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Green light for Indian e-commerce

Indian customers are increasingly comfortable with online shopping, and there is a higher acceptability for the concept, says Abhinav Singh.

India has 25 million Internet users and more are now turning to online shopping. There has been an influx of online shopping sites in India with many companies hitching onto the Internet bandwagon. According to the Internet and Online Association, (IOA), revenues from online shopping in India was at Rs 570 crore in 2004-05 and that is expected to more than double and reach Rs 1,180 crore in 2005-2006 and climb to Rs 2,300 crore by 2006-07. According to IOA, the average number of transactions per month in India has gone up from 2 lakh in 2003-04 to 4.4 lakh in 2004-05. It is expected to double to 7.95 lakh transactions per month in fiscal 2005-06. Companies like eBay have seen a large increase in the number of sellers and buyers from B and C cities and in a year the eBay community (buyers and sellers) base has increased to 1.7 million users in India.

Embracing online shopping

Online shopping has become the latest trend among shoppers. Attitudes towards the Internet and shopping have become increasingly positive over the years Gautam Thakar Country Manager eBay India Marketplace

Indians are becoming more comfortable with e-commerce as is evident from the IOA Power Shopper report which has placed the e-commerce market at Rs 430 crore in 2004-05. Gautam Thakar, Country Manager, eBay India Marketplace says, “The consumer’s attitude has been evolving towards online purchases. Online shopping has become the latest trend among shoppers. Attitudes towards the Internet and online shopping have become increasingly positive over the years. Attitudes about the motivators that drive people to shop online, such as convenience, price comparison and choice are improving in India.”

eBay has also witnessed a spurt of Indian sellers selling on their site. Thakar adds, “Now, Indians are selling on online marketplaces like eBay. It is a great way to start a business at virtually no investment. Sellers can choose to work flexitime and out of their homes. In India, a few thousand sellers make their living on eBay India. They come from many walks of life and consist of traders, SMBs, students, retired people, women, handicapped etc.”

Travel rules

The biggest category online continues to be travel. People are buying air tickets and booking their railway journeys online. Says Surya Mantha, Senior Vice-president, Sify.com, “E-commerce in India has just touched the tip of the iceberg and will grow inorganically in the next 3-5 years. Travel will definitely drive the volumes. Most airlines are shifting to online ticketing. IRCTC continues to lead the e-commerce travel space as far as the revenues and the number of transactions are concerned.”

Electronics and jewellery follow. Indians are not only trading in India, they are also trading worldwide with international buyers of traditional Indian items such as sarees, salwar kameez, jewellery and handicrafts. Indian banks have been successful in adapting to new technologies to provide customers with real-time account status, transfer of funds between current and checking accounts and facility for stop payment. Banks such as the SBI and ICICI Bank are encouraging their customers to move to online banking.

However, the catch for any company to be successful in online trading in India will be to constantly innovate and move towards creating customer confidence to trade online. Amit Agarwal, Managing Director, Web Services, Amazon Development Centre, India says, “The biggest challenge for any company in e-commerce is to constantly innovate on behalf of customers. This is done in order to drive availability of massive selection at lower prices, offer a personalised customer experience and make it convenient and easy for customers to find, discover and buy anything online.”

Greater awareness required

As Indians get comfortable with e-commerce, there is increased awareness and trust on the online shopping format. Many Indians opt for cash on delivery as a payment option, thus paying for items only when they are delivered to their doorstep. Vendors are educating their customers on e-commerce in India. For instance, eBay is educating users on safety tips like reading the item description, looking for a seller’s feedback score and asking questions. In addition, there has been an attempt on behalf of the company to protect users through online tutorials on detecting spoof mails, phishing sites and new identity theft crimes. However, the greatest driver to bring in an e-commerce revolution in India would be the easy availability of affordably-priced broadband connections.

A long way to go

Although there has been a rise in the number of e-commerce transactions in India, there is still hesitancy in using e-commerce due to the security concerns attached to it. There are concerns over security and encryption. Many market analysts say that it will be difficult for smaller online companies in India to establish their presence across the country. Public companies and traditional brand name retailers have deep pockets and a name recognition that will make it difficult for smaller sites to attract customers. However many analysts are of the opinion that e-commerce will increase exponentially in the coming years. Business-to-business transactions will represent the largest revenue earner. Online retailing will also enjoy drastic growth. Areas expected to grow will include financial services, travel, entertainment and groceries.

abhinav@expresscomputeronline.com