Internet in India

In the previous post, we had a good discussion about the scarcity of online deals for Indian Market, then came the point as to why the e-commerce isn’t picking up. To analyze this let’s first have a look at the reasons behind success of e-commerce in the US market. Books and Consumer durables (mostly electronics) are possibly the highest sold amongst the various goods sold online in US. Beyond any doubt, the user buying something online loses the shopping experience and has to wait for atleast a couple of days to get the goods delivered. So, there has to be a motivation and a strong reason which would attract the consumers to shop online.

Major factors that attract people to buy goods online are -

1. Convenience
2. Deals and discounts
3. Availability
4. Variety

Now let’s have a look at the most popular indian e-stores, and analyze what they have to offer against each of the above parameters.

Convenience - It is much more convenient and is also cited as the top reason in many surveys
Shopping online is all about convenience. Granted that you miss on the entire shopping experience consisting of going out, having snacks and idle talk, but even the die-hard shoppers will sometimes want to buy from their chair. But with convenience comes a risk, that the item will not be exactly same as described on the net, or may be defective. This is a big concern even in the US, and with our daily dose of indifference to customers, it would be really really hard to return any item once it is delivered. So you might save yourself a lot of hassle by taking a look before buying, it also identifies you with the dealer.

Deals and Discounts - Online shopping allows you to look for deals at all stores, local and remote
Be it greed or immensely low volumes posing a challenge to sustainability, Indian e-stores are charging higher than what you would get in the store neraby. To give you a few examples,
Nokia N72 at Ebay.in - Rs. 15,999.00 + 149.00 for shipping
Nokia N72 at FabMall - INR 16399 + INR 45 for shipping

And it is easily available at around INR 15500 at any of the stores in Gurgaon, so why would some one pay higher and then wait for a week to get the “media computer” delivered before one can try his hands on it?

Books, the nearby book shop easily gives a discount of 10-20% on any books and that’s the discount these stores offer.

Now, let’s have a look at the prices for a gift basket as described on FabMall, have a look at the satrangi diyas at FabMall, which cost Rs. 816 ! Even if the prices are genuine then the atleast needs to offer a product detail to justify it’s cost. Agreed the customer base is mostly NRI with deep pockets but does that mean that we have the liberty to fool them at our own will?

It’s not difficult to find more such examples and you would be surprised that the price listed on individual brands site like www.lgezbuy.com is also greater than what you could get at the store. Compare this with the US and you immediately see the difference. The comparison with store prices is easily available at sites like shopping.cnet.com and it is easily demonstrated that the online prices are almost always less than the store price. Sometimes the online stores even guarantee that there prices are less than any store.

Availability - people buy goods online which are otherwise not available in the nearby stores
With the advent of shopping malls in metropolitan cities, there is hardly anything available on any of these e-stores that you cannot find in a store nearby. Contrasting with the US, the malls are usually quite some distance away from residential areas and it could easily take you a couple of hours to do one purchase.

Variety - Users get a chance to compare price and features at the e-stores, enables better decisions
I tried comparing my favourite Nokia N72 with other phones, but the feature seems to be missing. When I compared the automatic washing machine models on www.lgezbuy.com, I found the comparison to be irrelevant. As you see below, the same feature is shown at two places. The information about Tub Clean/Silent modes is just plain wrong and it is present in WF-8014 HN. The comparison at other sites is no better.

The bottomline
It is not all about shopper’s mindset that we often attribute as a reason for slow growth of e-commerce, it is more about lack of understanding of customer requirements by these e-stores. Agreed, that the modern consumer is willing to pay extra for value adds and enhanced experience but then what’s the value add that the e-stores in india have to offer?

I have been looking to find sites like morestuff4less, that allow users to find deals available online in India. I was able to find only a single one - http://www.allindiadeals.com/ and this got me thinking. Are we too far behind the curve in online shopping or it is the next wave ?

It is interesting to estimate the state of online shopping in India. To do this analysis, I first used a google trend graph for “online shopping” and Indian cities easily grabbed the top ranks. As a region, India ranked first followed by Singapore, Malaysia, UK. US doesn’t even figure in the list, which is one of the most advanced in online shopping (A recent survey indicated that online shopping in US has topped $25 bn).

This probably means that the users still are not familiar with the stores for online shopping. In fact, I know of only a handful selling a broad range of items.  

1. http://ebay.in
2. http://www.fabmall.com/
3. http://shopping.indiatimes.com
4. http://www.ndtvshopping.com
5. http://www.shoponline-india.com/
6. http://shopping.rediff.com

Ebay is the leader in the online shopping with 38 per cent of market share. It comes as no surprise that the Google rank of ebay.in is 1 while Fabmall ranks 3rd with the keywords “Online shopping india”.

The google trends for “Online shopping India” is a zigzag but surely decreasing which shows that the searches have halved since 2004. So as a ballpark figure, we can assume the same rate and this gives us that we could be having negligible searches within 3 years.

I am still guessing when will we be able to easily compare items on the above shopping portals and also the individual brand websites ! Please be sure to leave a comment if you know of any such site.

Is E-Commerce going to be the next big thing in the Indian Markets?

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It’s good that the Union Cabinet today approved amendments to the Information Technology Act, 2000, aimed at checking information theft and online fraud.

But I don’t think that it covers online privacy. On an average I receive 5 sales calls daily and 20 marketing sms messages, some originating from the service provider itself and many from unknown senders and “affiliates” from sites I gave my number to.

We need strong laws to prevent data sharing and selling by the companies in India. With mobile social networking on its boom in India, one needs to be extra cautious while submitting your number at these sites, as you might as well be inviting more spam sms messages to your phone.

Have a look at this clause in the “Privacy” statement of one of the sites:

“We may provide information to service providers to help us bring you the services we offer. Specifically, we may use third parties to facilitate our business, such as to send email solicitations. In connection with these offerings and business operations, our service providers may have access to your personal information for use in connection with these business activities.”

We reserve the right to change our privacy policy at any time. If we do this, we will post the changes to this policy on this page and will indicate at the top of this page the policy’s effective date. We therefore encourage you to refer to this policy on an ongoing basis so that you understand our current privacy policy.

I do not understand the exact legal implication as such, but simply put it means that the owners of the website would be free to change there privacy policy so “keep checking” and they could as well use your personal information to “facilitate” their business (sell this data to advertisers???).

Is there a way to ensure that this data does not get shared (read sold) with telemarketers?

India certainly needs some amendments to online privacy laws as well.

Now this one’s a cool ajax based site intended to help users track their debts and loans.
A startup not neccessarily in India but started by Indians in US, Buxfer.com, which is in Beta right now offers an awesome(gmail like) interface. Following functionality is available:

1. Buxfer home page:
* Your Net Balance, the sum of group balances and contact balances
* “News”, aka notifications
* The transaction-line-view of the five most recent transactions you have participated in

2. Report Transactions
Use the new transaction page to report a new transaction, either as a shared bill,
a lend or settle loan (also called ‘money transfer’), or a personal expense.After you press ‘Next Step’, Buxfer automatically suggests the groups that can be applied to the transaction.

3. Transaction Detail
Use the full transaction detail page to see the transaction details including the amounts paid, received, or spent by all the transaction participants, the amounts that the transaction participants owe or receive, the previous edits, and the comments posted to the transaction.

Contacts:
Use the manage contacts page to add new contacts, rename contacts, view contact balances, and view transactions with individual contacts.

Tags:
Use the tag details page to rename or delete a tag and to see the transaction history for a particular tag.

Groups:
Use the group details page to see the group description, group balances of the members, and a history of transactions posted to the group. There is also an option to filter group transactions based on which members participated.

Buxfer.com has been started by Amit Manjhi (he’s my batch mate from IITK, makes me feel proud of my Alma Mater), Ashwin Bharambe, and Shashank Pandit.

They have almost copied the gmail interface. The site looks professional, with nice layout and smooth interface, the site is better than most of the web 2.0 startups coming in India,which are backed by a huge venture fund and product managers with industry experience.

Here’s what they have to say about it:

Buxfer started as a small script one of us wrote about 3 years ago. As graduate students, having food almost always meant eating out with a bunch of fellow sufferers somewhere on Craig Street. With such a high rate of accumulating bills, our memories and scraps of paper were just not enough. So we wrote a small simple script to keep track of our debts. And boy, did we love it! Well, we thought maybe the others would find this useful too.

The homepage claims to be tracking “$416544.70 in 2178 transactions.” and yes, users can use the FaceBook account to log into the site.

I am not too sure who came first BillMonk.com or BuxFer.com, but feature wise BillMonk.com, offers more in terms of allowing to track borrowings of Books, DVD, CDs etc, but the interface of Buxfer.com is better.So, You already have some competition here!

e-aahuti, e-pooja, e-mandir, e-pundits, e-yajna etc..

Most of these terms have already come into existence and if not, very soon they would.

Rajiv on WatBlog writes about Saranam.com and Pariharam.com.

But as bursting of firecrackers is not really allowed in the western countries and also the lack of religious temples the Indians abroad are making a beeline to the religious web portals like Saranam.com and Pariharam.com for offering prayers which cost prices ranging from $8 to $15. Such religious portals are offering IT-savvy devotees prayer sessions done at temples in India, sending them a DVD of the prayer and offerings like dried flowers or vermillion, blessed by the priest.

Even the the holiest of temples are coming up with their own websites to facilitate booking of prayers online. Meenakshi temple happens to be one of them.
It’s not really limited to this, there’s a society called “Society for the Confluence of Festivals in India” operating out of Noida and runs the following sites:
1. Diwali
2. Durga Pooja
3. Pongal
4. Raksha Bandhan
5. BhaiDooj
7. KarwaChauth

…. and probably many more, think of an Indian Festival and they have a web site for that.

All of the sites are pretty informative and offer details right from history of the festival to celebrations, traditions and gifts. Good source of information equally for Indians and NRIs. A look at google trends for karwa chauth during this time gives a fair idea of the massive number of hits (revenue potential?) these sites get at the time of that particular festivals.

“Online gifting has become a popular phenomenon because it’s so convenient. Rs 29.5 crores worth of gifts were bought Online for the year 2004-2005 with Rs 53 crores expected for the year 2005-6 - IAMAI

“The festival season of 2005, online shopping saw customers spend $25 million on gifts, clothes and household articles”
-Source

Let’s see what are the figures for this year, and how much do the Indians and NRIs spend online this festive season.

Here are some of the facts and figures about internet consumers in India, the numbers have been compiled from different sources and research papers. For all those people who want to aim e-shoppers for their business, these statistics would give you a launching point.

Total online “Active users” (as of September 2006): 37 million. Source

Total online “Active users” estimate: 100 million by 2007-08. Source

Total market potential: Expected at Rs 2300 Cr by 2006-2007

Age group:

18-25 : 25%

26-35 : 46%

36-45 : 18%

What is selling?

Books, Electronic goods, Railway tickets, Apparel, Gifts, Computers and peripherals, Airline tickets, Music and Movies, Hotel rooms, Magazines, Home tool and Products, Home, Appliances, Jewelry, Movie Tickets, Beauty Products, Health and fitness products, Gift Certificates, Sporting goods.

How much are they spending?

Rs 500-1000 – 25%

Rs 1000 – 5000 – 39%

Rs 5000 – 10000 – 13%

Rs >10000 - 11%

Apart from that the total investment in 2006 is likely to be $6.3 billion, a number that is more than five times the amount invested in 2000. Source

While India rides the VC wave, it’s the best time to innovate, raise a VC investment and execute. Like most other good things even this will come to an end, so even before the “Bubble 2.0” is pricked lets just make some good use of it.

There’s a very inspiring google video on “Leveraging India as India stands up” where Prof. Ashok JhunJhunwala talks about the different opportunities India has to offer.

Note: I would publish more of these statistics on a day to day basis, you can also get the research paper from IAMAI website