Thursday, February 16, 2006

Online Shopping in India

If online shopping has to become big in India, we would need scale both on the transacting buyers as well as on the sellers’ side. Currently, there are less than 1,000 merchants in the country who are doing business online. Large chunk of these merchants are SMEs. Most of them do not even have their own websites but are just plugging in as vendors / suppliers to the major online shopping portals.

The number of buyers who are buying stuff online also remains low. Major reasons are low internet penetration (around 25 million total internet users), low credit card population (less than 15 million credit card population with unique credit card owners even lower than 10 million), non-willingness of people to use credit cards for online purchases, adverse taxation rules etc.

No wonder, online shopping still remains a small activity. If we were to exclude Travel & online stock broking then the total size of online shopping in India will be in the region of US$ 60-70 million annually (Gross Merchandising Value basis). On the net commission basis it will be as low as US$ 15-17 million.

The current proposition online shopping portals are giving to their customers are “convenience” and scattered “deals” they are able to get from the vendors / brands. This is not compelling enough. The proposition needs to move away to aggregation & comparison. This can only happen when more merchants (SMEs), brand owners and retailers have their own online stores and strategies in place.

In US all major retailers – Walmart, Target etc have their own online portals. All the big brands too have their own online presence. However, in India barring LG who were early movers, I cannot even recollect any other Indian brand being available online! Amongst retailers, I know of only Pantaloon who are now in the process of setting up their online shopping portal. In 2005, ComScore Networks estimated Walmart.com to be the third most visited online shopping site after eBay and Amazon.com . Also, in 2005 online shopping in USA contributed more than 5% of all non-travel retail sales: Shopper’s stop, Pyramid, Lifestyle, Westside.. are you listening?

I am sure over the next 18-24 months we would see several national brands / retailers having their online shopping offerings. In the same timeframe, I estimate that the total number of merchants online would reach 50,000 and the total internet users around 50 million. Once this happens, I estimate that the B2C online shopping will scale up to US $ 500 million.

24 comments:

shiva said...

Why is it that Indian retailers stay away from new technology? We need managers and CEOs to be educated about the Internet.

Umesh said...

I think the cost of technology for web-enabling the merchants has to come down substantially.

Besides, somebody needs to take the lead in educating these merchants about the benefits of going online.

I guess it is only a matter of time before the SMEs start exploring the opportunities.

Anonymous said...

I do not intend to make this personal but with n o response forthcoming from the other side, I had no option but to make us of this forum. One of the reasons for low level of online buying is the extremely shoddy customer service by leading portals, like your own Indiatimes.com ORders don't get fulfilled, or the wrong product gets sent. There is no way for the customer to get in touch with the portal except through a solitary feedback form which only sends out automated responses. Wonder if any human reads the pleas and grievances of woebegone customers. With such pathetic customer orientations, is it any surprise that customers confidence in online buying is so low?

Anonymous said...

I think online shopping in India is bound to grow in a matter of time.We will be using the internet in far more ways than we can fathom today.But for starters the sites should give us convenience shopping where a touch and feel experience is not required, for eg where can we order monthly groceries in a simple and affordable way,what about pizzas online or movie tickets of the all collective theatres in a single city,on a single site.

Anurag Gupta said...

you can communicate with me at anurag1@gmail.com. will look forward to understanding from you the entire issue. It will help if you can also give your contact number.

Regards

Anil said...

I wonder how Fabmall is doing, they seem to have made big bets on future growth in online retail. Any views?

Anonymous said...

Taking your views a few steps forward, we have released a kannada portal selling local kannada books for kannadigas, and google like search for product search amazon like presentation for presenting and cross selling products. Checkout www.udayaravi.com. Incase you can read kannada, you can understand further.

- Gyanesh

Divya said...

Another company taking the lead in aggregating all the online shopping products available for the consumer is http://www.bechna.com

Anonymous said...

Community building for seller and buyers will drive online shopping as it has done in other countries...basic rules cant be changed

Josh said...

Hello Anurag,

Online shopping has a huge potential in India. We have lots people entering the work force and minting lots of money these days. I can only see the future going down that line. And speaking of people fearing to use their credit cards online, i had come across this online shopping portal www.storrz.com which allows customers to swipe their credit/debit cards at the time their products are delivered to them. Me and my have shopped from this portal twice and its service has been really good so far. I think its really going to make it big. Its also the only online portal in india to be selling groceries online.

SarathRocks said...

New online portals are coming with good shopping experience. They research on customer needs and sell the products according to it.I have found one similar portal www.storrz.com where they are selling groceries online. consumers can now shop their daily needs online.The portals of this kind will grow very fast because they provide products according to the customer needs.They are providing good offers to customers which will increase the consumer traffic.

Anonymous said...

Hi, This is a student doing research on Online buying of fashion goods in India... what do u think is the scope for this?

karthik said...

Being a big fan of comics I have over the years collected a whole lot of comics including Archies, Phantom, Tarzan Classics, Li'l Abner Classics, Wizard of Id Asterix to name a few. However the other day my nephew happened to leave the asterix collection on the floor and Rocky (my German Shepard) had a blast by tearing it all apart. I went online to purchase a new set of asterix and to my surprise (or call it luck) I got the Tintin collection free of cost for buying the asterix collection on IndiaPlaza.

If any of your dogs chews of your books try this link below to find some real cool deals @

http://www.indiaplaza.in/books/all/ASTERIXTIN/all/the-asterix-and-tintin-collection.htm

Anonymous said...

It's been repeatedly said that Online Shopping is the future of every industry, but still Garments are not selling online. The reason being the Fit & Size and Touch & Fell Factor. We have worked out a way by which Fit & Size problem will be totally removed from Online Shopping and customers will be able to buy Garments with more confidence because we will claim that the garment we will send to your home, will fit you 100%

We are expected to hit Indian Online Retail Market by end of this year.

If anybody require more information or have something to contribute, please write me at g.chanchal@gmail.com

Anju Patel said...

Hi friends please have a look at this also:
http://www.shoppingsurat.com is an online shopping website where there are more than 6000 business contact details.Surat Diamonds, Surat Textile, Surat Sarees, Surat Dress Materials are some of major categorie

Anonymous said...

hi another student here,so what benefits do you think the seller gets when he sells his goods online?

Online Shopping said...

Hi Anurag, Nice Article on Online Shopping as you know there are many shopping portals are in India, But I will suggest Naaptol.com because it's just a comparison shopping portal. It doesn't sell anything, you can check the product rates here in this online shopping portal and compare the product's rates

Gaurav said...

The ONLY way to sell Garments Online : Technology made is just a child's play

Bonjour,

We are Spring Overseas (P) Ltd, a 17 yr old Garment Export House based in 6 huge location in Delhi and Gurgaon(Haryana).

We have automated the process by which consumers can be effectively and efficiently measured and then matched with garments that fit them best. This process results in increased off-line and on-line traffic, improved conversion rates, higher purchases per transaction, reduced rates of product returns, higher customer loyalty, as well as improved inventory management and profitability for all value chain members

We are working on this project from last 1.5 yrs which can effectively sell Garments online. Trust me, it is the ONLY way to sell garments online. I will brief you a bit on this -

Why Garments don't sell online?
- Touch and Feel factor
- Fit & Size Problem

We can solve both these problems and make a customer shop online for his garments without any fear of Fit & Size.We claim that whatever we will deliver to customer's home will fit him 100%.

A thought to tickle your brain - What if I have measurement of your whole body, on which I will write an algorithm which can tell you What size of Which brand will Fit you BEST.

Fitting was never so easy – buy a Garment specially tailored for you



Finding the right pair of Garment is tough but we just made it a child's play. A simple process which would get you, your own best fitted custom tailored garment. Get yourself measured with us which just take 15 – 20 sec and experience the magic.



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************************************************************************

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Let's make the trial rooms obsolete. Visit our virtual world and "get fitted with Intelligence". Create your own "Avatar" and we have a personalized gallery where brands will come to you with your perfect fitted size.



Shopping was never so painless – it just become more fun

It will result in a BIG boom in Retail Market and Tailoring Market both at the same time. We are looking out for potential investors to make this happen.

Please do write me back of feel free to call me anytime if this brief description creates any interest in you.

Await your call.

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+91 9999994403

Anonymous said...

Hey Karthik I liked your comment. I did go to Indiaplaza and as per you I found lot of books. Did like most of them. Thankyou so much.Oh yea also wanted to tell you that I also participated in the GoldenQuill award and I voted for my favorite author and also won a free gift voucher at http://www.indiaplaza.in/Goldenquillaward/...

amit said...

This is very illusive option for every one , and great opportunity .
If right market is targeted for sell (Internet user).
//we can not neglect that IRCTC is booking 10k tickets everyday which is remarkable.

so i think "what to sell to whome ?" is the Q to be answered .

Hetal Patel said...

I wonder how Fabmall is doing, they seem to have made big bets on future growth in online retail. Any views?

Hetal Patel
[http://www.shoppingsurat]

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saranya said...

Hi friends online shopping is made easy through a site called vpaycash,its a online cashback site where you get cashback for every online purchase through them,For eg,if you book a ticket in Yatra or Make My Trip,you will get a cashback of Rs.333/- through Vpaycash,really its a boon for online shoppers,just cheackout this awesome community,www.vpaycash.in(Registration is free)

Online Inspector said...

Its funny coz when I go through the comment section.. everyone has a link..whether trying to put it in the reply in a seemingly intelligent way or upright.. I guess these must be for the SEO reasons.. but then if you guys are looking for link backs.. lol.. have a laugh coz teh blog probably has a 'no follow' tag which means you dont get any link backs..

So next time you want to post something.. do so if the article really interests you and you have something genuine to say..