E commerce in India is at crucial juncture. While the cash crunch is being felt by the most players, social media is fueling a lot of growth for these players. Deepa Thomas, e commerce evangelist at Ebay India, tells Digbijay Mishra how 14% of its traffic comes from Facebook and what the smaller players need to do while developing a sustainable model to stand a chance in the long run. Edited excerpts:
What is the current scenario of e commerce and how is the outlook in India?..
A E commerce is growing at a healthy pace. It is now at $1.2 bn growing at 55% and expected to be $1.8 bn by this 2013 according to IAMAI data. So outlook is very positive.
Today there are 69 mn Indian who r visiting online sites though the number of people actually transacting is much less which is 14 mn but the fact that they are visiting the e commerce websites mean that they are interested in it and at least check out price and find out more about products.
We are now seeing a cash crunch being felt in the industry. Is there any cure?
There is a definite drying up of funds from venture capitalist and I would say this is because of couple of reasons. One is services,,where you had spas, restaurants and other such services available have shut because it was being discounted to death. The venture capital money got burned actually. Now the effort is to catch the Indian companies who are setting up venture capital funds. Of course ultimately people worth sustainable business will find funding and there will be four or five big companies ..there will not be one winner.
So, big names will survive but what about small companies?
I would say if you are small company you need to be very clear and focused. Have a target group have a clear orientation on what you are offering..so if you are a start up your scale of operation and investment needs are small so its not like every start up will do badly. But companies trying to be clones of existing biggies without tat kind of appetite may not do well. You should have clear value proposition for customers..for example...if I want to sell a certain jewelry to certain age group then that should be my focus...but if I try to do everything...perhaps I will not do well
But being so niche at the beginning, will that restrict my growth?
It depends..if you can offer something in which customer finds a true value then you can do well..there is no hard and fast rule...even the same exists in offline retail.
How is social media fueling growth for e commerce?
There is a large relation between the two. Facebook alone contributes of 14% of our traffic at Ebay. The transaction will be a little lower than that but the engagement that is happening there is very powerful in multiple ways because you see your friend buying you feel more confident..we also have lot of things sharable.
What is other option apart from VC funding?
At ebay everything is from USA. Headquarter but the key is to grow the number of users and merchants. So it is about how can we get more people to buy online. Also more brands as in Spencers, Bata because they add confidence so when i see a brand that I have bought those brands offline I will b more confident to buy it online.
What is happening at ebay?
We have come up with Customised feed for individual customer. Earlier it was just a template so that is something we have done..In terms of growth, we want to grow faster than industry.
How long a growth of 55% is possible?
There is a lot of time as a lot of headroom exists so healthy double digit growth is going to continue for substantial amount of time. At one point we though it might reach three digits but then recession came in between.
The number of total traffic and actual transaction, there is a gap. How do you plan to bridge the gap?
You are constantly seeing the traffic .10 million are coming to ebay so they are the ones who are coming to ebay. Second base is the ones who have already bought which is called retention.
Any off line activity required for companies like you?
Yes we do, We partner a lot with telecom companies, colleges, IIM.. They (youngsters) spent so much time online so its easy to move them to e commerce.
Your exposure to TV ads is limited? Why?
we believe is a sustainable business model. We will never advertise all year around because there is so much wastage because there is also the 60/90 year old guy who would probably not come to shop online so TVC we do in bursts.
In terms of branding, are you looking to be more Indian?
We have been here for eight years. We are international company with a Indian heart .the entire team is Indian and we have done many localisation to cater to the consumer base here.