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Once upon a time not so very long ago, online shopping was touted as the ‘Next Big thing.’ Then along came the dot-com crash and separated the men from the boys. SHIPRA ARORA reports.
Despite being termed a nonstarter around two years back with a sceptical audience not very confident of the deliverables, B2C (business to customer) e-commerce seems to have finally found its way into the Indian shopper’s wallet. A recent IDC study on the Indian e-commerce market suggests that 2002 has seen a growth of around 88 percent in B2C (Business to customer) e-commerce seems to have finally found its way tinto the Indian shopper’s wallet. A recent IDC study on the Indian e-commerce market suggests that 2002 has seen a growth of around 88 percent in B2C e-commerce spending over 2001, aggregating total revenues of Rs. 238 crore. Going by the research agency’s estimates, the outlook continues to remain positive with this spending likely to cross the Rs, 2300 crore mark by 2006, thus growing at a CAGR of 79 percent. (IDC defines e-commerce as the process by which an order is placed or accepted via the Internet i.e., a buyer clicks an order button on the Internet, thereby representing a commitment for a transfer of funds in exchange for goods or services)…
…This is an indication of a growing breed of Indian consumers who are not only better equipped but also more confident of online transactions. The question that now arises is whether Indian businesses too hae grown mature enough to move up the IT curve and consider B2C e-commerce a viable revenue model. The answer is yes, at least for the likes of baazee.com, indiatimes.com, rediff.com, indiamart.com, fabmart.com, traveljini.com and sifymall.com.
Take the case of indiamart.com, which has witnessed a growth of more than ten times in just two years in its online gifts domain. In the online travel domain, the company has been able to generate an average $8,000 worth of room bookings/ month for its first client. Dinesh Agarwal of indiamart expects to touch $15-20,000/month/client by the year end, which is over 100 percent growth. In this estimate, Ashish Kashyap, general manager for e-commerce at Times Internet also pegs growth in the B2C online retailing space at over 100 percent for at least the next two years. However, for traveljini.com, the business growth this year stands at a modest 20 percent.
Brick and mortar businesses are also building up e-commerce revenue. This year samsung India, the consumer electronics giant, recorded a 120 percent jump in online buying from its site over last year. Nirula’s, whose online B2C initiative, www.nirulas.com, has been declared the first Indian B2C portal by the Limca Book of Records, has witnessed more than double growth in its B2C e-commerce revenues. The company holds equally positive projections for the next one to two years.
DINESH AGARWAL expects indiamart room bookings/ months to increase from $8,000 to $15-20,000 bookings /month /client by the year-end.
Growth Drivers
According to a nasscom survey, from a 1.1 million active internet subscriber base in march 2001, the number is likely to reach 7.7 million in 2004-05, with the user base growing to over 50 million; by then, PC penetration is also estimated to reach a ratio of 13 Pcs per 1,000 persons.
Apart from infrastructure development, the growing maturity of the average Indian Internet user has also spurred the growth of the B2C e-commerce market. While infrastructure development is happening and will continue to happen,players have been striving to create awareness and increase comfort levels to move consumers up the IT value curve. In the last couple of years they have increasingly brought to public attention the existence of an alternative marketplace- the internet- and highlighted the benefits of buying and selling online. Some key benefits which players have been talking about include discounts and deals, quality of goods, convenience, availability of standard guarantees similar to offline shopping and the ability to make an informed purchase decision by comparing multiple sellers and checking products details and prices. Avijit Gupta principal consultant at Price Waterhouse Coopers says that convenience of buying is one of the most important reasons for buying on the Net.
But what has really given a boost to the cusstomer’s confidence is the progress on the payment-mode front. One of the big barriers in the way of e-commerce has been the scepticism surrounding security aspects of e-commerce, which lowered confidence levels. Online sellers are now concentrating on factors which help in transforming the sceptical Indian consumer into someone who experiments with buying online. These include not only creating more payment options and payment gateways, but also strengthening transaction security to gradually build up confidence in online payment as well.
Who buys online
- SEC A1 and A2
- 19-35 years age grounp
- Student or executive
- Owns a PC and accesses the net at least once daily, not just for mail but for other information-related activities as well
- Disposable household income of about Rs. 5,000.
- Purchases out of desire to experiment rather than habit
- Contrary to belief, most online buyers are not net-junkies but moderate net users
- Mostly male; the male: female ratio of buyers is approximately
Emerging trends
Greater security awareness will continue to drive trends like AVS (Address Verification system), PIN for credit cards, smart cards, digital signatures, e-cards, and easier intra and inter-bank transactions online. According to kashyap, unlike the situation on th eground where the liability of a fraud rests with the bank and not with the merchant establishment, in the online world the liability rests with online retailing platform. But in the next one year he expects this liability also to shift to the bank. Some other trends include payment throguh mobile phones, and better service offerings for online payments by the banks. Althoguh sophisticated online payment mechanisms will take some time given regulatory constraints, they will be an important facilitator of e-commerce.. moving in this direction, ICICI bank recently introduced eCheques. Agarwal feels that in future there will be convergence of media, Internet, cable and satellite networks with mobile telephony. The ease of access to and use of these media will bring about an increase in the size of the market…