Online Shopping Trends - India
Executive Summary
Online shopping refers to physical goods purchased online that are consumed offline. This is also termed as Etailing.
Etailing market size in India stands at Rs 850 cr in the year 2006-07 and is expected to grow by 30% for the next 5 years. Currently, Etailing in India is dominated by the concept of Marketplace.
To make it easy to understand, Marketplace is referred to as something where there are large number of buyers and sellers. The best example for this concept is ebay.
We are slowly moving into a pure online retailing concept (large no. of buyers and only one seller) with the advent of players like futurebazaar and hindglobal. Futurebazaar.com, with its deep pockets and infrastructure of its parent is definitely going to drive the market and expand its size. However, it would need to grow at a much faster rate to sustain due to its relatively higher overheads and sheer size of the organization which makes it less customer centric. Hindglobal.in, with far lower cash to burn needs to work pretty hard to gain in the confidence of the buyers.
Triggers
1. Low cost carriers
Thanks to Air Deccan and other LCC carriers in India, the concept of buying air tickets online spread not only to Metros but also to Tier II and III cities. I have come across many people wanting to avail of a credit card so that they don’t miss upon the free tickets offered by these carriers. Indian railways through its portal irctc.com had further added fuel to this fire. It’s only few more years where these people would move further up the ladder to purchase products online.
2. Credit Card User base
The credit card user base in India is exploding adding around 2 million cards every month. Further, with easy EMI options provided by banks and etailers who go to the extent of bearing the costs and providing EMIs at zero percent rate of interest to the customers are getting people to buy online rather than offline stores.
3. Broadband penetration
Unlike chat or emails, shopping online requires good internet connection. As per CII, broadband penetration has already crossed 3 million in 2006 and is expected to cross 10 million by 2010.
4. Indian Retail growth story
The hype around the retail growth in India has created a tremendous increase in commercial rents. These rents are passed on to the customer in the form of increase in product prices. This is where etailers have a cost advantage. They can provide a good bargain to their shoppers inducing them to buy products online.
5. Convenience
A trip to a mall especially on a Sunday can take few minutes to few hours depending upon the distance and traffic. The increase in vehicles with no simultaneous increase in infrastructure compels a customer to save time and efforts by shopping online.
These factors would slowly make the next Indian growth story in the form of e-retailers. As I repeatedly say that we have space to accommodate 3 Amazons in our country, it’s only few more years when this comes true.
- Vivek Jain
Director – Rinks Retail Pvt. Ltd
www.hindglobal.in
Note: www.hindglobal.in is currently under development and is expected to go live in the next two months.
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