Tuesday, July 17, 2012

Ecommerce - India Challenge

FlipKart, Snapdeal, Myntra, FashionAndYou, infibeam, HomeShop18, inkFruit, ebay, Firstcry, hoopos, babyoye, bigbasket, 99labels, jabong,... the list of Indian ecommerce sites keeps growing every day.

FlipKart has raised over USD 100 Million, Myntra just raised USD 25 Million recently, snapdeal raised over USD 40 million a year ago, another USD 40 Million by FashionAndYou late last year - the investments have been coming thick and fast.

VC companies like Tiger Global Management, Accel partners, Norwest Venture partners, Intel Capital, Bessemer Venture Partners,  Nexus Venture Partners, IndoUS  Venture partners and a host of other top-notch venture capital companies have poured in literally hundreds of millions of dollars as a mark of faith in the Indian buyer.

Given the frenetic activity going on in this space, one would think all is well in the Indian ecommerce space.  But the truth is no one is sure yet who will win this battle or even if any of them will win this battle at all.

This doubt and worry is not due to any of the usual problem areas such as quality of goods, customer experience, ease of payment, or execution. The teams in most of the leading ecommerce sites have actually nailed these issues.  Finding what you want, buying it online and getting it delivered (usually well ahead of time) is as smooth as you can expect.  The problem is not related to the size of the market, or number of people with credit cards or the reluctance of the typical Indian to buy online without touching and feeling the product. A growing middle class, Cash On Delivery facilities and attractive prices have gradually eroded all these impediments, so much so that it is now believed that the Indian ecommerce market will be over USD 250 Billion by the year 2025!

So what truly ails the Indian ecommerce sector?  The real problem lies in the collective behaviour and psyche of the Indian - something that may not change for the foreseeable future.  Understanding the Indian mind and finding innovative ways around these essentially Indian problems is the only way to tilt the balance.  Just increasing volume of sales will not cut it if every individual transaction is making a loss!

Here are a few ground realities about us Indians that we need to accept.

1.  Customer delight hinges on only one criterion - price.  No matter how good the user experience on your site is, no matter how quickly you delivery, no matter how good your product is, or how generous your return policy, if another site is even a Rupee cheaper, we will go there.  Of course, you can still screw up, but you will get that opportunity only if you have been the cheapest option in the first place.

2.  Customer loyalty is non-existent.  However great our experience was with your site during our last transaction(s), do not expect us to swear allegiance to you.  Price is still king.  Then again, if you screw up badly, we will complain vociferously, but we might still quietly come back to you the next time if you are still the cheapest.  We have very short memories.

3.  User engagement is a pipe dream.   Do not expect any meaningful or substantial response to your overtures from us.  We are largely passive consumers of information rather than active participants or providers of information.  Take a look at the comments section of any site not related to politics, cinema or cricket if you want any proof.  Or look at the Indian contribution to the open source initiative. Even on seriously niche sites populated with "sophisticated" Indians, most comments are inane and add no value. (Check out the comments on India Nature Watch, for example.  It is a site where people share their nature photographs.  Most comments will be "awesome!", "Too good",  "Great shot" and "Super".  You will not find any meaningful dialogues.)

4.  Bad behaviour is not the exception (nor the rule, to be fair). We will promise to be at home at the time of delivery and then not be there.  We will agree to pay at the time of delivery and then try to bargain with the courier and return the product when the courier is unable to give a discount! We will return products on a whim, just because we can, but will make the collecting courier come three times before we handover the returned items! We will even use the items and then return them if we believe we can get away with it!  Not all of us will do this nor will we do this all the time - just often enough to hit you where it hurts.

Am I being too harsh and too cynical?  Use the comments section and let me know - if you can push yourself to do so :)


Ronnie said...

awesome !! lol - just messing with your previous mention of commenting on photography sites -

Sanjay Dattatri said...

@Ronnie. Good one!

Raj Bhatt said...


Excellent article! I think that some folks are becoming slightly more discerning about which online shops they buy from. However you may be right about price being the overwhelming deciding factor.

One suggestion: Please enable Twitter/fb/ Linkedin sharing of your blog articles so that I can share with friends.

Sanjay Dattatri said...

@Raj. Done. Thanks.

Vivek Venugopalan said...

Sanjay - seems to be lot of frustration venting out :). My take is that I think it is just our ecommerce sites are simply aping the west and not getting into the skin of the indian buyer to make him/her do what they want them to do.
For example, engagement - there are some FB groups like chennai shopping or chennai moms which I see huge interaction that is meaningful and helpful (mom to mom - that kind of thing)

In fact if you go to mooremarket.in you will see it started as an FB group on the whim and it has big traction.

I am sure we can be made to "behave" if we are given the right carrots :)

Vivek Venugopalan said...
This comment has been removed by a blog administrator.
charles said...

flipkart is like the prodigy that bursts into the mens playing arena ahead of its peers and earns the right to play with them.
But whether that prodigy will turn out a Vinod Kambli or a Sachin tendulkar...you need more time to assess temperament.
For flipkart it is about their founders...will they go all the way or will they sell out to amazon once their valuation peaks. The success of flipkart is not its immediate valuation but if it can leverage its brand to deliver 1000 crore of profits in the next 5-7 years. But then again considering that even a retailer like Kishore Biyani eventually had to sell out, the odds are overwhelmingly in favor of flipkart being sold..the only question is at what price ??

संदीप वि.सबनीस said...

agreed.....nice article....
using some of your data in my PPT

Thanks in anticipation....

commenting immediatly because hit by ur point - "User engagement is a pipe dream"

संदीप वि.सबनीस said...

agreed...nice article...
using some of data ..Thanks in anticipation....

commenting immediately because hit by ur point - "User engagement is a pipe dream."

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