-commerce – fared? According to the online audience measurement service, ViziSense, India has seen 125% growth in e-commerce shopping – beyond travel – over the last one year.
According to the Internet and Mobile Association of India, of the estimated Rs 31,598 crore worth of e-commerce business in 2010, 76% was contributed by online travel. Non-travel e-commerce, therefore, would have contributed Rs 7,584 crore. IAMAI projects India’s e-commerce business at Rs 46,000 crore – a 47% growth – by the end of calendar 2011.
During the Indian Retail Forum 2011 held earlier this month, Sundeep Malhotra, CEO, Homeshop18, which runs a television shopping plus e-commerce model, said, “E-commerce constitutes 4% of the total retail industry in India, and we see a growth of 8-9% in the coming years.”
B2C e-commerce is seeing very rapid development, with several business models emerging quickly – from shopping cart to deal-based, television channel plus online shopping to brick and click models. As consumers have responded, more models have evolved.
While Ferns N Petals (www.fnp/flowers) is a gifting portal and Letsbuy.com a consumer electronics portal, Flipkart.com started out as a books site but has expanded to various consumer product categories. While the eBay model of putting buyer and seller together for a transaction has worked well, most B2C sites have adopted the Amazon model – an inventory model where they first buy the products and then sell them on their sites. Even among the deal/group deal sites, there is a mix of owning inventory and directly handling a brand’s excess inventory.
Paritosh Joshi, COO, Star CJ Alive, a TV plus e-commerce shopping model, said: “Online is a subset of what we have on TV. The difference is that the internet customer is younger and more urban than our TV customers. While our online customers are mostly below 30, our TV customers are between 30 and 35. We are planning to append full-featured audio-video content to the products we display online.”
CK Venkataraman, COO – jewellery, Titan Industries, said of Tanishq’s experience in selling via Star CJ: “Our experience has been good for selling units of up to Rs 8,000. We sell around 700 pieces of jewellery a year online. While this part of the business is still small for us, we believe that impulse purchasing and gifting could draw young consumers to increasingly buy jewellery online. It is important today to be present in new age media.”
According to Vizisense, July 2010’s 530 lakh unique internet users grew to 730 lakh by June this year. Of these, B2C e-commerce (non travel) grew from 81 lakh to 181 lakh users. Travel e-commerce users grew from 103 lakh to 175 lakh.
Amit Bhartiya, GM, Vizisense, said, “The huge e-commerce buzz has resulted from new formats and innovations such as cash on delivery and free shipping, which have broken the barriers for Indian consumers. A combination of great deals and convenience will lead the charge going forward. We are amazed to see the huge traction that recently launched sites such as Flipkart, Fashionandyou, Snapdeal and Bookmyshow have gained. E-commerce stands on three pillars – cost, convenience and choice.”
According to ViziSense, the online shopping cart format grew by 20% in the past six months. eBay, Amazon, Homeshop18, Infibeam, Naaptol and Rediff Shopping are the top six shopping cart sites. Services, largely group-buying formats, saw 70% growth in the last six months. Snapdeal leads the group-buying/daily deal sites, with an 80% share of shoppers within the segment, followed by Dealsandyou, Sosasta and Mydala. Private shopping clubs such as Fashionandyou attract 50% of the shoppers on product sites.
B2C e-commerce players agree that while metro consumers are more inclined towards deals, small town consumers are accessing a lot of products that they couldn’t access till now. “While a metro customer looks at online shopping as a discount store, his small town counterpart will visit our website because he is deprived of options in his city’s retail shops,” said Rahul Sethi, president - e-commerce, Tradus.in, Ibibo’s e-commerce venture.
“Smaller towns are keener to buy value deals in mobile phones and laptops. Metro consumers are skewed towards brands and deals,” Manu Agarwal, founder and CEO, Naaptol.com, added.
Manmohan Agarwal, CEO, Bigshoebazaar, which owns Yebhi.com, said: “Small or second rung cities possess more appetite for quality products, especially apparels and gadgets, in comparison with their urban counterparts.”
Pawan Gadia, CEO, Ferns N Petals and head, www.fnp/flowers, added: “Smaller town consumers are receptive to slightly lesser ticker value as compared to metro and large city consumers. But we have seen 25-30% growth in online orders from smaller towns, higher than in metros and larger cities.”
The male:female ratio among online shoppers is skewed 70:30 in favour of males. “But our fashion catalogue has about 70% females buying in categories like home care, beauty care, jewelry and innerwear,” Sethi of Tradus said.
The majority of consumers are in the age band of 25-35 years, though some sites push the band down to 18 and up to 40 years. Modes of payment are via credit and debit cards, and internet banking, though cash-on-delivery has opened up the scope.
While ViziSense finds repeat buy intentions to be 71% for product and 84% for service e-commerce sites, the B2C sites place their repeat buyers – those buying between three-six times a year – at 15-20% of their overall shoppers.
Could B2C e-commerce challenge conventional brick and mortar retail in the future? Kunal Bahl, founder and CEO, Snapdeal, said, “Online would be complimentary to the brick and mortar model. We still have a very long way to go in competing with offline models, but the acceptance levels of merchants and consumers to shop online is fast increasing.
This is only complemented by the increasing penetration of the internet, mobiles and credit cards in the country. Right now, online acts as an additional channel of sales for most brands.”
Yebhi’s Agarwal added: “With e-commerce booming, brick and mortar models are fast getting translated into brick and click.”