e-retailing in india

7/22/2019 E-Retailing in India

1/41

E-Retailing in India

Group Members :

Aditi Nayak - 42

Divya Kumar - 34

Smital Bhalerao - 6

Arvind Palaniappan - 47

Harsh Salian - 61

Shailesh Bhadra - 5


2/41

1

TABLE OF CONTENTS

1.0 EXECUTIVE SUMMARY ....................................................................................................... 3

2.0 RESEARCH METHODOLOGY ............................................................................................ 4

2.1. Defining the objective of research............................................................................................................................ 4

2.2. Literature review............................................................................................................................................................. 4

2.3. Formation of the specific questions......................................................................................................................... 4

2.4. Building of a hypothesis............................................................................................................................................... 4

2.5. Research design............................................................................................................................................................... 4

2.6. Data collection and analysis...................................................................................................................................... 4

2.7. Findings and Recommendations............................................................................................................................... 5

2.8. Conclusion .......................................................................................................................................................................... 5

3.0 SECONDARY RESEARCH..................................................................................................... 6

3.1. Growing opportunities.................................................................................................................................................. 6

3.2. Key drivers in Indian e-commerce........................................................................................................................... 7

3.3. Drivers of accelerated growth................................................................................................................................... 8

3.4. Focus beyond Tier-1 cities.......................................................................................................................................... 8

3.5. Not easy to replace the traditional retailing channel....................................................................................... 9

3.6. FDI will enter in e-retail........................................................................................................................................... 10

3.7. Challenges That Online Retailers Face.............................................................................................................. 10

3.8. PCs, Smartphones, Tablets..................................................................................................................................... 12

3.9. Reasons for Limited Success of Online retailing............................................................................................ 17


3/41

2

3.10. Trust & Quality........................................................................................................................................................ 17

3.11. Negotiation vs. Price Discounts........................................................................................................................ 18

3.12. Return Policy............................................................................................................................................................. 18

3.13. Other Aspects............................................................................................................................................................ 19

4.0 PRIMARY RESEARCH AND OUR INFERENCES....................................................... 21

4.1. Hypothesis....................................................................................................................................................................... 21

4.2. Findings - Customers.................................................................................................................................................. 23

4.3. FindingsRetailers.................................................................................................................................................... 27

5.0 RECOMMENDATIONS......................................................................................................... 29

6.0 ANNEXURES ............................................................................................................................ 30

6.1. Customer Questionnaire............................................................................................................................................ 30

6.2. Retailer Questionnaire............................................................................................................................................... 36

7.0 BIBILIOGRAPHY ................................................................................................................... 39

8.0 CONCLUSION .......................................................................................................................... 40


4/41

3

1.0 EXECUTIVE SUMMARYThrough our project we have tried to understand the future of E-Retailing in India. India's

e-commerce market was worth about $2.5 billion in 2009, it went up to $6.3 billion in 2011 and

to $14 billion in 2012. About 75% of this is travel related (airline tickets, railway tickets, hotel

bookings, online mobile recharge etc.). Online Retailing comprises about 12.5% ($300 Million

as of 2009). India has close to 10 million online shoppers and is growing at an estimated 30%

CAGR vis--vis a global growth rate of 810%. Electronics and Apparel are the biggest

categories in terms of sales.

Through our research and subsequent survey we have tried to understand the existing

state of E-Retailing in India, the problems and the opportunities. India's retail market is estimated

at $470 billion in 2011 and is expected to grow to $675 Bn by 2016 and $850 Bn by 2020,

estimated CAGR of 7%. According to Forrester, the e-commerce market in India is set to grow

the fastest within the Asia-Pacific Region at a CAGR of over 57% between201216. Our

primary aim has been to uncover what the factors which have led to the growth of E-retailing in

India and also the factors responsible for low growth rate.

We, through our research, have also tried to identify the areas of improvements which

can make E-Retail comparable to the traditional retail.


5/41

4

2.0 RESEARCH METHODOLOGY2.1.Defining the objective of research

The primary objective of our research is to study E-Retailing in India.

2.2.Literature reviewThere is a whole gamut of information available regarding the E-Retailing sector in

India. This helped us a lot in understanding their basic modus operandi. We learnt about the

E-Retailing model adopted by various players and the problems that they face.

2.3.Formation of the specific questionsSince a lot of research has already been done on this topic, we decided to research and

study specific aspects of E-Retailing. For this, we formulated questions that would capture the

user preferences and the problems in E-Retailing.

2.4.Building of a hypothesisAccording to the data that we found during our secondary research, we found out that

even though the E-Retailing sector is growing, it still doesnt have a good growth rate and has

a very less share as compared to traditional retailing. Hence our hypothesis was:

Increase in user base (Growing opportunities) Cash on Delivery is most preferred Not easy to replace the traditional retailing channel

2.5.Research designBased on the hypothesis, we designed a questionnaire which was filled by the

customers. The research was unsupervised. We also interviewed the E-Retailers like Flipkart,

Myntra, etc. to verify our hypothesis.

2.6.Data collection and analysisWe collected the responses and did analysis by making pie-charts and bar graphs of

relevant factors


6/41

5

2.7.Findings and RecommendationsBased on the responses, findings were tabulated and recommendations were made to

overcome the problems associated with the lack in growth rate of E-Retailing in India

2.8.Conclusion


7/41

6

3.0 SECONDARY RESEARCH3.1.Growing opportunities India has an internet user base of about 137 million as of June 2012. Thepenetration ofe-commerce is low compared to markets like the United States and the

United Kingdom but is growing at a much faster rate with a large number of new entrants.

The industry consensus is that growth is at an inflection point. Unique to India (and potentially to other developing countries),cash on delivery is a

preferred payment method.

India has a vibrant cash economy as a result of which 80% of Indian e-commerce tends to beCash on Delivery.

Similarly,direct imports constitute a large component of online sales.India's e-commerce market was worth about $2.5 billion in 2009, it went up to $6.3 billion in

2011 and to $14 billion in 2012.[1]

About 75% of this is travel related (airline tickets, railway tickets, hotel bookings, online mobile

recharge etc.).

Online Retailing comprises about 12.5% ($300 Million as of 2009). India has close to 10 million

online shoppers and is growing at an estimated 30% CAGR vis--vis a global growth rate of 8

10%. Electronics and Apparel are the biggest categories in terms of sales.
http://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Market_penetrationhttp://en.wikipedia.org/wiki/E-commercehttp://en.wikipedia.org/wiki/Cash_on_deliveryhttp://en.wikipedia.org/wiki/Direct_importshttp://en.wikipedia.org/wiki/E-commerce_in_India#cite_note-Online_shopping_touched_new_heights_in_India_in_2012-1http://en.wikipedia.org/wiki/E-commerce_in_India#cite_note-Online_shopping_touched_new_heights_in_India_in_2012-1http://en.wikipedia.org/wiki/E-commerce_in_India#cite_note-Online_shopping_touched_new_heights_in_India_in_2012-1http://en.wikipedia.org/wiki/E-commerce_in_India#cite_note-Online_shopping_touched_new_heights_in_India_in_2012-1http://en.wikipedia.org/wiki/Direct_importshttp://en.wikipedia.org/wiki/Cash_on_deliveryhttp://en.wikipedia.org/wiki/E-commercehttp://en.wikipedia.org/wiki/Market_penetrationhttp://en.wikipedia.org/wiki/India


8/41

7

3.2.Key drivers in Indian e-commerce Increasingbroadband Internet (growing at 20% MoM) and3Gpenetration. Risingstandards of living and a burgeoning, upwardly mobile middle class with high

disposable incomes

Availability of much wider product range (includinglong tail andDirect Imports)comparedto what is available at brick and mortar retailers.

Busy lifestyles, urban traffic congestion and lack of time for offline shopping Lower prices compared to brick and mortar retail driven bydisintermediation and reduced

inventory and real estate costs

Increased usage of online classified sites, with more consumer buying and selling second-hand goods.

Evolution of the online marketplace model with sites like eBay,Flipkart, Snapdeal, Infibeam,and Tradus.

The evolution of ecommerce has come a full circle with marketplace models taking centerstage again.

India's retail market is estimated at $470 billion in 2011 and is expected to grow to $675 Bn by

2016 and $850 Bn by 2020,estimated CAGR of 7%.

According to Forrester, the e-commerce market in India is set to grow the fastest within the Asia-

Pacific Region at a CAGR of over 57% between 201216.
http://en.wikipedia.org/wiki/Broadband_Internet_accesshttp://en.wikipedia.org/wiki/3Ghttp://en.wikipedia.org/wiki/Standards_of_livinghttp://en.wikipedia.org/wiki/Long_tailhttp://en.wikipedia.org/wiki/Direct_Importshttp://en.wikipedia.org/wiki/Disintermediationhttp://en.wikipedia.org/wiki/Disintermediationhttp://en.wikipedia.org/wiki/Direct_Importshttp://en.wikipedia.org/wiki/Long_tailhttp://en.wikipedia.org/wiki/Standards_of_livinghttp://en.wikipedia.org/wiki/3Ghttp://en.wikipedia.org/wiki/Broadband_Internet_access


9/41

8

3.3.Drivers of accelerated growth1. Disposable incomes;2. a young and educated population;3. rising use of social media and technology;4. increasing Internet penetration5. reaching into smaller cities and6. The evolution of the online marketplace model.

The next five to 10 years promise a big opportunity in online commerce because of the young

India who are going online with their iPads, mobile phones and smart phones, and this method of

interacting with one another is becoming a habit for most of them.

Indian e-commerce industry has evolved over a period of time with innovations that havechanged the rules of the game globally.

Cash on delivery (COD) is one such example. In a country where credit card penetration ismuch lower than other developed markets and where e-commerce companies are still

working hard to build trust among shoppers, introducing cash on delivery has been one of

the key factors for the success of the segment.

At present, COD is the preferred payment mode for close to 55-60% of all onlinetransactions in the fashion and lifestyle segment in India.

COD is here to stay owing to its convenience and its cultural affinity and will be a majorpart of payment mechanisms for at least the next four to five years.

Executing COD efficiently and painlessly for the customer is critical to the success of any e-commerce player in the country

3.4.Focus beyond Tier-1 cities Cities beyond metros are in the limelight for all the good reasons. On an average, almost 50 55% of our business come from tier 2 and tier 3 cities and this

ratio is similar across other ecommerce companies in the country.

With metro markets reaching saturation, tier 2 and 3 cities are going to be the biggest driversfor ecommerce businesses in India in the not so distant future.


10/41

9

Building a robust supply chain is critical to efficiently fulfilling orders from these cities andtapping their full market potential.

The e-commerce industry is growing at a rapid pace and changing the dynamics of the retailindustry.

In the coming years, e-commerce is expected to contribute close to 8-10% of the total retailsegment in India. This growth is bound to continue provided e-commerce companies focus

on innovating, building strong technology infrastructure and delivering the best customer

experience.

3.5.Not easy to replace the traditional retailing channel The challenge is to get traditional retailers embrace the Internet as a channel. A good 18

years after the Internet was introduced to India, its true penetration is less than 10 per cent.And, yet, the way we refer to the Internet gives the impression that the Internet is a mass

medium. It's not. We have a long way to go.

People need a very strong incentive to get a broadband connection and shop online. E-commerce is the future but it will have to be embraced correctly.

Travel is the biggest e-commerce category because airlines started offering heavy discountsonline. Reasons like low broadband speeds and an insufficient number of people who

subscribe to this medium hold true only outside the metros.

It is also a myth that Indians don't want to swipe their credit cards online as many urbanIndians are getting good deals and buying from Amazon.com.

People need to have a reason to get a computer at home and a broadband connection. India's Internet base, already the third largest in the world after China and the US, is

growing by 40 per cent a year.

Despite this, e-commerce continues to underperform with all the major companies bleeding.


11/41

10

3.6.FDI will enter in e-retailFDI in online retail will temporarily enhance the issues the industry is facing. As funds

become available for investing and there is shortage of sound business models, ventures that

do not have sound business models may receive funding.

To survive and prove their business models, once again customer acquisition costs will be

ignored to gain a customer base.

Over the long term, things will settle down and FDI in online retail will allow foreign players

to enter the market and only the fittest will survive. Consumers as well as the eco-system will

benefit from this change.

3.7.Challenges That Online Retailers FaceCHALLENGE #1

Approximately 97% of people who visit an

eCommerce site leave without buying anything.

While the top performing sites might get 17%+

conversion rates, the rest of the industry achieves

far less. Typically, most conversion rates range

between 1 and 3%.

Many online retailers never take into account the

unique personality traits or varying shopping

behaviors of the people who actually visit their

site. They view all shoppers through one

conversion funnel and present all of them with

identical promotions and discounts without

knowing which exact offer will actually incentivize each to buy.


12/41

11

CHALLENGE #2

Lost opportun iti es hi dden in mounds of data.

Collecting data is great, but if you dont havethe means to analyze the data in an efficient and

timely way, you lose the value of the data.

When youre marketing to people online you

must be able to observe, understand, and react

to decisions theyre making in real time so that

you are able to capture the sale before they

navigate off-site to a competitor.

The largest sites have armies of data analysts

and engineers to assist them in giving every site

visitor the best possible offer to ensure the sale,

but smaller sites are often working without these resources available to them.

CHALLENGE #3

A pervasive lack of transparency in reporting.

When online advertising results cant be proven,

retailers end up paying for views and clicks that dont

convert. eCommerce marketers are often unable to

find out where their online ads are running because

tech partners are trying to protect their own margins.


13/41

12

Examples:

1. Yatra.com, Indias leading online travel company, today announced the launch of its muchawaited Cash on Delivery (COD) service. This facility will now enable the customers to

make travel bookings with Yatra.com and pay cash against the travel bookings. The COD

payment option is available for International Air, Domestic and International holiday

bookings with Yatra.com. This service is currently available for all customers in Delhi /

NCR, Mumbai, Bangalore, Kolkata, Pune and Chennai with an endeavour to soon extend this

facility to other cities as well.

http://www.business-standard.com/article/press-releases/yatra-com-launches-cash-on-

delivery-service-111030700121_1.html

2. Flipkart.com has hit jackpot. In the last two months alone (April May 2010), the cash-on-delivery model has contributed as much as 30 per cent of its overall sales. Further, the

company is hopeful that buyers from new geographies, particularly those in smaller cities and

towns, will now add to sales. Industry insiders are optimistic about the cash-on-delivery

model and point out that credit card and net banking penetration is very low in the country.

http://www.business-standard.com/article/management/cash-on-delivery-

110071900074_1.html

3.8.PCs, Smartphones, TabletsDeclining prices of PCs and increase in disposable income make it affordable for the

majority of people to buy PCs which are now available at a low price of Rs.20,000.
http://www.business-standard.com/article/press-releases/yatra-com-launches-cash-on-delivery-service-111030700121_1.htmlhttp://www.business-standard.com/article/press-releases/yatra-com-launches-cash-on-delivery-service-111030700121_1.htmlhttp://www.business-standard.com/article/management/cash-on-delivery-110071900074_1.htmlhttp://www.business-standard.com/article/management/cash-on-delivery-110071900074_1.htmlhttp://www.business-standard.com/article/management/cash-on-delivery-110071900074_1.htmlhttp://www.business-standard.com/article/management/cash-on-delivery-110071900074_1.htmlhttp://www.business-standard.com/article/press-releases/yatra-com-launches-cash-on-delivery-service-111030700121_1.htmlhttp://www.business-standard.com/article/press-releases/yatra-com-launches-cash-on-delivery-service-111030700121_1.html


14/41

13

Smartphones have revolutionized the way people access internet and communicate.

Consumers are swapping their feature phones for smartphones which are much faster and

provide better user experience.

Many variants of smartphones are prices at less than Rs.10,000 in Indian market, making

them affordable for a large number of people.

It has often been debated whether online retail will make traditional, physical stores

irrelevant. What is your view?

Traditional stores will not become irrelevant. Even in established online markets such as the US,

this has not occurred.

Traditionally, the growth of the retail sector is shared with e-commerce but rarely has e-

commerce produced negative growth for physical stores.


15/41

14

In most cases, online and physical complement each other. Traditional retailers who are online

will have to relook the fundamentals of their business models.

1. From brick and mortar model to Market place modelIndias e-commerce companies have far too often concentrated on the bells and

whistles instead of focusing on deploying and customizing technology to serve customer

needs.

Contrast that with Amazon which competes not only with a Wal-Mart for retail

business but also with Apple for technological horsepower.

On the evidence of its latest Kindle, its tablet computers or its set-top box for

television, it could well pass muster as a top tech company.

Flipkart, which switched to a marketplace model earlier this year, allowing thirdparties use of its platform to sell products, is making some belated efforts with its launch of

PayZippy, a kind of digital wallet.

But this too is a me-too product (modelled obviously on PayPal) and the companys

switch of business model aims at accessing foreign direct investment, which is banned in

direct online retail.

With such limited objectives, long-term investments in technology of the kind

Amazon and even Wal-Mart are making, are not possible.

An electronic mall (e-Mall) or e-Marketplace provides a platform for merchants to

set up virtual stores and sell their merchandise.

Merchants frequently choose this option due to the advantages of reduced cost and

the complexity of putting products up for sale on the web.

They also benefit from leveraging websites (e-mall) traffic and user base, given the

expectation that visiting other stores on the e-mall would lead to visits to their stores as well.

Smaller merchants also look to leverage the brand name of the e-Marketplace, based

on the premise that this would lead to increased trust and, therefore, readiness on customers

behalf to buy products online.

Larger merchants sell their products through these virtual stores, in addition to their

own sales channels.


16/41

15

Product pricing is not controlled by e-Commerce players and is decided by

merchants. For the purpose of billing, merchants use the common payment gateway/method

provided by the e-Commerce player hosting the platform.

2. Presence of the marketplace model in the C2C spaceThese marketplaces allow consumers to sell products directly to other consumers,

either at va fixed price or through auctions.

E-Commerce players allow monetary exchange through offering payment modes on

their websites or proposing direct payment by buyers to sellers.

Membership or subscription fees from sellers setting up virtual stores, and

commission charges on transactions and advertising fees are various revenue sources for e-

Commerce players

3. Internet PenetrationInternet Penetration has increased significantly in the last 2 years.

As compared to other countries, there is still a long way to go, but in the next 10

years, growth in internet penetration is expected.

The Indian retail industry was estimated at US$528 billion in 2012 (growing at 11%

per annum).

A significant portion (90.4%) of Indian retail is unorganized. Currently, online retail

constitutes 1% of the total organized retail market in India and is set to make a higher

contribution to the growth of organized retail in the country.


17/41

16


18/41

17

3.9.Reasons for Limited Success of Online retailing Low internet penetration Inadequate supply chain Low propensity of Indians to buy online Limited focus on real value being delivered.

3.10. Trust & Quality Consumers when shopping for tangible products have several queries encircling the

product quality and often would like to obtain a first-hand feel of the product (such as the

fabric quality, fit, or screen display quality, etc.) and you would notice that few eager

shoppers drive down to nearby stores before endorsing their online purchase.

With the proximity of stores this is possible in the Indian scenario and driving distancesas well as fuel costs may not offer the same flexibility in the United States.

Moreover, the apprehension encircling the quality of goods delivered always lingers;having paid for goods consumers desire an immediate sense of satisfaction of ownership.

Many eCommerce companies have tried plugging the holes by making available largesized product images (incl. various perspectives), size guides, and even use dressed-up

mannequins/avatars for providing a true picture.

However, cautious buyers may still prefer interacting with the product in real-time beforean online purchase; not sure if their behavior would change with time. Advent of cash-on-

delivery (introduced by Pizza shops) has helped mimic the shop-floor check-out

experience and provides immediate gratification for monies spent; this seems to be

working well and has taken the business of eCommerce to greater heights.

Many e-commerce firms, including Flipkart, Rediff, Infibeam, Yatra, Cleartrip andMakemytrip, offer cash-on-delivery options. Flipkarts COO and co-founder Binny

Bansal says cash-on-delivery drives over half its sales. Most players have reported a

figure between 40% and 60%.


19/41

18

3.11. Negotiation vs. Price Discounts Every shopper would like to strike the best deal for their buy; am sure you will agree that

Indians have a keen sense of bargaining for price and would walk/drive any distance for a

better price.

With online competition brewing you would find shoppers wedged amid the huge pricingbattlefield and bounce from one store to another for discovering the best-buy.

Have you ever experienced walking into a store (e.g. electronic, stationery) and striking adeal with the shop-floor manager over-and-above the tagged price? Try negotiating in

comparison to an online/neighboring store deal and you may be pleasantly surprised.

Price could be the prime influencer for decision making however the satisfaction of

winning a negotiation could be another strong driver for purchase.

The survey conducted by ASSOCHAM between January-June 2012 across ten cities, inwhich 5,000 shoppers were interviewed, revealed that most online shoppers used internet

to evaluate options by gathering information on available products and prices or buy low-

value items like gift products, but opted for final transactions at the traditional retail

outlets.Associated Chambers of Commerce and Industry of India

3.12. Return Policy Several brick and mortar stores in India provide the flexibility of returning goods within a

stipulated time period once bought; in doing so gain customer confidence and trust.

Online stores have yet not matured to the level of offering favourable return policies and

often shoppers are forced to accept delivered products.

One major advantage that UK online shoppers have over real world buyers is a statutorycooling-off period of seven days. You can cancel an online transaction and receive a

refund anytime in the first seven working days for any reasonor no reason. Jabong.com

is one of the few India-based commerce companies which offers a 30-day free return

policy (full order as well as part if ordered for multiple products) which has significantly

contributed to their sales volume. Hopefully many more will soon get added to the list of

options.


20/41

19

3.13. Other AspectsBroadband Penetration

The total number of broadband subscribers including DSL, cable, fiber optic, and broadbandwireless platforms is estimated to reach around 15.3 million at the end of 2012.

The penetration is currently low however growing at a rapid pace. Glancing at a blank computer screen waiting for products to refresh/display owing to spikes

in connectivity speeds and the fear of a transaction being interrupted during check-out due to

technical snags are inherent problems which are yet to be fine-tuned.

Shopping online has become a mainstream activity for the rural people. People are

evaluating the option of ecommerce and as the Internet penetrates deeper, more and more

people will try it, eBay India Director (Category Management), Kashyap Vadapalli

Credit Card Penetration

Unlike in the Western countries, in India cash is used for most transactions. Poor fraudprotection policies and the fear of personal information leaking as well as spamming further

contributes towards the low adoption and usage of credit cards in India.

However, credit card usage is gradually increasing in the premium card segment.The country saw a 2 percentage point drop in the number of credit card-holders last year,-

HSBC India consumer assets head Manish Sinha

Finally

Several advertising campaigns are being launched by eCommerce companies to reduce

online shopping apprehensions of a consumer.

Flipkart, responds to an online shoppers worry in a humorous and quirky way. Few

companies are using celebrities as curators/advocates for products and in that way hoping to

inspire trust in consumers.

The eCommerce scenario in India is fast growing with numerous players and the evolution of

product interfaces/platforms and customer experiences have been significant over the last

few years. However, in India online buying is buzzing amongst the younger generation from

select urban areas and in general is still perceived as being complicated and bumpy.


21/41

20

Hence, the grey spot still encircles the dilemma around industry pace versus customer

adoption; are they in-sync?

Shoppers and commerce companies will continue to evolve and soon reach to a point of

balance sparking a new wave.

Amidst such a scenario companies will have to tune online experiences with time in view of

customer demographics and psycho-graphics and base their strategies on sound behavioral

research.


22/41

21

4.0 PRIMARY RESEARCH AND OUR INFERENCESOur sample space consisted of 73 individuals across demographics. It also includes individuals

who have never shopped online as well. Our extensive survey has shown us the following:

4.1. Hypothesis1. Increase in user base(Growing opportunities)

India's e-commerce market was worth about $2.5 billion in 2009, it went up to $6.3

billion in 2011 and to $14 billion in 2012. About 75% of this is travel related (airline tickets,

railway tickets, hotel bookings, online mobile recharge etc.). Online Retailing comprises

about 12.5% ($300 Million as of 2009). India has close to 10 million online shoppers and is

growing at an estimated 30%CAGR vis--vis a global growth rate of 810%. Electronics andApparel are the biggest categories in terms of sales.

India's retail market is estimated at $470 billion in 2011 and is expected to grow to

$675 Bn by 2016 and $850 Bn by 2020, estimated CAGR of 7%. According to Forrester,

the e-commerce market in India is set to grow the fastest within the Asia-Pacific Region at a

CAGR of over 57% in 20122016.

2. Cash on DeliveryIndian e-commerce industry has evolved over a period of time with innovations that

have changed the rules of the game globally. Cash on delivery (COD) is one such example.

In a country where credit card penetration is much lower than other developed markets and

where e-commerce companies are still working hard to build trust among shoppers,

introducing cash on delivery has been one of the key factors for the success of the segment.

At present, COD is the preferred payment mode for close to 55-60% of all online transactions

in the fashion and lifestyle segment in India.

COD is here to stay owing to its convenience and its cultural affinity and will be a

major part of payment mechanisms for at least the next four to five years. Executing COD

efficiently and painlessly for the customer is critical to the success of any e-commerce player

in the country


23/41

22

3. Not easy to replace the traditional retailing channelTraditional stores will not become irrelevant. Even in established online markets

such as the US, this has not occurred. Traditionally, the growth of the retail sector is shared

with e-commerce but rarely has e-commerce produced negative growth for physical stores. In

most cases, online and physical complement each other. Traditional retailers who are online

will have to relook the fundamentals of their business models.


24/41

23

4.2. Findings - Customers

98% of respondents use Home Internet and Mobile Phones for Online Shopping. The fact that all the respondents use internet in one form or another and 93% have shopped

online, support the first hypothesisIncrease in user base.

This is a huge opportunity for many enterprises to tap


25/41

24

The frequency of shopping is less as compared to other countries where e-retailing isprominent.

But, due to low internet penetration of just 12.6% in the country, these figures areencouraging.

The COD is the most preferred mode of payment. 59% of the total respondents (73) prefer COD for payment. Hence, the primary research supports the 2nd hypothesis.


26/41

25

In India, customers still prefer the traditional retail shopping over online shopping 56% of the respondents still prefer traditional shopping over online shopping. Thus, the primary research suggests that the 3rd hypothesis


27/41

26

Apparels and Electronics are majorly purchased online by the respondents


28/41

27

4.3. FindingsRetailersOur Sample:

Flipkarto An Online Megastore which provides shopping solutions across categories from

books to electronics to apparels.

JabongDelivery boyo A Fashion & Lifestyle portal. It retails apparel, footwear, accessories, beauty

products, fragrances, home accessories and other fashion and lifestyle products

Style FiestaOwner (www.stylefiesta.com)o A Fashion e-retailer who sources products from Thailand & China and sells these

goods under her label. Her consumers belong to a niche of the urban and trendy

kind

Cross Category e-Retailers (Jabong & Flipkart)

People prefer COD Reverse logistics an issue Huge investment cost Most demand is from tier 2 and 3 which constitutes to almost 50% of sales Flipkart is asking for a 30 % return basis when entering into a contract with companies Online customer today demands sweet deals including freebies such as no shipping

charges and flexible payment options


29/41

28

Specialized Category e-Retailer (www.stylefiesta.com)

Younger generation consumers (18-35 yrs) COD most popular Biggest problems: Reverse logistics, Packaging & Delivery For her category, e-Retailing will not completely replace traditional store
http://www.stylefiesta.com/http://www.stylefiesta.com/


30/41

29

5.0 RECOMMENDATIONS Encouraging online shopping: Adopting innovative ways of making the experience as

close to traditional shopping. For example, feed in vital stats details on consumers body

type and upload so consumers can virtually view how an outfit may look. Provide

services like trying on the clothes at the time of delivery. This can also help with reverse

logistics

Tapping needs of Tier 2 & 3 cities: As mentioned, a big chunk of Flipkarts sales fromcome Tier 2 & 3 markets and with growing internet penetration and provision of Cash on

Delivery, tapping into these new markets can help generate higher volumes of sales

Going mobile: With the increasing smart phone and tablet penetration in India, retailersshould develop their on Application for the on-the-move customers.

Innovation - Barcode Scanner: Ability for consumers to scan the barcodes on products atphysical stores on their mobile and allow mobile apps to generate all possible product

related details including price

Adoption of Amazon Prime model: Where at a slight premium, goods can shippedwithin 24 hours

Possibility of market place model: For large players selling branded goods, can adopt amix of market place model as well where third party sellers can sell their commodities on

the website, thereby reducing costs.

Reverse logicitcs: Depenidng on individual business models of the e-Retailers, they needto adopt an optimum return policy especially with respect to the number of days return

back policy. Large players can afford to absorb costs however for small retailers it can be

a burden. Hence depending on their business model it is crucial for retailers to determine

their return policy which fits them the best


31/41

30

6.0 ANNEXURES6.1. Customer Questionnaire

1. Gender Male Female

2. Age 15-25 26-35 36-45 More than 45

3. Education degree Bachelors Masters PHD Others

4. Monthly Income Lower than Rs 2000 Between Rs 2000 - 5000 Between Rs 500010,000 Between Rs10,00020,000 Above Rs 20,000

Student/ Housewife/ Unemployed


32/41

31

5. How do you access the internet?Home internet/Broadband

Internet caf

Mobile Phone

Others

Do not use the internet

6. How often do you use internet for shopping Very often Often Sometimes Rarely Never

7. Have you ever done Online shopping Yes No

8. If you have never done online shopping, please specify the reason I dont know about online shopping Risk of credit/debit card transactions Internet Illiteracy Risk of identity theft Others (pls specify)


33/41

32

9. If you do online shopping, which websites you have used to order online Local Banya.com Myntra.com Flipkart.com Jabong.com Snapdeal.com Yebhi.com eBay.in Futurebazaar.com Homeshop18.com Jungle.com Others (pls Mention)

10.What have you ordered online Grocery Packed foods Clothes Accessories Shoes Bags/Purses Books Others(pls mention)

11.Could you tell us how often you buy products through online on average? Once a week or more often Once every 2-3 weeks Once a month Once every 2-3 months (4-6 times a year) Once every 4-6 months (2-3 times a year) Once every 612 months (Once a year)


34/41

33

Less than once a year

12.Select an approximate amount you would spend on a single purchase online Less than 1000 1000-3000 3001-5000 More than 5000

13.Which mode of payment do you prefer most? Online payment Cash on Delivery Others

14.Do you collect information on the product before buying online Yes No

15.Do you prefer online shopping over Traditional shopping Yes No

16.If yes, why you prefer online shopping over the traditional shopping Discounts Free Home delivery Saves time Dont have to travel Product not available in the brand store Others(pls mention)


35/41

34

17.In general, what things you normally think should be bought from a physical store andcannot be bought online

Grocery Packed foods Clothes Accessories Shoes Bags/Purses Books Others(pls mention)

18.Have a faced any problem during online purchase? Yes No

19.If yes, what kind of problem Delay in Delivery Cheap quality of Product Product damage Non-Delivery Others(pls specify)

20.Please select your level of agreement to the following questions:1-Strongly agree 2-Agree 3-Indifferent 4-Disagree 5-Strongly Disagree

Shopping on internet saves time It is a great advantage since you can shop at any time of the day I prefer traditional/conventional shopping to online shopping Online shopping is risky


36/41

35

Online shopping will eventually supersede traditional shopping Selection of goods available on the internet is very broad The description of products shown on the website is very accurate Online shopping is as secure as traditional shopping A long time is required for the delivery of products & Service I purchase only if there is cash on delivery option Online shopping infrastructure in India is underdeveloped

21.Feature you think most necessary for an online shopping site? Multiple payment gateways Social Networking integration Credibility Privacy & Secure checkout Design Customer friendly


37/41

36

6.2. Retailer Questionnaire1. Name of Online Retail

Flipkart Jabong Myntra Amazon Other

2. Category of Retail Store: Megastore Jewelry Electronics Clothing & Apparels Cosmetics Home Furnishing Others

3. Do you follow a market place model? Yes No

4. Majority of your orders are paid via: COD Credit Card Debit Card Net Banking

EMI E- Gift Voucher

5. Do you think online shopping is becoming more popular? And why? Yes No


38/41

37

Reason:6. (For stores selling across categories) Which category attracts the most customers? Why?

Jewelry Electronics Clothing & Apparels Cosmetics Home Furnishing Others Reason

7. Which age demographic is your most popular customer group? Below 18 1830 years 3050 years Above 50

8. Do you provide Cash On Delivery Service Yes No

9. Do you have any particular logistical problems with COD service Yes No

10.If Yes, then why?

11.Which period of the year do you experience maximum orders? FebApril MayJuly AugustOctober NovemberJanuary


39/41

38

12.In your opinion, in your supply chain, where do you experience the maximum bottlenecks? Order Procurement Shipment Packaging & Delivery Reverse Logistics Infrastructure Policies & Regulations Other

13.Do you outsource your Payment Gateway or is it your own? Outsourced

Personal

14.Do you provide international delivery services? Yes No

15.If no then why not?

16.Do government regulations act as a roadblock to growth for your business? How? Yes No Reason

17.Do you think that online shopping will ever replace traditional shopping? Why? Yes No


40/41

39

7.0 BIBILIOGRAPHYWe are extremely grateful to the authors of the following sources. The information we

received from these sources has helped us prepare our secondary research and has helped us

prepare our screener questions on the data.

http://www.iamwire.com/2012/12/e-commerce-in-india-%E2%80%93-present-and-future/

http://www.moneycontrol.com/smementor/news/infotech/e-retail-industry-will-be-worth-10-billion-in-5-yrs-time-995352.html

http://www.livemint.com/Opinion/ZlFCafHLaEHndqzK0M2vfJ/Flipkart-and-the-fate-online-retail-in-India.html

http://en.wikipedia.org/wiki/E-commerce_in_India

http://blogs.timesofindia.indiatimes.com/green-carrot-americas-work-visa-crisis/entry/selling-jewellery-online-a-new-wave-of-e-commerce

http://www.pwc.in/en_IN/in/assets/pdfs/industries/retail-and-consumer/retail-report-300812.pdf

http://www.ey.com/Publication/vwLUAssets/Rebirth_of_e-Commerce_in_India/$FILE/EY_RE-BIRTH_OF_ECOMMERCE.pdf

http://www.youtube.com/watch?v=aW8-FUFPySQ


41/41

8.0 CONCLUSIONOur project on the e-Retailing Industry in India, has given us the opportunity to

thoroughly understand not only the market but it also gave us a clearer picture on the strong

potential that this growing industry has to offer. From an entrepreneurs point of view, this

project will throw light on some of the important factors that one needs to consider before going

online. As a group we would like to thank Prof. Iyengar for giving us this opportunity to dig deep

into the potential of the e-Retailing industry.

e-retailing in india

Documents