Even though e-retail in India accounts for a miniscule 0.1 per cent of the total retail sales, as against 8 per cent in the US, this segment is poised to grow at twice the pace with which the traditional domestic retail sector is growing.

However, challenges such as inadequate online payment methods, fragmented supply chain structure and low awareness even among Internet users are stifling the growth of e-commerce.

These and other issues were discussed at length during an interactive session on Strategies for e-retailers at the Digital Summit 2013 organised by the Indian School of Business here recently.

Vivek Pathak, Head, Business Strategy and Operations of eBay, traced how Indian e-retail was moving from the inventory-led model to the marketplace-led model. In the inventory-based model, the e-retailers had to build their own inventories and handle their in-house logistics, which gave them complete control over the entire value chain. However this model faced challenges of scale, had longer lead time and lower margins, besides requiring more capital.

Pathak said the marketplace-led model, which eBay was focussing on, involves lesser capital. This model is based on creating an online platform to bring retailers and consumers together. As it does not involve building own inventories, this model needed lesser capital. “However, challenges before this model was creating the right buyer experience and building trust,” he said.

He gave a snapshot of how eBay was trying to create this structure. “We are focussing on technology that will widen the search window for consumers and improve browser-based experience,” he pointed out.

Saran Chatterjee, Vice-President (products management) Flipkart, said e-retailers should move from cash-on-delivery payment model to cash-on-satisfactory model. In other words, consumers will prefer to pay only after they are satisfied with the product delivered through online purchase.

Experts pointed out how ‘showrooming’ was hitting traditional retailers – this means people visit retail stores just to select the product and later purchase it online at cheaper rates.

It was pointed out that some Australian retailers charged $5 as a ‘just-looking fee’ for customers who visited the stores but did not pick up anything.

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