case on influence of culture on design of e-retailing portals

7/27/2019 Case on influence of culture on design of E-retailing portals

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Cultural

influences indesigning e-Retailing portals

Submitted byGroup 9ASudhir Medithi(122049)Vinay Tejasvi (122105)


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Table of Contents


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Mr.Chris Lambert, the head of Marketing at CrySoft Technologies had reached office an hour

earlier than his usual time to prepare for his meeting with the companys CEO. In the past

few weeks, Chris had been working on the re-launch of his companys e-commerce website

in India and his team had come up with a new design and layout. The earlier website failed to

attract customers and had been criticized for neglecting key cultural aspects of the Indian

consumer. The team had spent considerable time in identifying the needs of the Indian

consumer and made substantial efforts to customize the website to gain a better cultural fit.

Chris was hoping for a go-ahead from his CEO to initiate the changes in the website.

Company Background

TheCrySoft technologies Ltd. Is an American e-commerce company, headquartered at New

York, United States. Mr. Jeffrey founded the company in the year 1995 as an online retail

bookstore but in a short span of time CrySoft diversified in to selling electronics gadgets,

apparel, furniture, and toys.

Vision, at CrySoft technologies, is to build an excellent e-commerce platform where people

can buy anything at a cheaper, affordable price with a trusted experience. Crysoft limited

ventured in to India and started its operations in the year 2009. Indian subsidiary reported a

revenue of 217.78 crores, net loss of 116.69 crores in the year 2012 and 49.4 crores revenue

and net loss of 24.01crores in the year 2011 (Exhibit -1). Others competitors like naaptol,

best buy, snap deal are able to make profits in this business but crysoft is failing to do so

since it began its operations.

Main product categories that CrySoft offer through their website are

Books: Covering all novels (fictional and non fictional), education related (textbooks,

entrance exams materials, academic & professional journals), religious etc.

Clothing: All seasons collections for both men and women are offered. More than 250 +

brands products are available.

Footwear: It offers both sports & causal shoes, chappals, sandals, floater collections for both

men and women in more than 40 brands.

Fitness, Home kitchen, Electronic products, accessories, and watches: Various brands

products are available in each category with different price ranges.


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Beauty &Skin care: It offers more than 70 brands cosmetics to the women covering wide

range of products.

Gaming: It offers various gaming consoles, games CDs, dvds and gaming related

accessories. It covers all latest release of games.Payment Modes: CrySoft provides customers with a confidence of safe and secure online

experience, simplified electronic payments flow, cash on delivery and customer friendly

return policy. CrySoft with 24x7-customer service support and with globally recognized

purchase protection, company leaves no apprehensions to customers regarding their security

concerns.

Evolution of E-Commerce in India

Evolution of e-commerce in India started with the launch of internet using dialup connection

in six cities. By the year 1998 online job portals, matrimonial portals ruled the e-commerce

space. With the effect dotcom bubble, during the period 2000-05, e-commerce faced tough

times but after the year 2005, this industry started growing at a rapid pace. Below image

shows the time line of e-commerce developments in India.

Source: (RE-BIRTH_OF_ECOMMERCE)||KPMG report


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Modes of Conducting E-commerce in India

E-Commerce transactions in India are broadly classified in to three modes

1. Customer to Customer (C2C)

2. Business to Customer (B2C)

3. Business to Business (B2B)

Below image shows the various transactions carried over e-commerce space

Source: (RE-BIRTH_OF_ECOMMERCE)

Customer-to-Customer (C2C): At present C2C, represents only small chunk in the e-

commerce market space but numbers of entrants in this mode has been increasing. Many of

these entrants are backed by venture capitalists and this segment expected to grow in future.

Ex: Online classifieds about selling of cars

Business- to- Customer (B2C): This market is predominant in India out of all available

modes of e-commerce. In this segment, major revenue generators are online travel portals

and e-retailing portals. This segment is rapidly growing and expected to continue the same

trend in future years.

Ex: IRCTC, Flipkart

Business to Business (B2B): MSMEs (micro, small and medium enterprises) are the

frequent users of this mode. This helps the businesses to find the market for their

products/services and helps to overcome high financial & communication barriers


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Key stakeholders in E-commerce Supply chain

In e-commerce, information flow, product flow and monetary flow constitutes key things to

carry out a transaction. Three stakeholders play a vital role in carrying out these flows in e-commerce space (i.e. supply chain). One is buyer, second is e-commerce player and third is

supplier. In product flow, movement of goods happens from supplier to customer via E-

commerce player and vice versa in monetary flow. Information flow happens across the value

chain (i.e. key stakeholders, Enablers, Customers) right from placing of order to delivery of

the product to the end customer. Below image shows the typical e-commerce supply chain.

E-commerce Market size in India

B2C and C2C together showed a phenomenal growth rate of 49% (CAGR) in reaching $ 9.9

billion in 2011 from $ 2 billion in 2007.

All figures in Billion


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Indian retail market size was estimated at $ 528 billion in 2012 with a growth rate of 11%

(RE-BIRTH_OF_ECOMMERCE). In 2012, 90.4% of the revenues are from the unorganized

sector but organized sector showed a growth of 24% year-on-year growth. In the year 2012,online retail market constituted to 1% of the total organized retail market in India. Below

image shows the market size stats of retail sector along with online retail contribution.


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Considering the growth potential of Indian retail market, online retailing market is expected

to grow at rapid pace in coming years

Emerging Models in E-commerce

With the changing times and needs the way of conducting the businesses are also changing

with the time. New models, which evolved recently in e-commerce space, are

1) E-mall/E-market place 2) Deals/Group buying

1) E-malls/E-market place: This business model is similar to real world shopping malls.

Here merchants can setup their virtual shops and carry out their normal merchandise

operations. Advantages of this model are, merchants will have access to huge customer base

when compared to setting up new website altogether and merchant can use existing channel

for payment related activities.

2) Deals/Group buying: This model is gaining popularity in recent times, premise behind

this model is to operate in large volume, by which merchant can achieve economy of scales

thus can reduce the price of the product.

Outcome of launching a standardised website

CrySoft technologies launched their e-commerce portal in India by making few

customization in terms of content (i.e. Address forms, phone numbers etc.). They believed in

the maintaining standard layout across the globe and same business methodology. They

continued to offer the same deals in India similar to that of USA. During initial days, website

attracted huge number of customers, in due course customers visits to the website, logins

and purchases eventually reduced. Below graph depicts the three years customers data.

Interest of the people visiting the page has decreased from 80% to 15% even though

company offering competitive prices compared to the others competitors in the market and

purchases were almost stagnant.


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Cultures influence on Website

Design

In the context of electronic commerce, the website layout and design must take into

consideration, the behaviour, emotional response, purchasing trends and needs of the online

shoppers. Hence, Mr Chris Lambert formed a team to design a website that reflects the taste

of Indian consumer.

The team adopted Hofstedes model of national culture to gain better understanding of the

Indian consumer and to configure the websites layout & design according to the cultural

dimensions, preferences and expectations of the Indian customer.

Indian Culture according to Hofstedes Model

The team then gathered information from the Hofstede Centre (The Hofstede Centre, 2013)

on how to view India from the lens of the cultural dimensions model (ReferExhibit 2 for the

Hofstede Centre ratings for India) and made the following observations:

Power Distance in India

The Hofstede centre had scored India with 77 points on the power distance index. This

number is fairly high on the power distance scale and indicates that people in the lower levels

of organizations accept the unequal distribution of power and are accustomed to hierarchical

social structures. Communication mostly happens from the top and critiquing opinions or

voices from below are neglected. Centralization of power is another key element of Indian

culture and the power holders expect and receive obedience from their subordinates. Due to

power distance in social life, Indian consumers are expected to be very loyal and do not shift

Interest (100% - peak interest)

Months


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their allegiances frequently. Hence, they will become loyal customers who will generate

repeat business if they are satisfied with the services offered by the company.

Individualism in India

India scored only 48 on the individualistic trait which means it clearly is a collective society.

The social groups that individuals are part of have a huge impact on the opinions and

decisions that individuals have or make. Acceptance in a social group is very important to

Indians and people are expected to behave in accordance with the guidelines laid down by the

group. In such a culture the buying patterns and behaviour are hugely influenced by the peer

group, family and friends circle of online shoppers and products and designs that gain the

acceptance of the society at large will also be adopted by individuals who are part of this

collectivistic culture. The utility and expectations from products must reflect the collectivistic

nature of the society.

Masculinity and Femininity

A score of 56 on the Masculinity index suggests that India is slightly more masculine than

feminine. In India, the show of wealth as an indicator of success and the utility of brands and

material resources is widely accepted. However, due to its spiritual inclination the country

also displays feminine qualities such as focus on quality of life and well-being of others. The

economy also is a mix of capitalism and socialism. In Masculine societies, the men hold

more positions in social life and the result of an activity is considered more important than

the process.

Uncertainty Avoidance

The Hofstede centre gave India a score of 40 on uncertainty avoidance which means that the

national culture has less affinity to avoid uncertainty. Hence the Indian customer is open to


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new and innovative products and is willing to adopt new ideas. When communicating to the

consumers, the visuals and messages can be generic and need not be very detailed. Indians

are also more tolerant to mistakes and failure of products and accept unconventional

marketing strategies.

Long Term Orientation

With a score of 61, India can be called a culture that is pragmatic and focused on the long

term. Being a secular nation, there is a tolerance for many religions, beliefs and sub cultures.

Indian society forgives the lack of punctuality, is flexible about change in plans, and does not

insist on adherence to a fixed path. The value placed on education and personal development

is high in India that aimed at giving long-term benefits.

Proposed Layout and Design

Based on the Hofstede model of cultural dimensions, the team developed a preliminary

layout and design idea for the website that are effective in adapting to the cultural differences

in India.

In accordance with the High power distance observable in the Indian Society, the layout

would be very formal and categorized according to product lines. Each product line can

then be classified clearly into multiple divisions based on a variety of attributes like age,

price, size, features etc. Promotional messages and schemes need not be elaborately

mentioned on the home page. Such promotions can lead to other pages of the website where

users can get more information about the scheme. Also, due to low uncertainty avoidance of

Indians the use of a site map indicator can be avoided. While navigating through the website,

users can be offered choice of products that are related to the ones they are currently

browsing and the catalogue of products can be huge as Indians do not mind browsing through

a lot of products before they make a purchase.


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The design of the website incorporates both flashy and sober renditions. Lifestyle items

would be displayed in a flashy manner whereas as general purpose products would be

displayed in a sober manner. Since Indian society is more masculine, the design of the

website can focus on promotions or visual renditions with male themes such as contests,

winner announcements. Also, the design can focus more on showcasing exclusive brands and

designer labels that the company sells.

Dilemma

By accommodating these cultural aspects in the design of the website, the team hopes to

reflect values of social life that are aligned with the cultural identity of Indian consumers and

create a successful platform for the companys operations in India. Chris also wanted to

incorporate colours, public figures and Sanskrit quotes that would increase user satisfaction

and enhancing the online shopping experience. He was also worried about finding a balance

between the masculine and feminine traits in the design of the website.

Has the team considered all possible differences in cultural dimensions while making the new

design? Will these changes suffice to turnaround the bad fortunes for his company in India?


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EXHIBITSExhibit -1

Income statement of Crysoft technologies India


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Balance sheet of Crysoft technologies India

Exhibit 2: Rating of India on Hofstedes 5 dimensions of culture

Source: The Hofstede Centre

case on influence of culture on design of e-retailing portals

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