EXPRESS

THE SUNDAY STORY 13 MAY 1, 2011

CLICK,
SHOP,
SELL
Booking tickets, buying books and DVDs, selling and dealmaking—

C R SASIKUMAR
e-commerce is getting another life after the first such wave in 2004
BY ARCHNA SHUKLA

G
uess who was the
largest advertiser in the
country's leading print
publications in 2010? It
wasn’t any company
from the fast growing telecom sec-
tor. Not a leading consumer brand,
no automobile company either. The
largest print advertiser in 2010, ac-
cording to Adex India, an agency
that tracks advertising trends in the
country, was a virtual retail opera-
tor called Naaptol.com. According
to its founder and CEO Manu Agar-
wal, Naaptol.com continues to be
the biggest ad spender on print this
year too.
Snapdeal.com, an online dis-
counts site launched in February this
year, asserts it is the largest advertiser
on Google. These days, Flipkart.com,
another discounts site selling books,
DVDs and music, among other things,
is a regular on television, the most ex-
pensive advertising platform in the
country.
Advertising is the foremost indica-
tor of the vitality of a company or a
business. Prosperity, even its antici-
pation, is usually a big driver for ad
spends. The references above, there-
fore, are good indicators of the fact
that the e-commerce space in India is
buzzing.
E-commerce refers to buying and
selling of goods and services over the
internet. “There are more than 100
aspiring e-commerce entrepreneurs
in the market today. We get at least
three proposals a week for funding,”
says Suvir Sujan, Managing Director
months, at least 10 e-tailing, or elec-
tronic retailing, ideas have been
funded by investors with the average
investment being $1-3 million. More
than 20 online retailing sites have
been launched in the past six to 15
months with more or less similar
models.
According to the Internet and Mo-
bile Association of India, a body of
new media companies that studies
consumer trends, in 2009, e-com-
merce was mainly driven by online
travel that accounted for 76 per cent
of total e-transactions worth Rs
19,688 crore. E-tailing or non-travel
consumer transactions accounted for
a mere 7.8 per cent. The projections
made by the study for 2010 and
2011 don’t signal a major shift in this
trend except for the fact that the
overall e-commerce pie may expand
to Rs 31,598 crore and Rs 46,520
crore respectively.
The Social Networking
Phenomenon
A stark difference this time, how-
ever, is the emergence of social me-
dia platforms such as Facebook,
LinkedIn and Twitter. “Facebook and
Twitter are the lifelines of our busi-
ness,” says Anisha Singh, founder and
CEO, mydala.com, a group-buying
online platform launched in Decem-
ber 2009. “Unlike the previous time,
when players had to resort to tradi-
tional advertising platforms, which
are very expensive, to promote them-
selves or even to find buyers, this
time, we have social networking plat-
forms which have become a medium
unto themselves in building the
buzz,” she says.
“India has around 20 million Face-
book account holders and more than
15 million LinkedIn subscribers. This
internet-friendly population is play-
ing a crucial role in scripting the e-
commerce success this time,” says Su-
jan. “If you have a good deal on offer,
you simply have to put it out on these
platforms and the rest is taken care
of,” says Singh.
The other interesting develop-
ment is the emergence of the non-
metro consumer on the virtual plat-
form and for them, the driving force
has been television. “With TV reaching
far-flung areas in the country, people
are getting exposed to things they
hadn't seen or heard of. They now
want to possess them,” says Hitesh
Dhingra, founder and CEO,
letsbuy.com, a site that sells gadgets.
But availability can be a challenge in
smaller cities and towns. Enter online
platforms. “We are making things
available to them at zero cost and also
at cheaper rates and they are loving
it,” says Dhingra.
According to Dhingra, more than
50 per cent of his customers are from
tier-II and tier-III towns. “We have
sold computers, cell phones, acces-
sories and even LCD screens to cus-
tomers in Kanpur, Karnal, Bhatinda,
Ajmer and several remote places in
Maharashtra,” he says.
The market has also matured in
the past five to six years. Going by
different estimates, there are around
80-100 million internet users in the
country today as against 30-40 mil-
lion in 2005. Likewise, the number
of electronic card holders has gone
above 200 million and there are
more than 20 million people with
credit cards, who are more comfort-
able using their cards online than
they were earlier. “India, today, is the
third largest internet market in the
world. But Indians are way behind
several smaller internet markets
such as France in terms of online
buying,” says Ananya Bubna, who
launched the group-buying site so-
sasta.com in 2010, bought by the
leading US-based group-buying
player Groupon earlier this year.
Bubna now spearheads Groupon's
operations in India.
What Indians are Buying
Indians, by instinct, are bargain
hunters and e-tailers are playing on
this weakness. “We offer discounts,
anywhere between 15 per cent and
80 per cent, on goods we sell and ne-
tizens are lapping them,” says Kunal
Bahl, CEO and founder,
snapdeal.com. Bahl claims Snapdeal
gets at least 1.2 million visitors a day
and of them, 10,000 to 20,000 defi-
nitely buy something. The average
size of a transaction on his site is
Rs 750 and all transactions are card-
based, he says. On April 27,
Snapdeal sold 100 prepaid recharge
coupons for various telecom brands
in just one minute. A few weeks be-
fore that, the site sold 300 Gucci wal-
lets, available at 77 per cent dis-
count, in 45 minutes.
Group-buying sites such as
Groupon and Mydala also operate on
the discount plank. The difference is
the discounts are valid only when
there are a certain number of buyers
available for a deal. And thanks to
social networks, gathering crowd is
not a challenge anymore. The most
popular categories online are gadg-
ets and electronic items such as com-
puters, peripherals, mobile phones,
cameras, pen drives and MP3 play-
ers; kitchen appliances, dining,
grooming and personal care services,
apparels, movie tickets and various
subscription services. Players such as
Naaptol claim to be catering to 4,000
customers a day, selling them
200,000 products.
Flipkart, one of the most successful
players retailing books, DVDs and
music, recently introduced the con-
cept of cash-on-delivery. This single
step, according to one of its founders
Binny Bansal, has helped the business
tremendously. A lot of buyers are still
wary of making online transactions
and a large number has no cards at
all. Cash-on-delivery helps tap this
segment.
“Today, 50 per cent of our orders
are cash-on-delivery,” he says. “We
ship 500 orders a day to towns where
there are no courier services. We have
to send them by registered posts,” he
says. There is a huge pent-up demand
in cities and towns with underdevel-
oped retail network. “People want to
read good books and watch good
films. Going to a store is not only te-
dious, the choice is limited too.
Whereas, we offer a varied choice on
one platform,” he says.
Who Sells?
A dirty secret of the business is
that more than the buyers, it is de-
pendent on sellers, or the mer-
chants whose products and services
are offered to consumers on massive
discounts. Most of them are small-
time vendors with no means to
reach a large number of customers
on their own, some have perishable
inventories that are better sold on
discount and for some others, such
platforms offer an alternative chan-
nel of sale with no costs involved.
According to a survey by market re-
search agency The Nielsen, eBay
was the primary or the secondary
source of income for around 13,000
merchants in India in 2008.
“The number must have signifi-
cantly gone up,” says Muralikrishnan
B, Senior Director, Marketing and
Product, eBay. “Online buying and
selling is a win-win situation for all
involved. Customers get a large vari-
ety of choice, convenience, low prices
and also, with more responsible play-
ers coming in, quality products and
services. Vendors save on marketing
and logistical costs and even the cost
of acquiring customers.”
The sites make a margin of 15 to
30 per cent on every transaction. For

THE O N L I N E UNIVERSE
and co-founder, Nexus Venture Part- most, the business is not self-sustain-
ner, a leading venture capital firm. ing as of now but they are optimistic
On the face of it, it seems auda- that unlike the first wave, there will
cious that a bunch of aspiring entre- ACTIVE INTERNET USERS NET COMMERCE MARKET SIZE FROM 2007-2011 be more winners this time than those
preneurs, still green behind their ears,
are seeking to redefine the buying be-
17.5 million Year Dec 2007 Dec 2008 Dec 2009 Dec 2010+ Dec 2011+
going belly up.
Even the experts can't dismiss this
Those who used the internet at least
haviour of a people who proved a Total market size ** 8,146 14,030 19,688 31,598 46,520 optimism. “In the medium to long
once a month
hard nut to crack even for the most term, the internet will be a significant
Online travel 6,250 10,500 14,953 25,258 37,890
toughened businessmen such as channel in influencing consumer buy-
Kishore Biyani and Mukesh Ambani. Look For Information Industry (77%) (75%) (76%) (80%) (81%) ing decisions and driving commerce.
Yet, as Sujan says, “Their excitement is 13.6 million Online non-travel 1,896 3,530 4,735 6,340 8,630 There are, however, factors, such as
well-founded.” Accessed the Net for details on any Industry (23%) (25%) (24%) 20%) (19%) the successful rollout of networks, de-
Sujan speaks from experience. He product vice penetration, the creation of at-
e-Tailing 978 1,120 1,550 2,050 2,700
successfully rode the wave of e-com- tractive online and multi-channel
merce that hit Indian shores around Digital downloads concepts and payment systems which
Shop Online or paid content subscription 238 290 435 680 1,100
2004 (India missed the first wave in will determine growth rates,” says
1999-2000 because unlike in the 7.4 million Financial services* 1,200 1,540 2,000 2680 Laxman Narasimhan, Director, McKin-
West, the dotcom boom and bust hap- Bought some product/service on the Other services sey India.
pened almost simultaneously here) internet Besides standalone operators, ex-
by first setting up an online auction Incl. classifieds 680 920 1,210 1,610 2,150 perts feel that in the coming days,
site, bazee.com, and then selling it off **All figures in Rs crore *Financial services were not calculated in the years prior to 2008. + Estimated figures even organised retailers will begin
to the world’s largest e-auction TOP E-COMMERCE tapping the online medium. In devel-
player, eBay, for $50 million. CATEGORIES IN INDIA
TOP FIVE THINGS oped markets such as the US, offline
There aren’t many survivors IN 2010 Sold in india Indians bought from the US Indians bought from the UK Indians bought from China retailers generate 5 to 20 per cent of
around from that first wave in India (figures approximate and in crores) their revenues from online sales.
in 2004. Those who managed to stay Mobile handsets Smart Phones Indian stamps Cell phone accessories “Given the potential of e-commerce,
afloat are today worth billions of dol- Online Travel – Rs 25,258 crore competition is only going to increase
Indian stamps Mobile phone accessories Mobile handsets Smart phones
lars. Launched in India in September Financial Services – Rs 2,000 crore in the times to come but India will be a
2005, online travel agency make- Indian coins Books Asian coins Wrist watches large online market in the longer
Classified Online Services (such as
mytrip.com, for instance, was valued term and there will be space for
matrimonial, car sales, real estate, Books Indian stamps Film DVDs Head phones
at close to $1 billion at the time of its everybody to thrive,” says eBay's Mu-
etc) – Rs 680 crore
listing on Nasdaq in 2010. “Everyone Pen Drives Engagement rings Indian postcards Video game accessories ralikrishnan.
today wants to be the next make- E-tailing (sale of consumer products In one of its recent reports, McK-
mytrip.com,” says Sujan. such as durables, gadgets and elec- insey projected that there will be
tronic items, personal products, en- ON AN AVERAGE DAY ON EBAY INDIA more than 350 million internet users
The Two Waves: Then, Now tertainment products, etc) – ■ A piece of jewellery sells ■ A health or beauty prod- ■ A toy sells every 19 min- ■ A home appliance sells in the country by 2015. “This is big-
On the ground, nothing much Rs 2,050 crore every 4 minutes uct sells every 8 minutes utes every 35 minutes ger than the entire population of
seems to have changed between the Digital downloads—Rs 680 crore many developed countries across the
current and the previous e-commerce ■ A portable storage device ■ A stamp sells every 8 ■ A book or magazine sells ■ A digital camera sells world,” points out Groupon's Bubna.
Source: Projections from e-Commerce report or pen drive sells every 4 minutes every 26 minutes every 35 minutes
waves. Like the previous wave, this McKinsey, meanwhile, is betting big
from Internet and Mobile Association of India minutes
time too most entrepreneurs are chas- on the mobile internet population in
■ A watch sells every 10 ■ A fitness & sport item ■ A laptop sells every 40
ing the fabled “potential” of the In- the country. “India has a large poten-
■ A mobile handset sells minutes sells every 26 minutes minutes
dian market. Like then, the action TOP 10 E-COMMERCE tial in the mobile-internet space. De-
now is primarily driven by ambitious every 5 minutes pending on how supply evolves, we
HUBS IN INDIA ■ A piece of home décor ■ An MP3 player sells every ■ A video game console
entrepreneurs wanting to make it big. ■ A coin or note sells every sells every 10 minutes 27 minutes sells every 48 minutes believe that 50 per cent of the 35 mil-
And motivated by the same reasons, Delhi, Mumbai, Jaipur, Chennai, Ban- lion internet users can access the inter-
galore, Hyderabad, Ahmedabad, 5 minutes
there are enough private equity and ■ A car or bike accessory ■ A video game sells every ■ A movie sells every 58 net through their mobile phones.
venture capital investors this time Kolkata, Chandigarh, Pune ■ A piece of apparel sells sells every 13 minutes 35 minutes minutes Companies need to ready themselves
too, ready to oblige these deal Source: e-Bay Census 2010 every 6 minutes now to be able to exploit this opportu-
hunters. In the past eight to 12 source- e-Bay census 2010 nity,” he says.