eCommerce in India – Some Thoughts
Off late, I’ve been collecting some thoughts on e-Commerce in India – the perpetual questions also allures me as well like why isn’t Indian e-Commerce catching up faster like it did in the west, what are the problems other than the usual infrastructure roadblocks, what sort of business models might work better in Indian markets etc etc.
More on it later. Before that – today I read couple of informative posts [1] [2] [3] which paints the overall eCommerce 
picture in India.
Fair enough. I won’t say that those comments present a groggy state of Indian eCommerce but surely the picture isn’t bright. But yes, that brings me to yet another perspective. Talking to close contact from eCommerce world who’s been there, done that says that Indian eCommerce is still behind 5 years from western counterpart. Interesting comment and I can see why so!
But I was wondering that can’t we do better than that. May be yes or may be no. Only time will tell but I know one thing for sure – one who listens (only) stays back and one who listens and moves forward sets his own path.
Now back to this post – some of the comments I’ve been hearing from people far & near who has little, some and much experience in ecommerce are here as follows:
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Technology trends are always over estimated in short term and underestimated in long term. The user base for digital commerce is really expanding and while we wait for the growth to kick in we need to be careful about how sophisticated an experience a business is offering to the customer.
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The reason why number of people shopping on net will be low is that the interaction with the internet has always been about free; be it news, email services or any other thing and free is the most difficult price to compete against. Web is about removing layers between the product manufacturer and the consumer, while e-Commerce in India adds layers. The main reason why value is difficult to build for e-Commerce in India is because the tax-structures are in favour of offline business- due to the inventory holdings the respective businesses need to maintain. One needs to be patient for e-Commerce to deliver real value. The reason the travel in e-Commerce has really taken off is because one could deliver the information to the user online and needs no logistics.
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e-Commerce is not just about transactions but replicating the whole shopping experience.
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E-commerce delivers a phenomenal value in re-sales market because it is a complex business to implement offline and that offline methods are extremely in-efficient. It is impossible to sell a Rs. 5,000 bike offline while people are already doing it online.
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From UI Aspect – Overcrowding the portal and flooding it with tacky products, Google ads and not highlighting the product in good enough size is behind low adoption & last mile selling of eCommerce in India since an end-customer won’t spend a good enough price for a product which doesn’t allure her in the first place. So the whole shopping experience goes for a toss in the initial contact of user with a shopping portal.
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Lower adoption of e-Commerce in India is due to delays in shipment which may run more than 7 days here in India whereas in West, Amazon delivers in one day.
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The overall experience of shopping is missing in online shopping portals i.e. Indian buyer expects & wants to “touch & feel” the product even though she’s buying a lesser worth product. It adds to the overall consumer experience which is missing in online model.
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Also, shopping for most Indians (mind it that here I’m talking about most Indians and not everyone of us) is still a social affair i.e. a small outing sort of thing which many enjoy. Now this sort of experience can’t be replicated online.
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Mediocre Payment gateways is yet another hurdle.
There are many more. But let me not paint such a sad picture overall 
Now digressing a bit, couple of months back I was doing some work on eCommerce models in India, their business models and what’s lacking that can and can’t be hidden or over-ridden. I’ll tell you what excited me the most from my findings. Most of the eCommerce platforms that are here in India which is making some amount of money to stay afloat have deeper pockets since lots of cash is burnt initially. So smaller players are more or less mutilated if they can’t hit the jackpot right away.
Similarly, new business models emerged like social shopping couple of years back. Now when I went back to some like Storrz.com, myprodoktspace.com – they are gone (there site is down or they have really left the building). Few survived – amongst them one is ShopCorn.in. (btw do check these interesting uber uber online social shopping biz models – Woot.com and Dell Swarm).
Point is the evolution is happening even though some have perished but still newer business models are emerging fast and wide in this segment and in due course of time, we are going to see more innovation from business model aspect but the macro aspect is proving to be the biggest laggard in the whole ecosystem.
So I was wondering if a trade-cartel sort of arrangement might work in this case? I don’t know for sure. May be you guys can help me. But one thing for certain that measuring Indian online shopping with western countries in mind isn’t a good idea.
P.S. One of the most successful venture that comes on top of my mind which has been most successful in recent times is IRCTC. Wonder why? Does it give us any hints?
Search Interactive Marketing Blog
December 2nd, 2009 at
I think abut e-commerce as a straight substitute service to physical buying, and not an entirely new service. Also,while internet penetration is a big issue it is not the primary one, mainly because it will come. The fact that we have sites like IRCTC which are pretty successful by any standards with the current internet penetration is indicative of this.
For IRCTC the options to most Indians with access to internet was very simple – spend 2-3 hours waiting in line, defer to agent lose choice and cash or stick to internet with the risk that the payment gateway might falter. In this view the third option looks pretty good.
For books now, the story though is different. I get ease of buying and a little bit more choice (not if you are flipkart). I spend money for delivery and lose out on exploration. Most importantly, going into a book store is rarely a waste of 2-3 hours. I go when I like to and spend as much time as I need to. The incentives to switch to online are much lower.
The business model that might be interesting for India is again something that IRCTC shows today. Think about a kirana store in rural India, that holds little choice and inventory but if you are willing to wait for a few days the person will order the things online and for a few bucks extra deliver it to your doorstep.
December 2nd, 2009 at
Interesting, Sampad.
I had given a small talk at the Startup Saturday event in Mumbai, on the state of online retailing in India. Covered some similar points. The deck of that talk: http://www.slideshare.net/socialwavelength/online...
December 2nd, 2009 at
Have checked. Interesting pointers you've got there. Even one of the problems in India we face today is also listed there i.e. the UI aspect. We are on similar lines for sure. But still don't see much work happening there in Indian scenario.
Would love to hear more about your experiences?
Cheers
@Sampad
December 2nd, 2009 at
Though I would agree that internet penetration is not a big issue going forward, but was ruminating on your last statement – Think about a kirana store in rural India, that holds little choice and inventory but if you are willing to wait for a few days the person will order the things online and for a few bucks extra deliver it to your doorstep.
Do you mean to say that if you play around with demand & supply, then eCommerce might work out well in India?
December 2nd, 2009 at
Mediocre Payment gateways is yet another hurdle.
I think this is the biggest hurdle…
Shipment is also a big hurdle for tangible things..
@rungss on Twitter
December 2nd, 2009 at
P.S. One of the most successful venture that comes on top of my mind which has been most successful in recent times is IRCTC. Wonder why? Does it give us any hints?
1) Integration of all types of Payment Methods, specially Debit Cards at Bank Account Level.
2) Direct tie up with Banks. For this one has to have significantly big amount in Transactions.. a small vendor can’t manage a direct tie up with all the Banks.
3) Long Queue in Reservation Counters.
4) The ease of checking availability of Seats in all Trains..
5) A somewhat basic necessity with limited Options..
6) The Train Reservation System of Indian Railways is a huge System already in place, IRCTC extends it.
I can think of a couple more points…
DO share your thoughts..
@rungss on Twitter..
December 2nd, 2009 at
Nice blog…good information here.
December 3rd, 2009 at
On a larger picture, I very well admit that you pointed out the right reasons. But thinking from the core part of it why it works brilliantly then I can only think of two reasons:
1. The whole issue of evading hassles of standing in queue & manipulation by agents.
2. The simplicity of the process where one could deliver the information to the user online and needs no logistics. Basically removes the levels of complexity for en-users.
Now thats' the overall reason why I see it working like other OTA's in India. But still the pure-play eCommerce models like shopping online hasn't worked that much.
How do you think that can taken care off?
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@Sampad
December 3rd, 2009 at
Thanks Pritesh. Hope to see you more here!
Cheers
@Sampad
December 8th, 2009 at
I think the main reason is because Indians like to bargain, we like to ask for discount no matter what we buy.. vegetables or a big-ass LCD screen.. we like to reduce the price at least a bit. That's another reason why I feel the ebay model of the bidding model won't work in India. Look at the sales of games on forums like indianvideogamer and consoul.in. Lot of people buy from them as they offer discounts. An online shopping model — the ebay — style won't work because the people are invisible on these sites unless you decide to contact them (more clicks). But on forums I mentioned above, it's the people/vendors who post the sales updates.. Indians want personal touch — come to think of it what Indian need is social media like model used in an effective manner. Look at Xbox360India fanpage on facebook, see how many people ask the guy running the page for prices of accessories and details like where to buy etc.
Another point EMIs.. isn't there any way to provide EMIs when buying good which cost mroe than Rs20k, when buying using a debit card? A lot of people don't have credit cards in India, so there's something to be explored there (holds true more for tier-2 cities)
So to conclude.. to sell anything online in India there needs to be a personal touch plus discounts and more payment gateway and modes need to experimented with
December 9th, 2009 at
Interesting thoughts. Couple of very important points you've touched like discounts, social media importance in eCommerce, easy payment mechanism (especially for high priced items), payment gateways and above all a personal touch.
Now it makes me wonder why can't we use all these in our favor and make a biz model out it? btw I think we can!
Cheers
@Sampad
December 9th, 2009 at
Interesting thoughts. Couple of very important points you've touched like discounts, social media importance in eCommerce, easy payment mechanism (especially for high priced items), payment gateways and above all a personal touch.
Now it makes me wonder why can't we use all these in our favor and make a biz model out it? btw I think we can!
Cheers
@Sampad
December 9th, 2009 at
The lack of good payment gateways seems to be a very critical issue for the expansion of ecommerce in India.
You can optimise your UI, your business model, expand your user base, but if your users can't find a way to pay you easily & securely online, you simply won't sell.
I kind of heard here and there that it wasn't possible (or easy?) to use Paypal as a payment gateway in India. What is the situation ?
And what about Google Checkout ?
Btw, do you know if there is any article comparing the different payment gateways that can be used in India ?
December 10th, 2009 at
Yes, that's a real issues looming in Indian eCommerce market. And as you pointed out Paypal & Google Checkout isn't the preferred mode of transaction in India yet.
This article in Startup Dunia covers a good comparison of different PG's of India http://www.startupdunia.com/india-startups/compar...
But I would also recommend to read the comments since they provide further insights.
Cheers
December 10th, 2009 at
you have a nice site. thanks for sharing this resources. keep it up. anyway, various kinds of ebooks are available here
http://feboook.blogspot.com
December 14th, 2009 at
Indian consumers need to be educated about the safety and security of online transactions
January 2nd, 2010 at
Most of the points have been discussed here. I run about 7 online stores in US and I'm in the final stages of launching one in India in few weeks. The challenge I face now is with Payment gateway and the Shipping. It's real hurdle there. Most of the Indian consumers use Debit cards for purchases, which doesn't work with Paypal. Google Checkout is not available in India. Paypal works with Credit Card, but not many people have credit cards and the banks slowly stopped issuing any credit cards. Payment gateways in India (Including banks and 3rd party) asking too much or taking too much. Courier companies look at us as if they are doing a favor to us. SpeedPost seems to be good choice so far. We can cover anything (UI, good discount, marketing, etc), but still we do not have control over things like Payment gateway, shipping and credit cards, which is very vital for ecommerce
May 7th, 2010 at
thats a very good article with nice content!
cheers
July 7th, 2010 at
that is a very good article with nice content
July 8th, 2010 at
Indian Consumer now has been aware online shopping. E commerce market is growing than before.