Trak.in is a popular Indian Business, Technology, Mobile & Startup blog featuring trending News, views and analytical take on Technology, Business, Finance, Telecom, Mobile, startups & Social Media Space

Online retail thriving in US- when will it establish itself in India?

14

As per the latest State Of Retailing Online 2009 report by Forrester Research , most of the online retailers were profitable and increased their profitability, despite the recession.

In "The State of Retailing Online 2009," a Shop.org study conducted by Forrester Research, retailers noted that Web divisions grew by 18% in 2008.

 

forrester_ecommerce_nov09a

 

I do not have access to the report (costs $499), but form the ReadWriteWeb write-up it appears that the report focussed on US retailers. One can only speculate about the profitability of Indian retail players, but it is important to note that not many players are there in the Indian retail space in the first place and that Indian e-commerce is mainly driven by travel related e-commerce and not e-retail.

In India the lack of e-retailers is due to various reasons-while consumers are hesitant to buy products online (a trend which is definitely changing), and major brick-and-mortar stores are yet to launch their online offerings, there is lack of integration of social recommendations, social media and mobile commerce with the online shopping experience-some of the factors that are driving the e-retail business in US and other developed markets and which are sorely lacking when it comes to Indian e-retailers.

We had covered the state of online retail in India earlier also , and with the coming of Reliance and other players like HomeShop18, there was much excitement and promise, but it is not clear how much of that has been fulfilled and how much the potential remains untapped.

I believe there is great potential for online retail in India too, and if online retail can grow in Us in a year of recession, one can only dream how it may take-off in India which is an emerging market relatively lesser affected by recession.

Why do you think the big brick-and-mortar retail chains do not have their thriving e-retail counterparts/ arms in India? Is the Indian consumer fundamentally different and cultural factors come into play? or is it 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?

I, myself, tend to buy more and more things online nowadays; is the same true of you and reflective of a bigger trend that perhaps the industry is not adequately tapping in to?

  1. Sandy says

    Madhav, when I mentioned ‘delivery as per schedule’ I meant more at the retailer’s end assuming that the courier service is professional and does not add up to delays. Sometimes, retailers may be just pure apathetic (as in the case Arun mentioned in a previous blog post) or may not have items in stock that they advertise on their websites. Addressing that at the retailers end and providing transparent courier shipping details should help the customers in having some sense of power over the outcomes and a belife in their ability to track the shipment.
    When not even shipping details are available a long time after placing orders, than teh consumer is most disappointed/frustrated.

    If big retailers like the Future group, enter online retail in a big way, that definitely has the potential to be a game-changer and I’m sure that it will lead to more professionalism amongst existing players.

  2. Madhav Shivpuri says

    Sandy, you have mentioned “delivery as per schedule” – is the delay at the retailer’s side or because of the courier?

    I read about big retailers like Future group starting their own online shopping portals – once they come up they might starting giving the present players a run for their money. What do you think?

  3. Madhav Shivpuri says

    I wonder if we can addres 2 issues would e-commerce pick up in India?

    1. Delivery as per schedule – Within 1-2 days of online order & payment

    2. Quality of shipment – Should as though bought at a shop in person, or better (well packaged, no damage to the goods)

    One more issue that is obvious from this post and the one Arun has mentioned is “Seller’s apathy”. I think this is dependent on the seller, and not much an outsider could do solve the issue.

    One unanswered question is with respect to the existing logistics companies and what you as the consumer have to say about them?

    For the first two issues I listed, I would think if the parameters are well defined then an entrepreneur could even try to take up this challenge.

    What do you think?

    1. Sandy says

      Madhav,

      To dwell on your question, some of the courier services in India too are quite professional, though they are nowhere near the FedEx. Logistics I assume would not be that much a deterrent, the deterrent it seems is to be found in the two less well defined and industry agreed aspects of 1) delivery as per schedule and 2) quality of shipment as you rightly point out. Once these are taken care of, and adequate and enforcible return policies implemented, at least the consumer will be assured that he wouldn’t be taken for a ride by the online retailers.

      In the end game it is up to an enterprising entrepreneur to define his own standards for his own retail business and set the benchmarks for others to follow. The customer response and trust such an enterprise will gain will more than compensate for the risk and costs associated with taking an early lead.

  4. Janice Alexander says

    I regularly shop online at Indiaplaza.in, especially for books and overall I would rate the experience more than satisfactory. My experience with IRCTC has also been quite good. Beyond this, the rest are still more hype than action including the air ticketing websites.

    1. Sandy says

      Janice, its good that you shop at indiaplaza.in and have found the experience satisfactory. Why do you think the air ticketing websites are more hype than substance. I have personally found them very useful and would love to hear what bad experiences, if any, you have had with them.

  5. Sandy says

    @apu @arun,
    Yes the backend customer support and logistics has to be there; that is a bare minimum that should be present if the e-retail business has to take off. Its really unfortunate that retailers take it for granted that an e-commerce order once placed is final and thus they can now fleece the customer by shipping delays , sub-quality shipments etc. As long as robust and transparent post-shipment return policies are there, the retailers would be much more reluctant to act like this.
    Perhaps there is scope for consumer activism too here, because a b’day missed and gift not delivered is not just about a delayed shipment, it is a contract (of shipment on a given date) breached and calls for damages to be obtained beyond the cost of the to-be-shipped product.
    I’m sure if we the early adopters, the early e-consumers sue the e-commerce vendors more on promises unfulfilled, and set an example, it would serve as a reminder to the other e-commerce vendors in the future not to take the e-consumers as granted.

    1. Arun Prabhudesai says

      Sandy, Well said – I think the current retailers have “chalta Hai” attitude becoz they rarely are needed to pay for all these delays / sub-quality shipments.

      They will start taking it seriously only when they will be needed to pay serious damages..

  6. Sandy says

    @Ankit,
    Yes, the infrastructure (internet connectivity and speed) is definitely a missing piece of the puzzle as to why e-retailing is not taking off in India; but lets contrast this with travel e-ticket issuing be it airlines tickets or tickets of IRCTC which have seen phenomenal growth and countrywide acceptance. If e-commerce in travel sector can thrive, why not in retail sector?
    Awareness of IRCTC tickets for eg. is great and people go to internet cafes/travel agents to get the e-tickets issued, if they lack internet access at home, while awareness that e-shopping is safe, secure and trustworthy (you will actually get a good item sitting at home) is still lacking, so you definitely hit it home when you stressed about awareness!

    1. Arun Prabhudesai says

      Sandy,

      I had put up interesting case some time back on why Ecommerce in India does not grow…
      http://trak.in/tags/business/2009/05/02/the-reason-why-e-commerce-does-not-grow-in-india/
      I think this is the most important reason where Indian etailers need to concentrate on…
      This kind of thing never happens in U.S (even if it does, it is very rare)

    2. Ankit says

      @sandy

      You make a valid point but lets face it. IMO Travel took off more since
      it was a messy and time consuming affair to do it otherwise with huge queue’s.
      as for shopping for others, the general mentality of the public is still to go to a mall and get some retail therapy which to a certain extent is good :)
      But yes, with the benefits that e-commerce provides with some awareness and good results people will hopefully switch.

      I personally haven gone to a bookstore for a long time.I prefer buying it online and helps me buy only what i want to.Otherwise, if i land up in the bookstore there are so many which lure me :) If we can propogate this POV i am sure we are going to see a lot of happy husbands with their wives not OD’ing on retail therapy

  7. apu says

    Even for those who are open to it, I think the way the back end is structured makes one hesitant to buy; I have for e.g. ordered books occasionally from Indiaplaza, but there is no correlation between their promised and actual delivery dates! Also, when you buy online, there tends to be some element of doubt, which means, returns process must be transparent and simple, which again, most Indian stores don’t have whether on-or-offline.

  8. Ankit says

    @Sandy

    Interesting insights!! We are still in a nascent stage as far as e-commerce is concerned.
    IMO the biggest detterent is the infrastructure
    1) Internet Connectivity and Speed is still improving at snail’s pace.So, even the e-commerce savvy users tend to be a little skeptical
    2) Awareness.A lot of it is needed to educate the people that e-commerce is as safe as normal shopping and it actually is pocket friendly

Leave A Reply

Your email address will not be published.

who's online