Atleast that’s what it looks like seeing success of portals like Fashionandyou.com, Dealsandyou.com, Yebhi.com, Snapdeal.com. Last year we saw a large number of group buying sites offering heavy discounts ranging from 40%-90% mushrooming in India and majority of them were based on group buying concept acquired from Groupon. E-commerce websites (except travel) revolves around one single concept- Discounts. Yes, Discounts.
Though, this concept has been extended to travel also by Vamoose.in but it’s a relatively new concept in the travel space as earlier group buying sites was catering to spa’s, restaurants, health, electronics, beauty etc
It’s more of the discount factor that drives in more people to opt for online affordable shopping of branded products rather than the convenience factor.
Retailers like Fashionandyou, 99labels offers product trials before you pay them and can return the product at free of cost to them.
Retailers like Letsbuy, Buytheprice, Indiaplaza, Futurebazaar offers products at a cheaper price as operational and inventory cost is much less than the offline retailers. Even though, most of the E-commerce companies are running into losses but still raising million of dollars, projecting the losses due to heavy discounts they offer as customer acquisition cost.
E-commerce industry is witnessing a growth rate of 47 % every year and projected to be valued at 47,000 Crores by the end of 2011 with 81 % comprising of travel commerce. Flipkart is first Indian internet company to be valued at 1 Billion dollar and have raised whooping 200 million dollars.
Irony is that if the branded products are sold at a higher discounts then customers have a perception that product might carry a fake label. But once a portal build it’s brand name then they can bypass this customer’s suspicion.
Brands like Fashionandyou, Economics times, Indiaplaza and sosasta (Groupon venture) do sell products that are being imported from other countries and carry third party warranty. Most of imported blackberry’s comes with 6 months third party warranty whereas original product comes with 18 months warranty and have a price tag (Rs 1500 to Rs 2500) higher than the former.
Biggies like Amazon, Futurebaazar, Homeshop18 will eat up small retailers with their tremendous buying power which helps them availing the products at a much cheaper rate than their small competitors. Latest entrant is Taggle, which pivoted from it’s original group buying concept .
Indian market is different and it might be possible that even with the entry of Amazon, Indian retailers like Flipkart, Letsbuy would still hold the top position in this space as we saw with group buying portal (Groupon acquired sosasta, but it still ranks much below snapdeal in terms of revenues, customer base etc).
Retention of customer is more important so as to have repeated sales. Portals can add value in terms of delivery time, customer service etc rather than going for the price game. India is a price sensitive market and one can have competitive advantage of the price but ultimately it’s the customer experience that matters. As Inventory is not stocked by most of the e-tailers , logistics plays a very important role.
Companies like Flipkart have already started building their own logistics back-end. Most of the retailers have opted for COD options and with social commerce taking up in India, it will be an added value to the buying experience of the customer if they could drastically reduce the delivery time.
What’s your take ? Are we prepared to buy products online at the same price as that of offline market and help in kick starting the online retail revolution in India.