Online Retail Story of INDIA
Before I start with off with this lens I would like to comment on the most debated topic of the online retail industry,
INDIANS HAVE TOUCH AND FEEL PHOBIA ..
Is that true????
Yeah to some extent but there are people who buys goods worth of lakhs without actually seeing them.
Does that means there is only a niche market for online retail??
And this easy to order and delivery mode is being used only by tech savvy people?? But
Indian online retail industry is valued 0.23 billion i.e 1105 crores.
And there is a growth of 30 percent every year.
India is poised to have the third largest net user base by 2013
These are the certain facts about online retail industry of India that are now changing drastically, making India an untapped market for Online retail.
There are many new online ventures that have come up in last one year and are doing really well .
There are two issues according to me which are faced by Indian online retail industry..
1)The logistics problem.
2)Payment gateway service..
1)Logistics
a)Courier service is a big problem in Online retail.
b)The lead and delivery time is not fixed.
c)Deliver and COD charges are very high.
2)Payment Gateways
a)All payment gateways have an intial setup cost (one time and is non refundable).
b) Then there is a 4-7 percent transaction fees on the transaction amount which eats up the profit of the online retailer. However this transaction amount is negotiable.
c) Service support is not that good offered by the service provider.
d) Ease of integration and also if design and the architecture of the portal changes there is no alternate way.
e) Additional factors like – what credit cards / banks are supported by the payment gateway, mobile banking option , rate of successful transactions needs to be considered.
(PayPal does do not provide the option to charge customers in Indian Rupees.)
Indian online retail industry is generally classified into three categories…
1)Group Buying.
There are 3 entities in this
1)Customer.
2)Merchant.
3)Buyer who buys from merchant.
(Generally the portal company)
In this the merchant is promised by the buyer the fixed number of customers and the deal goes live if and only if those number of customers are met.
This is good for small retailers who do not have big budget for advertisements.
2)Online Deals
Portals running on online deals concept offers heavy discount by negotitating with the merchant and these discounts are passed to the customer which generally ranges from 40-90 percent and is available to the customer for 24-72 hrs.
The customers has to buy the deal within the specific period of time.
But how retailer or merchant can afford these discounts..
1)These portals give them customers without spending on advertisements.
2)Promotion is done by the portal company.
3)Minimum sales is guaranteed to the merchant.
3)General Online Buying.
In this the buyer i.e website owner does not offer any volumes to the merchant and generally no discount is given to the customer.
The number of Indian who shops online for purchases online because of convenience is very low.
WH Y ONLINE RETAIL
1)Low operational cost.(As there is no investment for the sales employee)
2)No investment on the demo product.
3)No brick and mortar structure.
4)Saves time and cost.
5)Convenience and shopping at home.
6)Wide range/variety of products are available.
7)Detailed review of the product is available.
8)Detailed comparison available online.
Why Indian are reluctant for online shopping.
1)Live product demo is not available.
2)Bargaining is not possible.
3)Logistics problem i.e Long delivery time.
4)Credibility of the shopping portal.
5)Lack on confidence of the product quality.
6)Product trial not possible.
Why there is growth in online retail industry.
1)With the coming of 3G.
2)With the coming of Internet in urban and semi urban areas.
3)Growth in credit card and online transaction industry.
Some Conclusions
Indian consumer are more secure transacting with a retailer who is present in both forms that is brick and mortal and online.
Online retail is one of the fastest growing segments of the global.
Social media, social recommendations, mobile commerce will add towards the sales of ecommerce.
Not many Indians purchase online unless until there is heavy discount offered.
It’s just a matter of time before new technologies like social recommendations and mobile commerce get integrated into the shopping experience and help kick-start the e-retailing revolution in INDIA.
-By Dhruv Goyal
