E-tail reaching beyond Indians with PCs and smartphones

India, which currently has 35 million online shoppers, is likely to have around 100 million by 2016, according to recent research by Forrester Consulting and Google. In the last of a three-part series, Business Standard looks at the little publicised encounters of low-income shoppers with the world of e-commerce

A space smaller than a garage, sparsely furnished with a counter, a laptop, a few Hindi posters and a chair, is easily overlooked in Delhi's gritty, lower middle-class Tughlakabad Extension.

But the area's first ever assisted e-commerce outlet should be judged not by appearance but its ambitions.

These immediately become apparent when Prithi Pal, a migrant from Etawah in Uttar Pradesh who works for Rs 15,000 a month as a tailor at a nearby garment export unit, enters the outlet.

Sales officer Ravi Prakash Pandey, opening the laptop, launches a pitch in which the words "cheap" and "branded" occur at least once in every sentence.

Prithi Pal is here to remit money through Fino Paytech, a payments technology company that has recently started 110 such "money marts" across the country to cater to migrants, daily wage earners and other low-income people.

These customers, on the wrong side of the digital divide, are also being introduced, via laptops, to a range of modestly priced "utility-cum-aspirational" products offered by e-retailer Snapdeal, including mobile phones, speakers, solar lanterns and dinner sets. The outlets handhold customers by ordering and receiving for them.

According to Fino, while its 30 money marts in the Delhi-NCR region have seen an average of 600 customers daily, a minuscule number of these have e-shopped. Delhi sales manager Vishal Gandotra puts the number at about 60 or 70 so far. Yet Fino, which earns a commission on what it sells for Snapdeal, is committed enough to plan for 500 such outlets by March 2015, each with a modest capital outlay of Rs 1 lakh.

So, too, is Snapdeal. Its chief executive officer Kunal Bahl says it is imperative to access a world beyond 200 million PC- and smartphone-enabled Indians in order to "get the next 50-100 million buyers into the fold". The company wants to be in 5,000 e-commerce kiosks by the end of next year because low-income shoppers need a "trusted intermediary layer". Bahl clarifies the company will not invest in physical infrastructure but use that of others.

Other e-retailers are also trying to reach out in their own way to the less affluent. Fashion e-label Yepme.com's chief executive officer Sandeep Sharma boils down his company's strategy to four points.

One, the average price of a sharply designed fashion item is below Rs 500. Two, an unfashionable delivery option, India Post's VPP, reaches every pin code in the country. Three, Yepme has a mobile app that works on a cheap, low-tech second generation feature phone. Point number four is, in two words, Shahrukh Khan, the company's current TV face. Even though Yepme is still in the red, Sharma argues for splashing out on TV to reach a wider audience. Yet, despite the floating of such strategies, the "low-income" e-shopper is fuzzily identified, because both digital access and aspirations seem hard to gauge.

Sharma of Yepme says he is targeting someone with a family income of at least Rs 20,000 a month. However, analyst Arvind Singhal of Technopac estimates 150 million households with incomes of Rs 25,000 or less, cannot be considered candidates for e-commerce. Another analyst, Mohit Bahl of KPMG, excludes "anyone eligible for a government flat in the economically weaker category". Snapdeal's Bahl merely says he needs to reach out to families which do not own vehicles, so far only 30 per cent of his buyers.

A discussion  last week  with students at Sakha, a skills training centre in Kalyanpuri in East Delhi, underscored that while awareness has trickled down, especially to the young, the picture was complex.

Many of the 40-odd students, drawn from slums and resettlement colonies, knew the names of big e-retailers, and yes, knew Yepme too, but few had shopped online. Yet, a youth from a poor family that epitomised digital exclusion had a brother who worked at a call centre and had ordered shoes online. Some others had used second-hand smartphones. But one youth, whose father was a laundry worker, had spent his entire earning from a summer job, Rs 7,500, on a new Micromax Canvas Doodle 3 phone.

Yet gadgets are a mistrusted category. "I would rather buy fashion items," said 18-year-old Vikas Chauhan. "You get proper brands online, not fake logos." A defective DVD player bought online for Rs 1,700 had left a bitter taste. It seemed the problems that all customers sometimes face with e-retail are magnified for those who don't have the skills to get these dealt with.

In his pitch to Prithi Pal at Fino money mart, Pandey tries to nail these very issues. "No computer needed, no address. I will order the goods, you will collect them right here. You can open the packet and check, you can return goods in seven days."

The tailor listens, but his eyes linger on a poster offering a dual sim phone for Rs 990. Pulling out his own, not dissimilar, phone, he wonders why he paid nearly twice as much last year in a local shop.

Clearly, Pandey has half-succeeded. Prithi Pal leaves, not with a purchase, but at least with a message: that the digitally excluded end up paying more than people who might be better off than them.

CLARIFICATION: This aticle had wrongly spelt Yepme.com as Yipme, which has been corrected. We regret the error.