With Internet penetration growing by leaps and bounds, and tech-savvy consumers preferring to go online to shop for all things ranging from apparel, electronic items, books and beauty products to even homes, top Indian companies are looking to set up shop in cyberspace, bypassing shops, middlemen and the marketplace. A bevy of companies such as Reliance, Tata, ITC, Panasonic, Madura Group, Dabur, Godrej, Future Group and Bata, among others, are readying their own e-commerce Websites, as a dedicated e-tail portal offers the consumer the convenience of browsing and ordering products without stepping outside home or even on the go.
India at the tipping point in e-tailing
A large part of the change in consumer behaviour towards online shopping in India has also been brought about by big expenditure on advertising by dotcom firms, say analysts. A consumer building a house in the hills in Himachal Pradesh ordered a lot of branded hardware “tiles, bath fittings and other stuff”online. It not only saved him the legwork, but also freed him from the anxiety that his contractor might procure and use sub-standard material. This example was cited at a recent conference in New Delhi by Kunal Bahl, co-founder of Jasper Infotech that owns and operates the online marketplace Snapdeal. It epitomizes the emerging online shopping behaviour of the new Indian consumer, who is comfortable buying a wide variety of things off the Net. According to a report by I-Cube and IMRB International, there were 169 million Internet users in India in December 2013. This figure was to touch 192 million in June 2014. To be sure, a curious mix of products is being sold online by various e-commerce websites with the total business valued at $3.1 billion, excluding travel services and tickets, according to a November 2013 report by securities house CLSA. The Internet and Mobile Association of India (IAMAI) claims India currently has 25 million shoppers who are ordering products ranging from baby diapers and men’s grooming products to groceries and home furnishings online. Fashionistas are either flocking Indian portals such as Myntra, Snapdeal or Limeroad or swarming international online shopping destination like ASOS, Neiman Marcus and Macy’s. The affluent are ordering their children’s dresses online from GAP, yet others are addicted to Gilt.com, a New York-based flash sales portal. There is a market to buy and sell second-hand products, too, ranging from bird cages to cars. According to a report on GenerationZ comprising the 14- to 19-year-olds, by design consultancy FITCH Design India, which works in the area of retail, this generation may be “cash-poor but savvy” there is no shame in using bargain websites such as eBay, nor in picking up a good deal second-hand. “There has been a definite social change and the improvement in infrastructure has also greatly contributed to the boom in Internet sales,” says Tripti Lochan, chief executive officer, VML Qais, a strategic, full-service digital agency. According to her, India is absolutely at the tipping point in e-tailing, what with the two big firms making waves recently ”Flipkart with its announcement of $1 billion raised from investors and Amazon with plans to invest $2 billion in India. A large part of the change in consumer behaviour towards online shopping has also been brought about by the big expenditure on advertising by dotcom companies. The introduction of cash on delivery further bumped up sales in a country where credit-card penetration is low. Although most studies talk about heavy Internet browsing and shopping by the young, the older age groups are also coming into its fold albeit indirectly. Although the key categories in e-tailing are travel, personal computers, mobile accessories and consumer durables, interest in jewellery, textiles, health and beauty products, cars, real estate and investment, packaged consumer goods and food is also growing. Lucy Unger, managing director, FITCH, refers to this research and comparison phenomenon, driven by the Internet, in the GenZ report. In terms of shopping, the behaviour of Gen X and Y is a very linear “see and buy” process. However, with GenZ that “see” and “buy” are separated by a period of “aspirational browsing”. They will have Googled items before leaving home, browsed Pinterest, used the Web to cross check prices and Instagram their friends for assurance before a purchase is made and it’s Tweeted about, the report observes. India is a vibrant market for Internet sales growing at 88-90% a year, says Unger. Of course, lower prices are a big factor pulling shoppers online, but the medium also allows for disruption and fast change as well as very targeted and tailored retail opportunities. FITCH calls GenZ (14 to 19-year-olds) the most complex and critical shopper, for, by 2020, it will be the largest group of consumers worldwide making up 40% of the US, Europe and the BRIC countries and 10% in the rest of the world. E-commerce may be a growing area for India but challenges still remain. For Unger, pragmatic things like simple access to the Internet particularly in rural areas (where coverage is less reliable) and the relatively low penetration of credit cards are both key factors. Neither of these factors is insurmountable of course. It’s very possible, however, that rather than becoming an e-commerce nation, India could become an m-commerce nation. Mobile penetration in India is extremely high and increasingly cheap smartphones mean access is becoming more possible for more people. (Source: http://www.livemint.com/Opinion/pJ3ulS9MaFOaKOHLtfta9K/India-at-the-tipping-point-in-etailing.html )
UK’s Burton debuts in India through Jabong
Jabong has added UK’s high-street iconic brand Burton to its portfolio. The brand offers men’s clothing, including casuals, hoodies, suits, shirts, jackets as well as gifts for men. Burton Menswear London would unveil its Autumn/Winter 2014 collection on Jabong with 175 options, this month onward. Burton Menswear London is all about British style. Calling the customer “Easy Fashion Bloke” the brand targets men in the age 18-35 years. The A/W ’14 range works around three major stories covering all styles, from everyday looks to classic tailoring. The formal pieces are a mix of herringbone fabrics in a rich colour palette of navy, emerald and berry. The casual looks are play on prints and pattern in charcoal, merlot and sky blue with accents of cobalt and saffron. Established in 1904 by Montague Burton, Burton Menswear London is part of the Arcadia Group owned by Philip Green. Burton was originally founded under the name The Cross-Tailoring Company. It quickly became popular and expanded into hundreds of outlets and factories across the United Kingdom. Meanwhile, though Jabong was planning to list on a bourse in the US or Europe, it might explore options in India as well. The fashion retailer is putting the processes and systems in place for a listing. Jabong, which started operations in 2012, houses more than 1,000 brands and generates annual sales of 300 million dollars (over Rs 1,800 crores). (Source: http://www.fashionunited.in/news/apparel/uks-burton-debuts-in-india-through-jabong-190920147564 )
Amazon plans portal for wholesale merchants in India, first country outside the US
Amazon is preparing to launch a portal for wholesale merchants in India, the first country outside the US where such an initiative is being planned by the Seattle-based company. The wholesale portal could be launched early next year, according to two people with knowledge of the plans. The initiative could be led by Samir Kumar, who is currently director of category management, said a third source. The wholesale team will report to Amazon India head AmitAgarwal. Since debuting its online retail business in India last year, Amazon has grown rapidly. Amazon has grown rapidly and aggressively in India, challenging Flipkart for market leadership in the country. Illustrating the scale of its ambition, founder Jeff Bezos announced that Amazon would invest $2 billion (Rs 12,000 crore) in India just a day after Flipkart said it had received $1 billion in funding. The India wholesale portal will be similar to AmazonSupply, its online site in the US focused on business consumers. The India platform will also target small and medium enterprises. However, it is not clear yet whether the company will offer all categories of products under its wholesale platform. For instance, AmazonSupply does not sell apparel and other soft lines such as furnishings. AmazonSupply was launched in 2012 and is still in ‘beta’, or test mode. The site, which does not have a minimum order size, sells products ranging from office supplies to electrical equipment. Since June last year, Amazon in India has set up a network of seven warehouses across the country and has over 8,500 merchants selling products in over 28 categories on its platform. The company is estimated to be on track to reach $1 billion (Rs 6,000 crore) in sales this fiscal. One of the factors influencing decision-making at Amazon is the Chinese ecommerce group Alibaba. Sources who briefed ET on Amazon’s wholesale plans said the firm wants to quickly establish wholesale operations in India before Alibaba pays serious attention to this market. Alibaba has set up offices in India but its platform is primarily focused on connecting small and medium enterprises in India to global buyers, and not on domestic sales. Alibaba has taken the fight to Amazon in its home market by launching a portal in the US before its public offer, which could mop up over $21 billion (Rs 1.2 lakh crore). In China, Alibaba’s success has been built on the back of business-to-business transactions. Others too have been drawn in by this opportunity. US retail giant Walmart has estimated that India’s wholesale market will grow to $700 billion (Rs 42.5 lakh crore) by 2020 from the current $300 billion (over Rs 18 lakh crore). Earlier this year, it launched a business-focused site bestpricewholesale.co.in for its wholesale club members in Lucknow and Hyderabad. Technopak has estimated that the retail market in India is at $525 billion (Rs 32 lakh crore) at present and will double in size by 2020.
E-commerce firms ready for bigger, better festive season
Flush with money from recent fund-raising efforts, India’s e-commerce companies are lining up deep discounts, exclusive merchandise, cash-back schemes, and other promotional offers as they prepare for this year’s festive season, which they see as an opportunity to sell more, gain market share, and justify, maybe even increase, their valuations. The result could be a windfall for India’s growing number of online shoppers. The festive season, beginning in September with Onam and ending in January with harvest festivals in some southern states, is a period that usually sees higher sales of consumer products, apparel, appliances, and even cars and bikes. E-commerce sites typically see sales doubling in this period. Planning for Diwali sales “the high point of the festive season in India” has been on for a few months and the discounts and offers will start by the end of September and culminate with Google Inc.’s online shopping festival in December, according to executives at several e-commerce companies. According to these people, Flipkart, Myntra (owned by Flipkart now), Snapdeal and Amazon will likely be the most aggressive. Discounts as high as 80% could be on offer, they add, pointing to Amazon’s India entry as another factor that will push local e-commerce companies to do more this festive season. Already analysts are predicting a better festive season for most companies than last year’s; a new and more business-friendly government is in place, the stock markets are at an all-time high, business and consumer confidence have improved since last year, and the economy, which grew at below 5% in the past two years, expanded 5.7% in the first three months of this financial year – the fastest in two-and-a-half years. Flipkart, India’s biggest online retailer, said in July that it had received as much as $1 billion in fresh capital, the largest-ever fund raising by an Indian start-up and among the largest-ever by any Internet start-up globally. Snapdeal.com is in talks to raise another large round of funding merely three months after it raised $133.77 million earlier this year, Mint reported in August. Snapdeal is expecting orders to grow by 45-50%. India’s largest e-commerce firm, Flipkart India Pvt. Ltd, could offer steep discounts and freebies, bundle products, and forge alliances with large banks for additional cash-back offers and discounts across the website, according to two people close to the development who asked not to be identified. Flipkart hopes to touch an annualized gross merchandise value (GMV) of $2 billion this festive season itself, the two people added. This means the site will be hoping to achieve a GMV of nearly $170 million in October; Diwali falls on 23 October this year. Flipkart achieved a GMV of $83 million this February, according to the company. GMV refers to the value of goods sold on a site, and doesn’t include discounts or returns. Flipkart declined comment on its plans for the festival season. Fashion e-tailer Jabong, owned by Rocket Internet, too, is targeting 150,000 orders a day during the festive season, according to an executive at the company who asked not to be identified. India’s largest online fashion retailer Myntra will launch three of its private label brands during Diwali and also introduce three international brands that will be available exclusively on the site by the end of September. Banks are gearing up for what could be the biggest-ever online festival sale in the country. Citibank NA’s Indian unit is in talks with top e-commerce firms to come up with additional discounts and offers.
The bank did not disclose any specifics, but said it would roll out the offers by the end of September.
To conclude, we can say that E-tailing possesses the potency to create new capabilities which India needs and offer viable employment to Indian youth over the next decade. It has the prowess to act as a catalyst and support the growth of new skills and industries.