Retail E-commerce today in India – to boom or go kaboom?

Last week started off by Flipkart announcing a big sale on Oct 6th which seemed to show lots of products at unbelievable low prices and netted $100M in revenue on one day but left a lot of customers dejected – it is not that they lost money, but rather seemed to have lost an opportunity to get a deal.  Looks like they could not handle the high traffic and many of the product’s prices did not match what was advertised. So, a mixed results in my opinion.   But I love the fact that they accepted the failure on their part and sent a personalized email out to all their customers – a very courageous move indeed, much like what Intel did when the first Pentium flaw came out and they offered to replace them all – this indeed gets a lot of loyalty to the brand in the long run.  But definitely Flipkart has to have a much better system to take care of the traffic and the day spikes, have enough inventory of items to be sold at a good price or mention how many items in that price to be sold, and have better relationships with the OEMs who cry out loud that Flipkart is lowballing the brick-and-mortar stores which compromise 90% of their sales today.   I am sure everyone would have teething problems to begin with and it is better to be addressed properly and I guess I would see this as a courageous move by Flipkart to really take the bull by the horn at this early stage to learn and adapt.

     In the meantime Snapdeal also had a great sale going on clocking 100 crore per hour, and this being the season of Diwali it looks like everyone wants to be on Top gear to maximize their sales this month.   I do not understand why the store retailers have a hard time when it comes to better pricing on the net – the margins are thinner and the warehouse cost is much lower than the real estate of the stores in prime locations.  Also, it is a great way to compare and shop for the best item you want instead of believing the not-that-knowing-salesman-in-the-shop who just wants you to buy one particular brand because their commissions are better. I will not even think twice to go with an e-tailer for books, movies and music, camera and phones and their accessories- as long as the warranties are proper.

    Having the government look into the e-commerce segment and being forced by the store retailers to curtail them is something that is not right for the customers.  Instead of that, it is better to see what is best for the customers and make laws accordingly.  Otherwise, it would be like countries like France where an e-tailer is not allowed to sell any book at more than a few percentage discounts from the MRP which makes the French folks go outside and buy them at better prices whenever they travel.

    So, where are we now with E-commerce (web and mobile included in this) in Retail in India? My focus here would be India as this is the story that is developing for the past 5 odd years, but many of the facts scribed here can be relevant to any geography depending on the maturity of e-commerce in retail in that country. I am more confident to write about the Indian story as I have been following this for the past few years, both as a regular customer and also as a consultant and the story unfolding come with a bag of mixed emotions.

  Benjamin Disraeli said “How much easier it is to be critical than to be critical”.  Yet, I chose to be critical here and hopefully correct.  Let me segment some of the areas of retail where e-commerce is a player, over and above the brick-and-mortar shops, and highlight some of the inherent issues being faced.  The issues are not confined to any particular e-tailer but rather a common occurrence in this segment.  I am not going to touch financial transaction as an e-commerce example here as we all know that this is the one what has the maximum penetration in India, thanks to the banks and insurance companies doing  everything online now.

Furniture:  Yes, one can get an entire Kitchen done or bedrooms finished, or just purchase a coffee table or an end table or just a ward robe, both antique and regular, all online.  Half the time, the bookings get cancelled as the vendor is not able to make the product or ship it in time.  But they need to take an advance of 10% only instead of the entire amount for furniture, especially if it has to be made after the order, and ask for the remaining money only when they are ready to ship.  Just before they ship, they must be able to send a short video of the actual product to the customer for the final approval which would ensure they meet quality requirements. 

     Once they ship, installation, if any, by local carpenters that they align with has to be done smoothly to the customers. I have personally have had my orders cancelled more than three times after  about 6-8 weeks, the e-tailer had taken my full money during booking and it is a good way to get interest collected without sending a products – bad way to do business.   Such things have made me NOT buy furniture on-line anymore. Once the delivery of an end table happened 3 months later, after I reminded them a month after I booked, and the drawers were not fixed properly and a local carpenter really drove some nails in and made it a little ugly. So, my suggestion for furniture is, go to an actual store, select some options and haggle on the price and have them delivered to your address, and pay them by cheque on delivery.

Tickets to any shows or events:  Again, a great way to get cinema tickets but the service fee can add up to a significant amount (Rs 30 to RS 50 a ticket for an Rs 200 ticket is 25%). Why cannot the actual PVRs and other multiplexes have a direct online booking without any additional service charge?  I realized when I went to a cricket match in Chinnaswamy stadium and the Davis Cup Match in Bangalore recently, only 60% of the tickets are allocated to be sold by the third party e-tailer and we could still get some privileged tickets in better stands that we do not see while booking online through them.   The worst error of all would be to have the same seats sold to a different set of customers – this is a big flaw in their system and this happens definitely. And the worst part is, when two customers with the same tickets happen to confront the e-tailer, they start investigating the customer instead of serving an apology unconditionally and trying to fix their end.  This is ugly arrogance of the e-tailer at their peak.

Taxis:  Honestly hilarious to charge a service fee if we call them up over the phone – their excuse is someone has to pay for the call center person –  why should this be a customer’s headache? I am going to assume this may be illegal as well.  Also, a new company now milks the customer for the amount of time spent in the cab over and above the actual per km charges, instead of taking it up with the city planners about it… knowing India and the metro traffic, this is a huge drain on your wallet.  And the worst of all is they do not have any control over the drivers – if the driver does not show up or seems arrogant or charges extra by adding stuff, then the customer is left unhappy. They have a long way to go in terms of actual fares, driver control, transparency and making the customer eventually happy.  And believe me, when you need them the most, none of the cabs are available. Try getting a cab during a rainy day in Bangalore!

Auto Accessories:  A good product to get online. But when I once got a helmet from a leading e-tailer, they gave me another design and their support staff does not even get back to you when you report it.  Again, an example of the problem inherent of a bazaar-type e-tailer who does not have any control on what the actual vendor ships and does not own the quality requirements before shipping.

Lighting Fixtures and bulbs:  Although you may get better deals online, it is better to go to a physical shop, try the bulb or the lighting fixture actually and then buy it after some bargaining. Despite some heavy packing, the chances of the light fixtures or the bulb breaking are very high – their transit is tough on Indian roads.   And once it is broken, they would ask you to take some photos of the broken item and send them by email before they can act on either refund or replacement.

Sporting goods:  if you are buying some balls for tennis or football, or a racquet for badminton, or some wrist band, online purchase is definitely a great thing to do as long you know the grip size and understand the material being used on the frames so that its weight is not a strain on your elbow or wrist.  It is better to go to a sporting goods store, check out their prices, and get a feel of what exactly to buy and then try online for the best price and see if you can get one. If not, go back to the store the next day and make the buy. 

Footwear and Apparels:   If you know the brand and their particular size that fits you, I guess buying it on the web saves a lot of money.   Remember, as in apparel, every brand has their own size that fits you – a Eur 42 may not be the same between a Puma and a Nike sandal.   An L size is not the same between an Arrow and a John Player, and you need to watch out for slim vs regular.  Again, it is better to get into a name brand store, get the size done and see if the same is available online to buy, if not, come back to the store and buy the same.

Home Décor:  This is one item where it is always about look and feel, and people need to see or touch them to buy them. Although plenty of choices are available on the net, I guess these are impulsive buys and more festival aligned and hence, in my opinion, would be something customer would still prefer to buy from the actual stores.   And the chances of getting an inferior thing as compared to what you saw on the web is very high – say for ex, one gets a bed sheet at a good price but finds out that they run colors or it is so thin or it tears after the first usage  that it cannot be used later – a total disappointment.   Buying a statue or a vase that it does not feel like what you expected would be another disappointment.

Perfumes and cosmetics:  Again, this is one area where you see lots of ‘pirated’ ones available on the net and even in a store, we do not know if they are actually the original or not.  Complicated purchase pattern and the deals on the net are not usually great and would stay in the realm of the actual store.  And you can regret the fact that that the fragrance can really be strong and against your senses that you are not able to use it on you. This is a very personal item and you really have to experience the odor before making a decision on the purchase – what others like may not fit your senses.

Wine and beer:  This being something that government has a big say in and can get into some law issues, may not be something everyone would buy on the web, let alone it being delivered to your home or office which may make us uncomfortable as well.  And definitely no price advantage for folks to get on the web and buy them. In India, again, most if it can be impulsive – the mood, money in your wallet and quick occasions are the ones that you drink for and hence would not have the time luxury to go online to buy them.

Electronics and Kitchen appliances:  Big ticket items on the web has got into some tricky OEM antagonism due to some ‘predatory pricing’ on the web but if you know what you are looking for, it would be great to have it bought online.  This is where I see a huge market for all the manufacturers – they just need to open up front ending stores that carries almost all their models for the customers to come and check, and then give them an option to go online and buy them up to get it delivered.. They can actually give some gift certificate with a short validity to force a purchase of their product.  This way, the stores do not need to have inventory of all the items and the same can be applied to multi-brand stores like Girias and Croma as well.   Someone is going to have an online price that is much cheaper than the store price and there is no need to go through the store in that case as long as the warranties are the same.    Many OEMs are not fully supporting e-commerce pricing yet as they do not want to antagonize the store retailers but this is a bad strategy in the long run – they are setting themselves back in ages. Customers need to reap the benefit of technology and not to fall back on older ways of doing things just because they have been better in the past.

  So, what can you reliably buy on the web?  E-commerce started off with Books (Amazon worldwide and Flipkart in India) and they are still the best buys – it is unfortunate that nostalgia rules over common-sense amongst customers like us who would like to have a purchase done in a Higginbothams or Sapna but get disappointed by lack of discounts at the physical store.  Also the variety in selection that an individual customer has access to on the web is something unimaginable.  Office stationaries may be something that can be purchased on the web as well. Crossword and Landmark have no excuses not to offer the same price like an Amazon or a Flipkart if they have a strong online presence as this just would complement their store offerings.   

     I guess the penetration of e-books is going to happen, thanks to the pressure from the lobby against cutting down trees, and this would see an upswing – this is going slow because we are not comfortable yet with a reader device and the lack of standardization of the e-books publications.  The only way I see old classics coming alive would be on e-books only.  So, whether the shop owners like it or not, and fighting the wrong battle in going against the Flipkarts for selling books at rock-bottom price, it is the advent and explosion of e-books that would be their dooms day.   

    And the next good buy on the net would be music and movies DVDs  and game DVDs – you need to ensure they fit the region you need to play them in and your DVD player at home can play that region and this is a LEGAL copy.  Beats buying from the store any day and this has made getting those ‘illegal’ copies on the street a thing of the past as the price points are too good for originals on the web. Also, Moser Bauer offering low cost DVDs of classic movies has helped the case to get the best legal editions of good movies.  I do not know why Flipkart walked out of their mp3 store as this was the best thing in India to follow in the same lines of ITunes store of Apple – customer could get affordable music of their choice at the right price with all the IP protection.

   Definitely Groceries – how convenient is this for all of us! Surely it makes us lazy too that we avoid even that neighborhood walk nowadays. Given that this sector is most unorganized and run by neighborhood Kirana stores, e-grocery is definitely something that is going to change the way we shop for groceries. Since you can pay upon receipt, you can also reject things you see are not fresh then and there. One can definitely avoid searching across aisles, waiting in queue at the cash counter, searching for a parking spot close to the grocer and lack of efficient customer service by sticking to online purchases. Nonperishable is definitely a good buy online and everyone delivers on the same day now.  As the technology grows and somehow the fridge and the pantry gather intelligence to inform what is there and what is not there, if this gets automatically dialed up to the grocery store, the whole thing can happen automatically based on some analytics in the back as well.

   The most commonly utilized e-commerce deals are in travel – be it rail, air or bus booking or hotel reservations or vacation packages.  Travel constitutes most of the internet commerce both in India and worldwide today. I guess the days of going through an agent are long gone. Even visas nowadays are being applied online.  If I have to name the top two for ecommerce, it has to be travel and books/e-books.

    All watches just show time, but still it is considered a prestigious fancy item and people can have much more than one with them at any price range suiting occasions.  Now with the affordability of many to splurge, watches priced at lakhs are available in the hands (no pun intended) of any customer… it is going to be better with phone like features on them, whether we like it or not.

     Stay away from an e-tailer who does not give a phone and an email on their website and try their support line before you even start any dealings with them.   It is a good practice to always go with the cash-on-delivery option as much as possible as many of the sites, even the reputed ones, fail the Internet Security software’s checks.  Or always have one card or one bank for net banking with low balance for all online purchases… ensure you have an OTP check before you make a purchase.

       If the e-tailer has shipped a wrong size of the product you asked for, then again, their quality check somewhere has gone bust and there is a strong likelihood they would do it again and again.  They would always say that they do assume their vendors take care of it.  And you see the product delivered in a particular size not at all the same as what was provided on the website (ex. Size 10 is 41 cm when the one delivered is only 27 cm but still says Size 10 for a sandal).  But if this wrong size happens, there are still companies like Amazon who do not do replacement but just do only returns – honestly, it ticks the customer off.   And there is no excuse for an e-tailer not to give all the relevant details about the size, materials, color etc. which is still missing in a wide range of offerings.

     It is important as a customer, to write an honest and relevant review of every product one has got from a seller, so that it helps the buying decision of others.  When it comes to apparels, your size is not consistent across all brands – each brand has their own size that fits you.  

What can the customers do?

  • Be careful about the security (or lack thereof) behind the umpteen e-commerce sites and believe in the ones that is more famous.   Check for safe pay channels that they use.  As much as possible, try to do Cash on Delivery.  Ask your friends where they shop online.
  • Check for a good customer support system – check their phone and emails before you make any purchases.  See if they offer replacement and not just refund.
  • Books, travel related purchases, Groceries, show and movie tickets, music and movies, and sporting goods are all items that are better online, both in terms of convenience and price.
  • Avoid buying furniture, shoes and apparels (if you are not sure about the size fitment), perfumes and cosmetics, and home décor items online as most of these are very subject to personal tastes.

   Since the E-market seems to be more dispersed now, in the next 3-5 years, we would see only 3-5 brands remaining, thanks to some solid consolidation, in the general e-tailer market whereas the niche players and the brick-and-mortar shops that have their own internet shopping presence would still see a good business online.

What are some of the key expectation of customers from the E-tailers?

  • Better real time customer support – by means of WhatsApp, Email and Phone, with a resolution of any issue within 24 hours
  • For big ticket items, getting the full money upfront is unacceptable, especially if the delivery happens after a month or so, esp. in furniture. A token amount of 10% to be used as booking amount, and rest of the payment during delivery is key.
  • Warranty of all items sold should be solid and should be backed by the manufacturers
  • If some deep discount sales happen, it is imperative that they advertise the number of units to be sold at that low price and set a counter as to how many are remaining so that customers do not feel dejected about a potential opportunity lost.  It is always first-cum-first-serve basis, even on the Black Friday, the day after Thanksgiving, in the USA.
  • Definitely there should not be any excuses of not able to manage surge in traffic or peak loads – the site must be available and fast for all customers
  • For cab booking related sites, it is illegal to charge the customer for calling to make a reservation and pay for their call center person. How does the customer care about one’s operation cost?
  • Most important for those ‘marketplace’ e-tailer who operate on bazaar type model, is to have total control on the vendors who are listed in their site, have a good quality process both in terms of quality of the product being shipped and the time within which it gets shipped and take FULL Responsibility and ownership of any issues that may come, instead of having customers waiting for response from the vendors who never seem to do anything.  This is mission critical for customer’s loyalty and their business success.   The more hassles the customers face and more frequently they face them, they slowly would start looking elsewhere.
  • The other key aspect is the logistics part of delivery. Every e-tailer must have a logistics partner or have total control on delivery so that the delivery happens at the time customer requests them.  Expecting someone to stay home during the weekday is not a reasonable thing to do. They need to invent better ways to deliver – may be in the evenings or weekends, and ensure to a time window of couple of hours max within which they would make delivery. It makes no sense to try a delivery when the customers are not there. Or have a pick up place in a location close to the customer’s home and offer them the facility to pick it up at their time of convenience.   The delivery guy must know exactly where it has to be delivered and when, instead of repeatedly calling for directions to come – in most of the cases, I get these calls when I am in meetings in office and this really gets annoying.  If they do not know the address, they should not be running a courier service, period!
  • If there are issues, treat customers as if they are not guilty and investigate the process first and see where the problem is, before jumping to conclusions.
  • Any legal issues or sales and GST tax issues should not be affecting the customers.

    Summarizing, I guess I feel a little patriotic to see Flipkart giving everybody a run for their money and of course, a cause of envy to the guys who do not know how to compete. Flipkart (with Myntra) will be to e-tailing as Infosys was for the professional services industry and I want to see them that way as a pride of India.  E-tailing is going to be a disruptive technology use case that is going to do magic, esp. in congested cities where folks have no time to spare to shop effectively. So far their customer service and engagement has been absolutely great and added to their purchase of Myntra, which has the same traits, I see a winner in our hands which has to be nourished and not be to be reprimanded.

Disclaimer:  I do not have any association with Flipkart or Myntra, two of my best loved e-commerce sites, based on some great experience – just a loyal customer so far.  After having shopped literally in almost all leading sites, I would give these two very high marks for satisfying customers and having a great transparent process.

This article was written in 2014

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