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Welcome to the E-Bazaar

A decade after the DotCom crash, the World Wide Web has spawned into a thriving field of commerce, among other things. With glorious projections foreseen in its future, e-retail is here to stay. The cautious yet experimentative Indian buyer is tapping into this medium, making space for a whole new trope of modern consumerism, writes Nidhi Gupta

NIDHI GUPTA  25th Mar 2012

illustration:sandeep adhwaryu

oday, you have the world at your fingertips. The Internet has given us that. But Tim Berners Lee, who first envisaged the World Wide Web, thought its primary use would be to help research scientists share data and analytical papers as quickly and efficiently as possible. Yet since August 1991, when the first website went online (info.cern.ch — the website of the CERN research facility, where Berners Lee worked), the Web has grown and grown, on the way becoming history's biggest repository of information, analysis, intelligence and debate.

And where information and eyeballs travel, can commerce be far behind? Retail on the Internet has had to fight a number of holdbacks. That people would not pay for something not tangibly within their grasp. That people would not input credit card information into a computer when unscrupulous retailers and ravenous hackers roamed the information superhighway. Yet, slowly these misconceptions were pecked away at, first in the West, and over the past few years, in India as well. Now we have reached a point where India is beginning to buy in a big way online, and firms of all hues are hoping to capitalise. Welcome, ladies and gentlemen, to the virtual bazaar.

Have Money, Will Travel

Travel, it seems, is where the money is. Of the 360 e-commerce portals currently offering services in India, travel and related services is the oldest, most-established and — crucially — only profitable vertical. "Travel alone has a 76% share in the consolidated industry. It has an established set up, both business-to-business and business-to-consumer," explains Gaurav Marya, President of Franchise India Holdings Ltd.

Yatra, MakeMyTrip and Redbus are some of the biggest players in the travel business online. In fact, travel companies have been so adept at catering to the needs of the online market that all but the biggest travel agents have disappeared from our landscape. As cellphones did for STD booths, the Web has done for agents. MakeMyTrip claims that it contributes up to 50% of all online sales in the travel market. "We are living in an economy starved for time, wherein convenience is the need of the hour," points out Deep Kalra, founder and CEO of Makemytrip.com.

Phanindra Sama, founder of Redbus.in agrees. "Convenience is the keyword here. Why would people want to stand in long queues to book tickets for railways, flights or buses when they have the option of doing it from home? And that too after surveying the best possible price points?" he says.

Today, there are more people who watch videos on YouTube than English news channels. More people have access to Facebook than Doordarshan. Twice as many are online as the country’s leading newspaper can sell in a year. —Mahesh Murthy

Want to Make a Deal?

The other boom comes from deals sites such as Snapdeal, Deals&You and Fashion&You. "After 19 months, we have 4.5 million members and 5,000 brands, including Barista, Hyatt, Hilton, Smokehouse Grill and many more, connected with each other on the same platform," says Gaurav Kachru, CEO and co-founder of Deals&You. By charging on a strict per buyer basis, the website allows brands to save on advertising costs and helps consumers find cheap deals. Though the company hasn't reached break-even point yet, it is growing by 15-20% every month.

However, there are others who are sceptical about the future of deals sites. "In effect, deals sites are either just liquidation spaces for brands to sell old stock or they're just giving you the right to buy at a discount," points out Mahesh Murthy, founder of Seedfund, a venture capital firm. "Unless they diversify, they won't be able to make it. They seem to have reached their maximum potential." Also, retail experts insist that those that go bottomfeeding – trawling the Internet for cheap deals – don't make up the biggest part of e-commerce consumers.

Yet, Kachru says that the site has been getting over 1,000 transactions every day and that over 30% customers return every month to buy more. This clearly suggests there is something of a future for these sites.

Multibrands on One Platform

Then there is the lifestyle vertical — websites that sell apparel, footwear, electronics, books, music and so on. Websites like Myntra, Inkfruit, 99Labels, Jabong and many others are the latest entrants in this field, which has so far been dominated by eBay and Amazon. None of these are profitable yet, with the exception of India's most phenomenal success in e-retail — Flipkart.

"Books definitely enjoy a lot of popularity as far as online shopping is concerned. The availability of a large number of titles online, coupled with discounts, and the fact that the touch-and-feel element is low for this category, all make it easier for consumers to trust online stores. Our book sales contribute 60% of our total sales in terms of volumes," says Ravi Vora, VP, Flipkart.

Also Read: An interview with Flipkart's CEO

Myntra, a website offering popular clothing brands, has been getting over 5,000 orders a day and is growing at 100% every 6-9 months, according to CEO Mukesh Bansal. "Footwear is most popular, because sizes are generally standard and we have a no-questions-asked return policy," he says. They plan to go public in three years.

Kashyap Dalal, CEO of Inkfruit, says that their orders have been doubling every 2-3 months since the last year. Their USP, an in-house dynamic design community, has stood them in good stead, says Dalal. "We're looking at gross margins right now. We're too young to look at profitability and our focus is on customer retention," says Kashyap.

A Booming Industry

Today, the industry stands at well over Rs 2,000 crore (Assocham), though different analysts have varying statistics about the growth of the industry. "Today, there are more people who watch videos on YouTube than English news channels. More people have access to Facebook than Doordarshan. Twice as many are online as the country's leading newspaper can sell in a year," quotes Mahesh Murthy, founder of Seedfund, a venture capital firm.

This, despite the fact that overall, the number of people with Internet access in the country stands at 7%, which translates into a mere 10 lakh users. This does not mean that the market doesn't exist, he reinforces, as those who have spending power also have access to the Net. Total consumption in India comes from about 900 cities, but modern retail – the malls, high-profile showrooms and market bases — hits only about 70 of them.

Your Feedback is their Business

As in the real world, or perhaps more so, customer satisfaction can make or break these businesses. It's not only your money, but also your opinion that matters to them. Building pages on Facebook and garnering feedback on Twitter is just as important as the technologies they leverage or the marketing tactics they employ. "Conversation on social media is going to happen whether one takes part in it or not. It's better for us if we tap into this space for opinion generation, represent ourselves as we want to and actually listen to what they have to say," explains Kachru.

But Sumit Aggarwal of Fashos.com, a footwear retailing site, says only 1% of the people who visit your site through digital advertising and promotion, get converted into shoppers. As such, they don't just want you to be customers; they also want to have a 'relationship' with you.

So, can e-retail change the way we shop for good? Not really, and certainly not in the near future, says Marya. "Nothing can beat the appeal of being able to touch and feel your product," he adds. "But as Internet grows bigger, and faster, patterns of consumerism are definitely getting altered."

"Most of our orders come from smaller cities like Ahmedabad, Indore, Lucknow, Vishakhapatnam and the like. It's obvious shoppers appreciate the wider choice online," says Bansal. As payment gateways get safer, Murthy advises you, the shopper, to get on with it, as this is the time to be shopping online. He also has a word of advice for retailers – build a distinct brand and give 'them' a reason to come back. Add to cart, anyone?

 
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