Posts filed under online retail

Group Buying: Not meant for the Indian market?

Written by: Samir

On May 25th, 2011

With a plethora of group buying websites flooding the Indian markets, E-commerce is certainly on the rise. According to the Internet and Mobile Association of India the market grew 70% from Rs. 19,688 crores in 2009 to Rs. 31,598 crores in 2010 and is expected to grow another 47% to Rs. 46,520 crores by the end of 2011. Over 25 group buying websites are already present (most of them emerging during the past one year) making the market quite cluttered, differentiation is missing between these sites and margins are razor thin.

Snapdeal, Deals and You, Buy the price, sosasta, khojguru, taggle, koovs, among others, are the new drivers of E-commerce in India. Most of these sites are relatively young, but investors are not shy of investing in them. January saw the world’s biggest group buying site, Groupon enter Indian market with the acquisition of Kolkata based sosasta.com. Infoedge (of naukri.com fame) invested Rs. 9 crores in mydala.com and German Group Buying Global AG acquired Mumbai based WanaMo.com and rechristened it as dealsandyou.com. What is also interesting to note is the entry of several major online giants in this space. Prominent e-Commerce player eBay.in entered this space. The last month witnessed two major online shopping sites: rediff.com and Times Internet launch their deal sites, Deal Ho Jaye and Timesdeal.com respectively.

Group buying websites come up with deals offered by different merchants in the city. These deals are active for a couple of days and discounts range from 20% to an incredible 95%. The user is either asked to pay the entire amount of the deal or an advance. However, there have to be a minimum number of people who opt for the deal before it become active. If the number of people who opt for a particular deal is less than the minimum required the deal is scrapped and the users get their money back. The deals are for restaurants, gyms, spas, health clubs, travel and various other services. The websites get a cut in every successful deal. These websites use Facebook and other portals, twitter or bulk emails to reach out to the potential buyers. They also thrive on word-of-mouth promotions.

But wait. Is the picture as good as it appears on the surface? Let us analyze different challenges for this business.

A highly cluttered market: With over 25 websites already present and many more in the pipeline, the competition in this market is cut-throat. The fact that these websites can easily be set-up, as the barriers to entry are very low, will only increase the competition further. Readymade softwares are already flooding the market and web development firms take no time to get you a Groupon type website up and running.

The key here is differentiation. Most of the websites present in this space are exact functional clones of each other (with some using the exact same templates as well). It is refreshing to see sites like Buytheprice.com who have tried to differentiate with a new incremental discount model, where they have deal slabs and discounts vary based on the final number of people who opt for the deal.

Deals: Are these deals too good to be true? I tried picking up a couple of deals at random from these websites. I picked up a deal for Hotel Ramada Gurgaon Central from snapdeal.com. Snapdeal claimed that the price of a night’s stay in this hotel was worth Rs. 12100 but they are offering a discount of 59% which means there price is Rs. 4999. I did a very basic online research and these are the lowest prices across various websites:

Hotel Website       SnapDeal       Yatra            TravelGuru            Cleartrip

Rs. 5849               Rs. 4999        Rs. 6928        Rs. 5099              Rs. 4887

Another deal at dealsandyou.com offers Seagate 500 GB and 1 TB Hard disks at Rs. 2999 and Rs. 5499, respectively. Out of curiosity I called up a local dealer in Indore and enquired about the prices. He got back to me with the hard disks priced at Rs. 2700 for the 500GB hard disk and Rs. 5250 for the 1TB Hard disk. These were prices for single purchase and not for bulk purchases.

Please note, these were just random samples picked up from all the available deals and are not indicative of all the deals available on these sites. The point that I am trying to make here is that there still is room for improvement and the deals that are being offered might not to the absolute best. We will surely have better deals as these websites mature.

Impact on local dealers: So does going to these deal sites really help the local businesses? Initially most of these local businesses see the exposure they get through the website. It’s a very good marketing platform for these sites. Or is it? Let us consider another example here. Dealsandyou.com lists an offer for certain salon services at Vibes in Bangalore. On contacting some of the good local beauty salons I found out the normal cost for these services would be anywhere between Rs. 2000 and Rs. 3000. Dealsandyou.com is offering the same at Rs. 750, which turns out to be a very good deal, assuming Vibes provides quality service. But the problem here for Vibes is as follows:

  • They are being pressed for margins and are providing these deals at prices which might not be profitable for them. Going forward as these deal sites mature they will press these local vendors further reducing their margins to a bare minimum.
  • Is this offer serving as a good advertising opportunity for them? I won’t think so. Someone opting for this offer at this salon might be very impressed with the services. But they will be under the impression that this service would cost them Rs. 7500 if the offer isn’t present, which, I would believe, might act as a deterrent for repeat visit.

Technical Challenges: Most of the websites operating in the virtual space agrees that doing business in India comes with its own challenges. Indian regulations don’t allow the storage of credit card information on the payment gateways unlike the US. 30% of transactions fail at the payment gateways. Companies are working on developing their own prepaid cards to ease the process of making purchases.

Traffic: With the exception of snapdeal, all the sites have struggled to generate substantial traffic for their websites. According to Vizisense.com, the total number of clicks for snapdeal was close to 34.4 million with an India rank at 16 (most visited websites in the last month). The second most visited group buying, dealsandyou.com website didn’t even feature in the top 100 and had less than 10 million overall page views, followed by sosasta.com which was ranked at 282 and barely has 3 million hits.

The good thing is, the e-commerce industry is growing rapidly and is also reflecting in the growth in traffic to these websites as well.

Survival: The abnormal increase in the number of group buying websites is posing serious challenges for every player in the industry. The number of group buying websites is already very high and I don’t think all of these sites would survive in the long run. The space would soon see some consolidation with 3-5 players controlling the chunk of the market.

The future of this industry will be quite interesting to follow. The major players will have to innovate to scale-up. Differentiation will be a key driver in this industry. Mobile phones will emerge as an important tool for differentiation as it would help the websites reach out to a wider audience. Companies would also be exploring alternate revenue sources. Another alternative for these companies on the long run would be the huge database of customers they will be handling as well as their relations with the local service establishments they will be serving.

We would love to hear your perspetcive/insights on this business. Please drop a comment or email me at samir@ileher.com.

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India Internet - status check

Written by: Madhur

On Jul 17th, 2007

comScore recently came out with a report on the Indian Internet industry. Here are some of my observations and thoughts:

Search engines - One of the popular category of sites. This category pretty much reflects the global trends in terms of the popularity of search engines. (Google, Yahoo, Microsoft, Ask). The interesting thing to note here is that there is no Indian company in the list. Given the variety of different cultures and languages in India, one might think local players might have an edge if they really tried. Currently though, most of the Internet population is English, but this is certainly going to change as the penetration increases. If Chinese search engine Baidu is anything to go by, there is certainly room for a local player in India too. And hey, its not like no one is trying. But frankly, other than Guruji, no one seems to be anywhere close to the standards of the big global players. We have talked about Guruji here and here, let’s see how they progress in the coming years.

Portal/Services - A popular category from the Web 1.0 era. The sites in this category either have day-to-day utility or entertainment value. Lot of early local players here from the 90’s, yet only a few established ones. Google, Yahoo, MSN are again the big players, although the good news here is that there are at least a handful local players in the sector.
news/entertainment/communication - rediff, timesnetwork and sify - decent content but poor user experience (broken links, popup ads, flashy ads)
classifieds - This is one category which has achieved the best success rate as far as the local players are concerned. One of the reasons is the demographics that is online in India and the fact that these players jumped on to the opportunity quite early in the game and more importantly stuck it out at the time of dotcome burst. Naukri, Shaadi, Bharatmatrimony, etc. are a few examples. A few promising sites in this space - mapmyindia (maps and directions), onyomo (local yellow page listings)

Social networking / web2.0 - A rapidly growing category. Very few decent Indian sites. Mostly dominated by the likes of Orkut, Facebook, Youtube etc. Again this is a category where one would think a local player can gain an edge as they would presumably understand the sensibilities of the youth better. Like I mentioned above, once English ceases to remain the predominant language on the web, more possibilities will open up. A few promising startups in this space - Minglebox, burrp.

Ecommerce - My personal favorite but not a popular category in India yet. We really need to catch up here if Internet has to sustain. The reason is simple - the most popular business model on the Internet is advertisments and for ads you need companies who are ready to advertise in the first place. Yes offline companies do want to advertise online, but there is only so much they will do. Real spending will come only from ecommerce players as they can directly affect the sales/branding using this form of advertising. We are seeing growth in this category. Check out some good articles on this space at Darpan Munjal’s blog. Travel is definitely a hot sector which already has a bunch of players (makemytrip, yatra, travelguru, cleartrip etc.) followed by entertainment (seventymm). The next big sector is retail which is currently dominated by Ebay India, but definitely expect to see some action here. IndiaPlaza.in and Futurebazaar are upcoming players. Remains to be seen who will emerge out as the Amazon of India (how about Amazon India itself?)

While on this topic, you might want to check out an interesting discussion here about why Indian companies are lagging behind global players (as opposed to Chinese, Korean, European markets). You can read the complete article for details, but the summary is that dominance of English language and poor user experience of Indian sites are the two main reasons.

Conclusion
India Internet has come a long way just in the last 3-4 years, but I think we are still in early stages. It might still take some time to reach the maturity level of more developed markets. To me, it looks more like the pre-bubble period (’97-98) of the US market. A lot of investment is happening, user base is increasing, new companies are coming up - things seem to be moving in the right direction. What are your thoughts?

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Comparison shopping in India: Current state and what’s in future

Written by: Madhur

On Mar 8th, 2007

Background
With the increasing Internet penetration, ecommerce is steadily growing in India. In the travel sector, it has reached a tipping point where buying tickets online has become quite commonplace. I believe it hasn’t reached that stage yet in the other sectors, but it is surely inching there. The number of sites selling stuff online is increasing at a good rate too - there are at least 150+ decent sites doing retail over the Internet. Surely, a lot of these have started off with focus on NRI customers, but it is not difficult for them to switch gears and start focusing on the customers in India, when there is demand.

Start of the concept
As the number of sites increase, how do you know where to go and buy stuff. Surely ebay is the current leader, but as other sites start becoming more and more competitive, it becomes a pain to find out the site offering the best deal. In comes the concept of comparison shopping sites. These guys build an index from the product inventories of as many online shopping sites as they can get the data from and provide search on this index. As a result, users can come to the site, search for products and see what each online merchant has to offer and eventually click out and go to the merchant site to do the transaction. The way these guys make money is by charging the online merchant for driving traffic to their site (mostly cost per click). As with the standard CPC concept, this marketing channel is very effective and accountable for the online merchants as they pay only when they actually get the user on their site. With more than 150+ shopping sites out there, you’d think someone would have seen an opportunity and started a comparison shopping engine. You didn’t think wrong. Surely, we are starting to see some traction in this area with the early players being bechna.com and ultop.com. Check them out, these sites do not have a lot of stores in their index, but its a good start. We will definitely see more players entering this field and will try to offer more and more value in terms of better user experience, having more items/stores in the index etc. Obviously, the more items and stores that a player has, the better job it can do by helping users find the best products and best prices.
How to scale?
Now the next question then is - how do these players get the data? Couple of options here: they can get data feeds directly from online merchants or they can scrape/crawl the shopping sites and extract data from there. The first method is an easier technological problem, because of the fact that data feeds that they get are much more structured compared to unstructured HTML from the websites (which ofcourse does not mean that no one takes this approach. Sometimes this is pretty much the only way to go. more on this approach in a later post). But the problem is that as more and more comparison shopping players come up, it is not scalable for the online merchants to provide data feeds to each of these players. Providing data feeds is not the only problem, the online merchants need to track how much traffic a comparison shopping site is generating so that they can pay appropriately and measure their ROI. As the industry matures and comparison shopping becomes popular, we will see “middle-men” in the form of data feed aggregators coming in, who will collect data from the online merchants and supply it to anyone looking to create a comparison shopping site. This is also a very attractive business as each these middle-men get a cut from the revenue that comparison shopping sites generate. Have not seen any player doing the data feed aggregation in India yet. To give examples from the US market, a few examples of comparison shopping sites are shopping.com, shopping.yahoo.com, pricegrabber.com, shopzilla.com etc. A few data feed aggregators are linkshare, commission junction, etc. In europe there is kelkoo, pricerunner to name a few.
Offline
Ofcourse the concept of comparison shopping is not limited to online shopping sites only. There are sites like Rediff Product Search and CompareIndia.com that actually build their index from data feeds from the local retailers, so users can find out who is offering the best deal and go and buy the products from the physical store.
Whats in the future?
I think bechna and ultop have an early foot in the door, but it will be interesting to see how they evolve and which other players come in by the time the concept really hits mainstream. Ofcourse aggregation and distribution of data feeds still looks like an open opportunity today (from my research).

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A Remote Retail Business - guest post by Sanjay Mehta of Homeindia.com

Written by: Madhur

On Feb 15th, 2007

In this guest post written by Mr. Sanjay Mehta - the president of Homeindia.com, he shares his experiences and insights from doing online retail business geared towards Indian customers. He describes Homeindia’s journey over the period of last 7 years, that has seen it all - the start, the boom, the bust and today’s rising wave. The article presents excellent all-rounded points on various business aspects including but not limited to product positioning, customer focus and sailing through the highs and lows of economic conditions. Needless to say, the article has lots to take home for entrepreneurs in the Indian Internet space. Many thanks to Sanjay for sharing this with our readers. Feel free to present your thoughts and even ask questions to Sanjay, if you have any. [If you have a story to share which fits the theme of iLeher and would like to publish, please contact madhur at iLeher dot com]

Here goes the story in his own words:

When you think retail, you think walk-in, you think proximity. And yet, we are running a retail business where we are thousands of miles away from our nearest customer!

Yes, I refer to our e-retail business, running at Homeindia.com, where we have focused exclusively on customers outside of India. Even today, nearly 7 years after starting this business, it fascinates me that sitting in a small office in Lower Parel, Mumbai, we are selling ethnic Indian products to customers located in far flung areas, all over the world.

We evolved into this. Starting from a pioneering, first of its kind web-to-snail-mail service (“Online Post”) that we launched in 1998, then extending to other services for NRIs, and then to a gifting service for NRIs, and finally evolving into this present state of an e-retailer, catering to NRIs and non-Indians, outside India.

I thank Madhur for inviting me to make this guest posting, and I take the opportunity to share some stray thoughts emerging out of the learnings of our journey of the last 6-7 years:

1. While we could have opened up our store to the Indian customer, it is clear that the customer in India is very different from the customer outside India. A single brand, a single URL will be hard pressed to do justice to both of these customer types, at the same time. From merchandising, to presentation, to pricing, and to the key value proposition offered, these will be entirely different for the two customer types. Even the quality of service that one needs to give to the customer, and which one can afford to give to the customer, varies a lot, between these two markets. As an organization also, this means two different cultures or attitudes, which cannot co-exist easily. So where we see many others attempting to address both of these markets simultaneously, it is our firm belief that we need to be focused to a market, and ensure that we have the best offering for that market.

2. Back in 1998-99, the decision to go NRI or India, was a simple one. There was no serious user base or market in India, and the NRI space certainly appeared far more attractive. Today, one may actually sit back and think – where should one rather be. And of course, each one will come to their own conclusion. For us, it still remains a relatively simple question to answer. The Indian consumer still has a distance to go before he embraces online shopping, especially for products that are otherwise in easy reach of his, in the offline world. There will be some early adaptors, and there will be specific unique product niches, where traction will happen. However on a mass acceptance front, I believe, it is still a while away. On the other hand, the market outside India has got only more attractive. In addition to the NRI, we see an increasing interest in things Indian, from foreigners – Americans, Europeans, etc. With the increasing interest in India, there is an increasing interest in things Indian. And while finding the specific customer/s for Indian products in the large global population may be like finding needles in a haystack, yet, once found, these needles are made of gold and diamond tipped – essentially in terms of what they buy, the transaction size, etc. So the search is worth the while!

Read the rest of this entry »

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Hungry for online deals

Written by: Madhur

On Jan 19th, 2007

One of the most prevalent business models in Internet companies is advertising. Here is a look at different types of business models that exist on the Internet around advertisements. The basic aim of advertisements is to generate leads for the advertiser. The beauty of CPC (cost per click) advertising on the Internet is that the vendors (advertisers) need to pay only when they actually get the traffic, which makes their marketing costs much more accountable compared to traditional banner advertising. Realizing the ROI that this promises to the advertisers, in the US, people have set up companies that solely do this - generate leads for online vendors. Of course any website that has google ads already does that. But let’s talk about sites that are dedicated to generating leads without focusing on any other content at all. One of the categories of sites that is quite popular in the US markets is the “deals” sites. These sites publish the latest and the greatest deals and discounts regularly, some updated throughout the day. People hungry for deals keep coming back to the site to check out the latest deals. Because of the timely nature of these deals, the daily traffic volume is high and since these sites publish hot deals that tend to expire soon, the clickthrough ratio is also very high. FatWallet is the big daddy of all such deal sites. There are dime a dozen other deals sites like edealinfo.com, deals2buy.com and more.

Naturally the trend is already beginning to catch on in the Indian markets. If you look at the google trends data for “online deals” India is not too low down on the list. So we had a chat with a couple of players - allindiadeals.com (publishes deals in online shopping space), tripmela.com (publishes deals in online travel space) - to get insights into what they are doing to get the latest deals on their sites and to drive the hungry for deals traffic on their sites:

Sources of data
: Both of these sites use a combination of feeds from vendors and handpicked deals from variety of websites.

Freshness of data: allindiadeals updates the site once a day while tripmela does that 2-3 times a week.

Business model
: The source of revenue for both of these sites comes from a mix of CPC based listings plus google ads on the site.

Marketing: Both the sites realize the power of SEO and are doing things to promote their site high up in the organic search results. allindiadeals uses the power of social networks like orkut and other online communities to spread the word. tripmela has used techniques like press releases and Search Engine Marketing to buy sponsored listings in search engines. tripmela also delivers weekly newsletters to the inboxes of the registered users and a lot of customers seem to like this feature. (Tip: Doing RSS based subscription could also be quite useful)

Problems they are facing
: This is probably the most interesting data that we got:
1. allindiadeals says initially people were not really familiar with the concept of online deals, although with the competition increasing among the online merchants, people are starting to get it now.
2. Both players mentioned that a lot of the online vendors do not understand the power of CPC based advertisement, as a result of which they are not willing to give data feeds. This is starting to change as well, with the increasing competition and increasing advertising budgets for online companies.

Bottomline
It’s clear from our conversation that a lot of merchants still do not understand the concept of lead generation and CPC advertising. We think as the market evolves, lead generation phenomenon will pick up steam - online vendors will realize the importance of CPC based advertising and they will start providing feeds of their data. As a result, we will start seeing more players who will get into lead generating business in the form of comparison shopping, vertical searches, affiliates and deals publishing sites.

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How to indianize your ecommerce site?

Written by: Madhur

On Jan 12th, 2007

Ecommerce is very important to sustain the growth of Internet. The ecosystem just doesn’t complete without ecommerce. After all that’s where the real money exchange happens between users and businesses. All other revenue models and businesses are just supporting, they cannot stand on their own. For example, there cannot be much expansion in ad revenues, or revenues from affiliates unless customers are ready to buy stuff that businesses are trying to advertise in the first place. We know that it is going to happen. Today or tomorrow, ecommerce will take off. It has happened in travel, it has happened in matrimony, jobs. Online retail is the next important and the biggest sector. There’s already a good number of sites that have decent offerings, but something feels lacking in them. Some of them are better than others in some respects, but none of them seem to be really tailor-made for Indian infrastructure and audience. Here is a list of points that we have come up to make a site better suited for users in the Indian context.

Payment system
People are not used to online payments. Forget online payments, people living outside of metros don’t even do a lot of credit card transactions. Customers need to be educated about this. They need to be given extra assurance that these transactions are safe. They should be given multiple payment options. Credit Card, Cash on Delivery, Cheque, Net Banking are just few of the days. Just today came across these two pieces of news, which talk about how BharatMatrimony (payment at local post office) and Yatra (payment at Web World) are using interesting ways of making payments easy for the users - quite neat.

Customer Service
Customer service is not a concept that a lot of Indian companies are associated with. (Isn’t it ironic that India considering that world’s leading companies have their call centers in India?) In any case, customers need to be assured that they will get top notch service. Phone numbers, live chat are some of the ways. Providing them assurance of smooth returns/exchanges will help quite a bit as well.

Shipping (delivery) assurance
Postal service is not exactly something that people in India count on. Of course most ecommerce companies use private courier companies for delivery, which are much more reliable. This needs to be spelled out explicitly on the site. Users need to be given guarantees about this.

Offline presence
We have written about this in details here. Having offline presence just gives a feeling that its all “real”. This can be a very important psychological factor for many users.

Mobile angle
We have seen a lot of companies using interesting ways to promote their service using mobile as a medium. This needs to be continued. Shipping info, tracking, price alerts, there are so many things that can be done using mobile. One of the biggest things that will help is mobile payments, when that hits the mainstream.

Price break
All things said and done, there is no real compelling reason for people to buy online unless they get a real break in the price. And this should happen. Businesses avoid the cost of building and maintaining physical stores and hiring employees by selling stuff online. At least a part of these savings should be passed on to the customers. And again customers need to be given proofs that they are getting non-trivial savings because they are buying online. Schemes like price matching will also definitely help.

Local language
The largest circulated daily in India is not English. To reach the critical mass, Internet has to go local language in India. Ecommerce sites typically have very little content. Having options to see them in local languages can be a very useful value add.

User interface
Keep it simple. Lot of Internet users are new and will be new in this growth phase. Lot of them would be doing their shopping first time. There is no point having complicated Ajax site or having a site full of flashy ads or million options for customizing what users are buying. Remember that most of Internet users still use dial-up, so the simpler the site, the faster it will be and more reach it will have.

What do you think? Why would you buy online, or why do you NOT buy online today?

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10 predictions for year 2007

Written by: Vivek Garg

On Dec 31st, 2006

I have been thinking about the predictions that I want to make for the upcoming year. Predicting is a tricky business unless you are inspired by Nostradamus. First few things that come to mind if you tried predicting about the consumer Internet industry in India are : “mobile 2.0 will lead the way to web 2.0″ or “more investments in booming industry” or “we will see increased M&A”. These predictions are either extended state of our present or they are generally true. So with the risk of sounding really stupid from iLeher camp, we put forward 10 specific predictions for year 2007. We tried to make them as specific as possible. Remember predicting is tough. But I am hoping this will get the dialogue started and we could encourage others to dare predict what they think will happen in future.     

1. Broadband growth in India will continue to disappoint by not showing an exponential growth. As against the target of 3 million broadband connections till 2005 end, only 0.18 million were achieved. At end-October, the total number of broadband connections stood at 1.92 million. The target till 2007-end is 9 million and 143 million by end of 2010.

2. WiMax will not be able to solve the last mile challenge; instead we will see a realistic alternative in cellular. Surge in Wi-Fi enabled devices will increase the number of ways people get online.

3. Airline tax cuts will boost travel industry further in 2007. Better taxation model will lower the net cost of flying around in India. This will increase the volume for travel portals. Too many players will lead to lower margins on each transaction.

4. Introductions of DVR in Indian markets with onset of Set Top boxes and DTH - people will no longer have to sit through painful ads to watch their favorite soaps. Set-top boxes will increase the market share of VOD. Find a detail post on various movie distribution channels here .

5. Online maps and local data will become commonplace. People will start using street maps and peer reviews of local destinations. It will lead consumers to online directions and use of map for their travel. This will benefit local search players like mapmyindia, burrp, onyomo. Google has recently started offering street level maps in India. At least a few of the big players like yahoo/msn/google/rediff/indiatimes will start offering local search in India.

6. ATMs everywhere will become a platform for ad placement, movie tickets and quick data shopping. This will cause increased computer literacy of Indian populace. Indian Railways is already extending the use of Internet to assist passenger’s book e-tickets over the ATM.

7. Mobile payment and mobile ticketing will hit mainstream. This will lead the ecommerce players to take mobile interface more seriously.

8. We will find Indians spending more time playing games (mobile, PC and console). Zapak.com will find itself well positioned. We will see players entering the gaming arena.

9. At least some online DVD rental companies and travel portals will realize the importance of offline presence and will tie up with local retailers and local travel agents for convenience of non-Internet savvy population.

10. iLeher will continue building a community of young professionals trying to make sense of the complex web of events relating to Indian Internet industry. Read our about page if you are interested in being a part of this community.

Your comments/suggestions and predictions are most welcome.     

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Ecommerce roundup - where does online retail stand?

Written by: Madhur

On Sep 30th, 2006

Bunch of news last week related to developments in the ecommerce industry in India, so I decided to do a quick rundown on the current happenings and present some thoughts.

Clearly, the leader is online travel market. You can get a lot of stats here but the bottomline is that it comprises of majority slice of the ecommerce indusy. It is not surprising then, that there are so many players (as many as 8 of them VC/Angel funded) that its already getting overheated for its size. The next two major sectors are matrimony/dating and jobs. Online matrimony sites have recieved a bunch of funding recently from big Silicon valley based VCs. You can read some news here and here. Online job listing sites are also turning out to be quite popular among Indian customers. Monster India has quoted an impressive figure of 1 crore (10 million) registered users, in a country where total number of internet users is estimated to be 37 million (of which only 10 million are “power users”). And then there are other verticals like online real estate (which has a bunch of players) and online movie distribution (which got quite a bit of news recently)

One sector that is lagging behind at this point is online retail market, with few major players(notable ones include rediff shopping, indiatimes shopping, fabmall, ebay.in, firstandsecond etc.) vying for a small market (roughly $250 million including travel, which is a significant chunk of it [pdf link]). But finally it looks like this sector is no longer being ignored and lot of big players are making an entry in this market. Here are some recent news bits:
1. Reliance and Pantaloon plan to enter the online retail market
2. Alibaba coming to India
3. Godrej and Boyce to launch online portal
4. Dominoes online pizza ordering and ecoupons

Now some of my thoughts:
As mentioned earlier, travel, matrimony and jobs sector have already grown big. They have recieved lot of funding, have a considerable user base and are set for more growth in years to come. The interesting sector to me is online retail, because this is one of the proven models of Internet business and have a large pie of the ecommerce industry in markets other than India (just for some perspective, US alone has at least 100,000 online retailers and more than double this number if you count all the small merchants on ebay and other marketplaces). Its not that online retail is something new to Indian market, in fact this has been around for a while in India, but has really not picked up because of various reasons including
1. Lack of credit card penetration, mindset of the Indian online population and lack of quality overall experience for shoppers.
2. Another interesting angle is that there are so many new and fancy shopping malls (note that these are not only very upscale ones, but for middle class population too like Bigbazaar etc.) springing up in India, which is relatively new concept for Indian customers. These malls not only provide a great shopping experience but have added entertainment value also as they are often seen as hangout places as well.

Considering above points, I am sure online retail market will take off, how fast depends on (obviously other than increase in number of internet users) how merchants can make the online shopping experience better than #2 above. The reasons cited in #1 can be overcome if the online merchants can provide a real cost benefit and top-of-the-line shopping experience. Good shopping experience may include reliable and smooth delivery process, easy returns, dependable product and merchant reviews and multiple payment options. If someone is really interested, Startup Review blog has interesting case studies on Newegg and Zappos, the two successful online retailers in the US, who developed their business against all odds and have sailed through bad times.

Update: Just after posting this, thanks to Venture Intelligence Blog got a link to this article from businessworld [free registration reqd], which has some interesting stats on online retail market in India. The main ones being:

1. Online spend on retail was roughly $260 million in 2005-2006, which is still a very small fraction of the total $11.5 billion of organized retail.

2. About 35-40 percent of the online transactions on Indian sites are done from abroad

3. Things that people like to buy online are books, electronic gadgets, railway tickets, accessories, apparel, gifts, computers and peripherals, airline tickets, music and movies (in that order)

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