Indians acquire e-com habit

ONLINE SHOPPING REALITY CHECK - I

Even if they buy offline, netizens research, window-shop online.

An estimated Rs 30 crore of air and rail tickets are sold online in India everyday. A jewellery piece sells every 5 minutes, a mobile handset every 8 minutes and a car sells every 9 hours on eBay. Over Rs 5,000 crore worth of business (domestic and international) materialised through leads generated by Indiamart.com during the last one year.

Moreover, online shopping is now prevalent in nearly 2,000 towns and cities (including tier-II cities like Surat, Ankleshwar, Sholapur, Kottayam, Faridabad and Bhopal). Maharashtra tops the list with Kerala yet to pick up.

Recent Internet and Mobile Association of India (IAMAI) figures clearly show that e-commerce has come of age in the country. IAMAI estimates the size of the Indian e""commerce market will touch Rs 2,300 crore (around 10 per cent of the organised Indian retail market) by 2006-2007 "" a 95 per cent rise over last year's figures of Rs 1,180 crore and an over-300 per cent rise over the figures of 2004-05.

"We will be concerned if the year-on-year percentage growth dips below 85 per cent," says Preeti Desai, president, IAMAI.

Goods sold online include books, electronic gadgets, air and rail tickets, apparel, gifts, computer peripherals, audio and video CDs and DVDs, magazines, sports goods, movie tickets, jewellery and toys.

Hotel rooms are also being booked online. Services like net banking (32 per cent), bill payments (18 per cent), stock trading (15 per cent), job search (51 per cent), and matrimonial search (15 per cent) have seen a tremendous rise.

Over 60 per cent of e-commerce transactions are being done by 20- and 40-year olds in India, constituting a considerable buying mass, suggests the IAMAI data.

Besides, netizens do a lot of online research and cyber window-shopping even if they buy offline, notes Desai. The Indian middle-class of 288 million is equivalent to the entire American consumer base. This makes India a real attractive market for e-commerce.

But is the boom here to stay, given that the country has only around 40 million Internet users (expected to rise to 100 million by 2007-2008), around 15 million personal computers and 12,000 cybercafes? This is according to Trai and ISPAI figures (other estimates, though, peg them at around 90,000 to 100,000).

The country does not have a very healthy broadband pipe. Besides, predictions have not always been on the dot, our surveys are mostly representative, and the legal infrastructure is sorely lacking.

Gautam Thakar, country manager, eBay India Marketplace, reasons: "With the world becoming a global marketplace, buyers for Indian products are coming online from around the world. On eBay India, we have seen over 1,000 Indians sell globally to buyers in over 95 countries in the third quarter of 2005 alone. In fact, an item sells to international buyers every 10 minutes. In this context, the size of the Indian Internet population alone does not remain a constraint."

Jasmeet Singh, vice-president (product marketing), Rediff.com, concurs. "IDC has pegged the e-commerce population to be around 16-18 per cent of the total Internet population in the country, which translates into roughly 6.5 million transacting users." Currently, around 8 lakh people transact on the Internet every month.

While 93 per cent of online shoppers bought products and services worth over Rs 300, 74 per cent of the purchases were above Rs 1,000. "Home delivery", "time saving" and the "24x7" concept appear to be the primary reasons for online shopping.

However, to take full advantage of the e-commerce boom, companies need to go beyond the "shop-in-shop" model (shopping links found on portals) which costs less than Rs 20,000. To make a successful e-commerce transaction, both payments and delivery services must be made efficient.

A full-fledged e-commerce-enabled site will include a payment gateway, website designing, development and maintenance, logistics, maintaining merchandise (for online window shopping), analytics (monitoring the shopping cart), and bill and inventory management.

A typical 50-product site will cost around Rs 2.5-Rs 5 lakh, while a 50-100-product site will cost around Rs 7.5-10 lakh. Besides handling the tricky issue of bypassing dealers, companies will have to invest time and money to make e-commerce happen. The critical ratio for an e-commerce site is how to convert visitors into customers.

Moreover, to propel and sustain e-commerce, several factors will have to be taken into account.