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E-commerce firms in India are shifting focus to consumers

27 Oct

One reason which was seemingly obvious of the slow growth of e-commerce websites in India was that, Indian consumers are really skeptical when it comes to buying online, products which they would normally buy from some retail store. Firstly, they feel a sense of insecurity doing transactions online and secondly, they have the question, ‘Will the product be delivered to me at all? And if it is, will it be of the desired quality?’ A synopsis of the post which recently appeared in the Business Standard shows how e-commerce websites are changing the way they do business to suit Indian consumers.

“E-commerce firms such as Flipkart, Myntra, SnapDeal tweak their sales model to suit Indian conditions. Unlike in Amazon, where people had to pay online for the product first and then pay an additional fee to for the product to be shipped across to India, the Indian e-commerce players have introduced an option where the Indian consumers do not have to pay a single rupee for the product until it is couriered to them. Most of them don’t even have shipping charges. This, the firms believe, suits the Indian mentality perfectly.

Online sales still make up a small portion of overall retail spending – one estimate pegs it at $10 billion (Rs 47,500 crore), a tiny fraction of India’s $500 billion (Rs 23,75,000 crore) retail market – but they are growing fast.

That rapid growth of firms such as FlipKart and Snapdeal has drawn the attention of venture capitalists who poured $183 million (Rs 869 crore) into 20 e-commerce firms in the last 12 months, up from $61 million (Rs 290 crore) for 13 firms in the previous 12 months, according to Venture Intelligence, a research firm.

The growth has also been noticed by foreign online retailers like Amazon and Groupon, where the former is working on an Indian version of the site and the latter has bought and Indian deals website SoSasta.com.

India has 50 million to 100 million Internet users, according to various analysts, and the number is growing by about 30 per cent a year, but capitalizing on it will not be easy.

Consumers and suppliers laud FlipKart’s service and execution. But they expect the company to soon face greater competition, especially if Amazon starts an Indian operation. How FlipKart will handle the situation of foreign competition remains to be seen.”

The full article which appeared on Business Post can be viewed here

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Posted by on October 27, 2011 in Feed Spot

 

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