E-Tailing In India: Opportunities And Challenges | Week 4

E-Tailing In India: Opportunities And Challenges

E-tailing simply put, is the selling of retail goods on the Internet. Short for "electronic retailing," and used in Internet discussions as early as 1995, the term seems an almost inevitable addition to E-mail, E-business, and E-commerce. E-tailing is synonymous with Business-to-Consumer (B2C) transaction. E-tailing or E-commerce can be described as transactions that are conducted over an electronic network, where the buyer and merchant are not at the same physical location, for example plastic card transactions via the internet. The major benefits for consumers is that e-tailing saves them time and money as more discounts pour in plus they get to choose from wide variety of choices. E-tailing has resulted in the development of e-tailware - software tools for creating online catalogs and managing the business connected with doing e-tailing. A new trend is the price comparison site that can quickly compare prices from a number of different e-tailers and link a customer to them. The economic conditions across the world are becoming harsh day-by-day and it is making it tougher for companies to increase their franchisee sales or shop sales but it is definitely making headway into their online E-tailing footprint.

The total e-commerce business in India, including other products and services such as travel and financial services, is estimated to be USD 10 billion at present and is expected to touch USD 200 billion mark by 2020. "The coming years will see emergence of totally new sets of retailers in all formats, including  hypermarkets,  department  stores,  supermarkets,  cash  and  carry,  and  specialty stores. However, these retailers shall be 'virtual' ones rather than physical ones," (Technopak, Indian Times). E-commerce helps the business owners to easily and quickly build a secure shopping cart to merchandise your products, take orders online, process payments, and distribute digital products over the Internet. It helps in controlling all your on-line commerce activities. E-commerce provides a lot of services to its customers like:

1.   E-commerce provides the opportunity to customers to purchase and sell goods online.

2.   Customers can buy goods online at any time they want.

3.   Online purchased goods are delivered to the door by sitting in the house.

4.   It displays products to the customers so that customers can decide what products can be purchased.

E-TAILING SCENARIO IN INDIA

According to the Internet and Mobile Association of India (IAMAI) and IMRB report, the E- tailing market was worth Rs 850 crore for 2006-07 and went on to achieve 30% growth by registering a turnover of Rs 1,105 crore in 2007-08 and is expected to show impressive growth in future too. It was just recently when future group started E-tailing for their white labelled products. Although E-tailing has lagged in India just like E-commerce but hopefully in future it would see a lot more actions as internet habit of Indian online users are on a rise and low sales and higher overhead cost makes it tougher for companies to expand their retailing footprint in India. E-Tailing has begun catching the attention of many entrepreneurs. Suddenly  a  lot  of  e-tailers  have  come  up  like  Rediff.com,  Jaldi.com,  Fabmart.com, Tsnshop.com and Satyamonline.com.

This could well be the beginning of an e-tail revolution in India. Blue Dart plans to enter the household shipment business in a big way to serve the needs of the online community in India. Looking at the coming e-commerce boom, Blue Dart is targeting a 80 per cent annual jump in its business, mostly from the shipment requirements of its online customers. For this purpose, Blue Dart has already invested Rs 40 crore to tune up its existing infrastructure and interface it with e-commerce potential. As the combination of retailing and e-tailing set to deliver the goods, the trend of using the internet as another service medium will gradually catch up. E-tailers like Jaldi.com have already set up kiosks in various cities  which  have  been  successful.  Tsnshop.com makes  use  of  its  teleshopping network franchisees in various cities for selling its products.

BENEFITS OF E-TAILING

The major benefits for consumers is that E-tailing saves them time and money as more discounts pour in plus they get to            choose  from wide variety of choices. Reasons for e-tailing becoming a hot opening can be attributed to many factors viz.:

•             No real estate costs: E-tailers do not have to maintain expensive showrooms or warehouses in prime locations; they operate through their web sites and thus save drastically on the real estate costs. The real estate costs in the metropolitan cities are sky high. Besides this, maintenance costs of a virtual store vis-à-vis a physical store are much less.

•             Easy and comfortably: Easy and comfortably -obtained info is another advantages that shopping on the Net offers. On the Internet, product information is just a few clicks away, all accessed in the comfort of a home. Traditional retailing stands out in stark contrast: the consumer searches frantically, runs up and down, and grills a poorly trained store assistant who is unable to help him out. In the bargain, valuable time is lost. Simply put, shopping on the Internet for, say 15 minutes could save a two-hour trip to the mall. Consumers prefer to save this time so that they can devote more time for their professional and domestic priorities.

•             Better interaction with the customers: The greatest benefits of online commerce are its ability to establish interaction en-masse. Interaction refers to the ability of reaching customers on an individual basis and reacts appropriately to responses of individual customers.

•             Mass Media: A supermarket has limited area of operation. It caters to customers of a city (and/or its suburbs), but a web site can be accessed from any part of the country or for that matter from any part of the world, thus increasing the potential customer base.

HURDLES IN E-TAILING

Most of the e-tailing ventures have not been as profitable as they were expected to be, the reasons being: -

•             One estimate is that India has a mere 4 million Internet users, mostly are from metros. According to web analysts many areas of retailing, Internet is unlikely gather a sizable slice of market. And that could be several years to come. , Especially in businesses where margins are thin.

•             Despite a higher Internet penetration, cities like Mumbai or New Delhi might not be a haven for an E-tailer. Reason: for things like grocery, there is a shop out there at every nook and corner. All that an individual has to do is just make a phone call and the goods are delivered at his doorstep.

•             There is mounting competitive pressures. The market for online buying is still at a nascent stage. Thus many E-tailers are eyeing a small market, exerting more pressure on operating margins.

•             Shopping is still a touch--feel--hear experience. Unlike the Americans, Indians do not suffer from 'time-poverty' and shopping is still considered to be a family outing. Hence this type of an environment creates a problem of customer retention.

•             Inadequate information provided when the customers discerns it certain products like clothes,    cosmetics etc. involve higher customer involvement.

Kind Regards,

Ravi Ranjan

Sec- B, ECOM