SCOPE OF ONLINE RETAILING IN INDIA

Parul Bapna 3Raj Kumar Desai 12Risheek Iyer 26Ruchita Jagetiya 27 Karishma Raghav 61Humpreet Sahans 64Aman Deep Singh 71

History of Online

Retailing

• Kick-started in India in 2004 when eBay started its operation in India.

• Stores like Flipkart, Myntra, etc. started in 2007 as an online retail store.

• ‘Cash on delivery’ method of payment entered the e-commerce industry.

• Many brick-and-mortar stores also opened an online portal to sell their products.

• Internet penetration increased from 21mn in 2006 to 243mn in 2014.

• Accounts for 10% of the GDP of India and 8% of employment.

Advantages for

Internet shopping

• Convenience: One of the biggest advantages of Online shopping is that you can buy almost anything you could imagine without leaving your house

• More options: Online stores carry more options as compared to brick-and-motar stores

• Information: More detailed information about items for sale than available in a brick-and-motar store

contd…• Price: Because online stores don’t

need to pay rent for a store in a nice part of town and they sell larger quantities, they can offer items at a lesser price

• Availability: Online retailers accept orders 24/7, hence, customers can shop according to their feasibility

Traditional vs

Online shopping

• Traditional method allows us real time quality check whereas in Online shopping we Circumspect quality

• Traditional method provides sizing and trials whereas for online shopping we need to wait for delivery, return and then re-order

• We need to go to a physical store which can be tiresome whereas for Online shopping we can do it at our own feasibility

contd… • Traditional method has limitation of timings whereas online method is available 24/7

• Traditional method provides a better aesthetic experience whereas Online Shopping has a visually cluttered experience

• Traditional method is time consuming to plan and execute whereas Online method offers “Click & Go” experience

• Traditional method has access to stuff only in one country whereas with Online method you have a Global access to products and services

Sectors using e-tailing

• Electronics• Computer and peripherals• Toys and games• Travel and tourism• Hospitality• Real estate• Employment• Placement

E-tailing formats in India

Generic e-tailers

■ Website acts as the sole front end of the respective player where customers can choose from online catalogue and place order.

■ Telephonic sales channels are also established to augment sales

■ Revenue through online (sometimes inbound telephonic also) product sales

■ Internet savvy customers mostly in Tier I and Tier II cities

■ Scalability depends upon internet traffic growth rate and a change in consumer buying behavior

■ Existing set of low prices are helping to attract throng of customers and enabling E-tailers to scale up

Online stores of physical retailers

■ Many Indian retailers operate online portals to adopt a multi channel retail strategy and complement their physical stores

■ Online stores targets acquiring new customers who are more convenience driven rather than looking for in-store experience

■ Revenue through online (sometimes inbound telephonic also) product sales

■ Scalability is driven by brand value of the physical retailer and convenience factor demand amongst its consumers

■ Scalability in this model will happen only with a paradigm shift in consumer preference for convenience rather than in-store experience

Niche players

■ Unlike generic E-tailers, niche players in E-commerce are just focussing on a single product category/type

■ Niche product categories includes apparel, footwear, baby care, personal care etc.

■ Revenue through online (sometimes inbound telephonic also) product sales

■ Their target segment is the Internet savvy and price conscious customer mostly in Tier I and Tier II cities

■ Scalability is limited as they are catering to niche demands

■ It is imperative to offer a host of products to gain new customers and hence niche players will scale up based upon depth of variety they are offering

Deal aggregator

s/ daily deal

websites

■ Offers discount coupons to consumers for various

products and services (restaurants, spas, hotels,

travel deals etc.)

■ Front end includes a website where discount

coupons can be purchased and a sales force

which enlists merchants and deals

■ Their Revenue comes from commission received

via merchants

■ Scalability is a function of number of

merchants/variety of deals one can bring to the

table, which is in turn driven by sales force on the

ground. Hence, scalability is limited

Online travel

websites

■ This category consists of players who focuses on

meeting a single consumer need through wide range

of products (air travel, rail travel, hotel

accommodation, travel packages etc.)

■ Focuses mainly on convenience rather than low prices

■ Travel websites have been able to scale up based

upon convenience as the central tenet of their value

proposition

■Players like makemytrip and cleartrip have to

compete with end-service providers which

operates their own websites (irctc.co.in, indigo.in

etc.)

Rapid growth of relatively smaller categories like fashion has led to horizontal players acquiring niche vertical players to increase

selection

Current Scenario in online retailing

Growing at a rate of 50-60% per year,Indian e-tailing market is expected to reach

$80-100 billion by year 2020

Split of e-tailing market by nature of player

Product categories suitable for E-tailing:India majorly works in the 1st and 4th

quadrant

Observed trends in online shopping…1. Men in India shop 3X more than women!More disposable income and free time; Shopping online is becoming a habit

2. Cash-On-Delivery (COD) was the most preferred online payment method but will decline due to demonetizationGave more control over online transactions since we don’t have to pay until the product is at our doorstepHas also proven to boost impulse purchases

3. 60% of online purchases happen during business hours. (9AM – 5PM)Marketers use this fact to schedule their promotions across advertising channels accordingly

4. Impulsive categories like Clothing and Mobile accessories count 60% of online purchases

Drivers of Internet Shopping

• Better price- Prices of products available online are around 5% on an average cheaper and shoots upto nearly 75-80% on special sales days. Also other offers such cash back etc make shopping online cheaper.

• Range/Choice- choices available online are multifolds than offered by brick and mortar companies. Companies like Amazon,Flipkart claim to have more than 1 crore product range on its portal for sales.

• Time saving-With different types of products all available at single place it save lot time of the shopper to choose and pick up what it wants.

• Delivery Options-Options such as One day delivery/ Express delivery , Cash on delivery, delivery tracking , delivery at almost any part of the country etc has made shoppers buy online

• Review-nowadays almost all E-commerce companies provide reviews of the product , a forum that help the shopper to understand how well a certain product is accepted by other buyers

• Exchange policy- With policy like exchange of product if not according to your taste or like removes fear from mind of buyer of “what if I don’t like the product ?”

• Heavy Advertisements-Catchy advertisements, slogans and campaigns have attracted large number of shoppers to purchase from online . Tagline lines like #aurdikhao, #dil ki deal, #Ab har wish hogi poori etc

• Mobile internet penetration-With increasing user base there has been exponential increase in internet usage. The country’s mobile Internet subscriptions increased by almost 1,500% over the 2009-2014 period.

Challenges of E-

Retailing

•E-Infrastructural Issue•Branding & Marketing•Declining Margins•Logistics & Supply Chain

•Touch & Feel

1)E- Infrastructural Issues

• Internet is the backbone of e-commerce. Unfortunately, in India internet penetration is so far dismally low at 0.5 per cent of the population, penetration of personal computer (PC) as low as 3.5 per thousand of population and penetration of telephone only 2.1 per cent of population, e-commerce remains far away from the common man.

2)Branding & Marketing

• To get people to come on an e-Commerce site and make a purchase involves heavy cost due to branding and marketing. This cost is significant and can be brought down to cost per customer, if the volumes permit to do so. Experts say that the average figure for this metric in the current e-Commerce ecosystem is between INR 500 – 1000 customer, which isn’t sustainable for even medium sized companies, let alone early stage ones.

3)Declining Margins

• With the introduction of a large number of players in the already competitive e-commerce market, the customer is pampered by offering huge discounts, offers, taking returns etc. resulting in razor-thin margins

4)Logistics & Supply

Chain

•  Logistics failure in any area can mean detrimental damage to a startup’s future and can hurt the brand overall. Add to this the need for a guaranteed return policy. Getting this right is a challenge.

5)Touch & Feel

• Indian customers are more comfortable in buying products physically. Companies dealing with products like apparel, handicrafts, jewelry have to face challenges to sell their products as the buyers want to see and touch before they buy these stuffs.

Scope

• More than just buying and selling products online. • It also includes the entire online process of developing, marketing, selling,

delivering, servicing and paying for products and services• Major breakthrough in e-retail in Consumer Electronics & Fashion

Apparel & Home Furnishing segments.

Why online retail is

growing?

• Critical mass of internet users• Rising middle class with disposable income• Payment gateways and logistics• User Experience• Infrastructure - Easy to get up & running

Future

• Social Media: Majority of online buying decisions are made on Social Media. Social network like Facebook, LinkedIn, Twitter, Google+, Pinterest etc have

become a medium for easy log-in and purchase. Increased chances of successful transaction through advertising and

promotions on these social sites.

• Drone Delivery: Shorten human effort and time. DGCA is now fast tracking the process of issuing guidelines for the use of

drones for civil purposes in India.  If everything goes as per the plan, then India might become the first

country in the world to allow the use of drones for civil purposes.

• App only Approach: Increase in internet users and accessing Web through mobile phones. About two-thirds of its online traffic of Flipkart comes from users in small cities

and towns.

• Google’s Buy Now Button:

Search for products on Google & purchase through a single click. The button will be displayed near sponsored search results beneath a “Shop

on Google” heading at the top of the page. When users click on the Google’s “Buy Now” button, they will be re-directed to another Google page that will allow them to choose specific item details.

Google would then pass on order information, including the customer’s name and shipping address, to the retailer.

• Artificial Intelligence: Innovative use of technology by developing artificial intelligence (AI)

solutions. Jet Airways is experimenting with one such solution devised by Vizury. 

Future Trends

• Mobile optimized, not just mobile friendly• Targeting wearable devices• Rise of long form content• More social and search ads• Brand and Author Identity Will Become More

Important• Personalized Experiences• Local Branding and Marketing• Marketing Automation