The Hindu Business Line : The virtual shopper

E-tailing comes with problems that are similar to real world retail. People buy goods online which are otherwise not available in brick-and-mortar stores. But what will they do if the goods go out of stock even in the online malls? Inventory is a ma jor hurdle while shopping online. “Lack of proper inventory management methods result in back-orders and delays in shipments,” says a Hyderabad-based shopper. “I have had an experience where it took almost one whole month to process and order. I placed an order for a couple of books, which, unfortunately, were out of stock, and the seller took about a month to get them ... All I could do was wait.”

Consumer mindset

The key hitch that needs to be addressed has more to do with consumer mindset than a change in business model. The biggest barrier is lack of trust, many online malls believe. However advanced the markets may be, customers are still sceptical about online transactions. “Very few realise that there’s more security when it comes to purchasing online. When you purchase offline, there’s a possibility that someone misuses your credit card. But when it comes to online shopping, all your personal information, like user name, passwords, credit card number and transaction history, is encrypted so that they cannot be read as it travels over the Internet,” says K. Vaitheeswaran, Chief Operating Officer, IndiaPlaza.in.

In a market where online shopping is still considered an unsafe and unreliable option, StoreGuru.com, Web 18’s flagship e-tail Web site, reassures its customers by claiming to provide the safest payment gateway among all e-commerce sites. “The site directs to an encrypted payment gateway of the bank itself, which is highly secure,” says Arindam Nag, Portal Head, StoreGuru.com.

According to a global online survey conducted by leading research firm Nielsen, more than 85 per cent of Internet users in the world are purchasing goods or services online, while credit card has emerged as the most used payment method for such purchases.

Indians have emerged as the third biggest credit card users globally for online purchases, next to Turkish and Irish e-shoppers. In the survey, as many as 84 per cent of online shoppers from India said they have used credit cards for such transactions, next only to 91 per cent in Turkey and 86 per cent in Ireland. Other modes of payment include debit cards, cheques and demand drafts.

Another attitude peculiar to Indians is that they would want to pay only on delivery. “If I have an option of paying the money when I have the product delivered, I feel I would be hooked,” says another online shopper. However, a few of them quote the fear of addiction as one of the factors that stops them from purchasing online. “I restrict myself from buying online as I think online shopping might lead to impulsive purchases,” a Chennai Netizen says. But e-store owners feel such addiction may not be Internet-driven. However, it is not the shopper’s mindset that influences or inhibits the growth of e-commerce; it is more the lack of understanding of customer requirements by these e-stores.

What sells online?

According to a study by Nielsen, globally, the most popular items purchased over the Internet are books (41 per cent purchased in the past three months), followed by articles such as clothing/accessories/shoes (36 per cent). Videos/DVDs/games and airline tickets add up to about 24 per cent.

However, in India, electronics and gadgets are among the most sought after products online. For IndiaPlaza.in, in the year 2007, there has been a drastic drift from books and music to gadgets and electronic items. “Back in 2003, 25 per cent of our sales accounted for books and 15 per cent for electronics. But, today, though our market for books is intact, the market for electronics has increased significantly – around 60 per cent of our revenue today is from gadgets,” says IndiaPlaza’s Vaitheeswaran. Incidentally, IndiaPlaza.in is the largest bookstore selling over three million titles.

The psyche of the modern buyer has changed quite a lot. Apparel is one of the highest selling categories in StoreGuru.com, says Arindam Nag. Consumer durables and jewellery are also sought after. “Surprisingly, the trend of checking things offline and then comparing the same online is becoming a reality,” he noted.

Sify Technologies has also kept pace with the market and has witnessed more than 70 per cent growth year on year. Gadgets account for much of their sales, says S. Rajaram, Head - E-commerce, Sify Technologies, adding that a lot of purchase also happens around events. Noting that Valentine’s Day is around the corner, he says there is a significantly higher demand for flowers and chocolates during this period.

Books, most popular

The number of books bought over the Internet increased by seven per cent in the past two years but clothing/accessories/shoes, which increased from 20 per cent to 36 per cent, witnessed the biggest growth. Online purchase of videos/DVDs and airline tickets/reservations rose two and three percentage points respectively in the past two years.

The online customer is more aware and more sensitive and, therefore, much more difficult to retain. Contrary to popular opinion, customer care is, and should be, a top priority with most online companies. “If a Web store does not respond to customer needs promptly, the customers tend to get quite upset and angry. Our strategy here is quite simple – be as responsive and proactive as possible to customer needs,” says Vaitheeswaran of IndiaPlaza. The industry needs to find ways and means to ensure that the customer has the right information, right mechanism and feels safe and secure while transacting online.

Indian e-stores should capitalise on the bullish trend and try new concepts to retain the customer base. “Try & Buy’concept would be a killer proposition,” says Nag of StoreGuru.com.

They will also have to focus on their back-end inventory and fulfilment systems, which are still not world-class. “As leading physical retailers start going online and the overall logistics infrastructure in India improves, this area will also progress further,” adds Mr. K. Vaitheeswaran.

With the increasing PC and Internet penetration in India, which is helping accelerate the share of e-commerce, it would not be wrong to predict that the mobile phone could well define the exponential growth in the near future. “The mobile phone can function as a catalyst for online shopping and can fuel its growth. Sify is today working with leading mobile-commerce players to ensure that we are an integral part of it,” says Sify’s Rajaram.

Mobile commerce wherein a mobile phone is used to make payments is catching on in India. “Mobile commerce is where e-commerce was five years ago,” says IndiaPlaza’s Vaitheeswaran.

“We expect higher growth rates and better reach in the coming years. With the sudden boom in online shopping, many physical retailers are moving to the Internet, which might sound a threat to online malls,” he added.

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