Millennium Post

Click it to pick it

When was the last time you swiped your card to buy your favorite watch on an e-store?  Or when did you decide that going to the corner bookstore was such a task and instead, you flicked the latest editions of an e-shelf? That old car that you wanted to sell, wasn’t it purchased by someone on an e-portal? Or that collector’s memorabilia that had fixated you right from the word go and which also made you scoot and run from city’s one end to another, didn’t you just happen to find it on an e-auction?

Ask these questions to someone living in the internet age of today and you’ll get replies with such affirmation that for a second you may start questioning your own sense of thought. Gone are the days when stores used to be ransacked by people who came in hoards to buy and the store keeper had to regretfully tell the unassailable numbers about his inability to provide them with what they wanted. The long waits at stores are over; ‘We had to jostle for space inside the store,’ sounds archaic and there is no scurrying to get your purchase billed. E-tailing is here and may just push out retailing in a never before manner, at least in the urban context.  You shop off your laptop, tablet or smart phone, the choice stays with you. All you need to have is internet and plastic money and you can own the world from the confines of your home, office or even your car.

As every trend is followed by another, the e-retail sector soon made way for online deals that became the next big thing offering extraordinary deals to consumers at throwaway prices with players like Snapdeal. The deals on offer varied from salon vouchers, to restaurants deals to resort vouchers and much more giving a whole new meaning to ‘value for money’. With deals becoming popular, the ever changing e-world introduced a new trend to surfers, that of online bidding or auction. This concept today sells like hot cake with players like 90 Bids and findmystay that allow you to decide the price of a commodity you wish to buy. 90 is one such site that allows users to bid not only for air tickets, hotel stays, holiday packages but products like branded watches, gadgets, dinner vouchers and an array of other products, giving users a chance to win these goodies at unbelievable prices and also creating a thrill factor for those winning these bids. Findmystay on the other hand, deals mainly in hotels at a pan India level that enables users to get hotels at their own chosen price.

If we happen to look at figures from the World Bank, we’ll realise that China tops the list with 568,192,066 internet users, followed by United States with 254,295,536 and India with 151,598,994 users. However, if the talk is about penetration than Falkland Islands, a British protectorate comes in first with 96.9 per cent penetration, followed closely by the Nordic country Iceland at 96.0 per cent and the Scandinavian countries of Norway and Sweden 95.0, 94.0 per cent respectively. Falkland Islands with its 2,842 internet users and Iceland, Norway and Sweden with their 300,656, 4,471,907 and 8,557,561 internet users are nowhere even close to the humongous numbers that are projected by China, the United States and India. These are also the world’s three most populated countries. However, there isn’t much disparity in the top 15 countries by way of internet users. While the number of developed countries is eight, seven from the developing world are also globally connected.

According to data on e-commerce accessed through First Data Corporation, India’s e-commerce market in 2011 was about Rs 50,000 crore and about 80 per cent of this was travel related pertaining to the booking of airline tickets, railway tickets, hotel bookings, online mobile recharges etc. Further, online retailing comprised of 15 per cent share and was growing at an estimated 40-45 per cent CAGR (compound annual growth rate) as compared to the global growth rate of 8-10 per cent. It was further found that electronics and apparel were the biggest categories in terms of sale. These figures do explain that internet penetration in India is more of an urban agglomeration phenomenon which can be said to be encapsulating not just the metropolitan cities, but tier II, tier III and small towns too. However, most of the e-commerce activity that happens in India is not related to online retailing but is associated with availing services that have been extended by public and private players alike in the realm of e-commerce. Even small hamlets and upscale villages, where the internet and the debit card has reached are using it them avail services like booking of train tickets etc.

Quite contrarily are the United States figures, sourced from, which had e-commerce sales that amounted to US$ 289 billion in 2012, up from US$ 256 billion in 2011.  More than one third of US e-commerce revenue was generated by travel and flight booking websites in 2012 but the largest share of online revenue could be attributed to retail shopping websites which earned US$ 210.3 billion in 2013. A current e-commerce market forecast projects that US$ 500 billion will be generated in 2018 as online retail revenue. Simultaneously the number of digital buyers in the United States is expected to grow from over 157 million in 2013 to 180 million in 2017, as per industry estimates. With more than 191.1 million digital shoppers, the United States has got some serious competition from China, which was expected to make RMB 1.5 trillion by 2013 and become the world’s largest e-commerce market overtaking the US with online sales growing to represent 7 per cent of all retail sales. In 2011, China alone contributed 3 per cent of global retail sales alone. This figure still lags the US and Europe together.

Globally, if China is compared to other leading countries in terms of e-commerce, it can be found that the East Asian giant is considerably ahead than many of its counterparts. A research paper submitted by Bain and Company, a global management consulting firm categorically mentions that Chinese CAGR grew at 102 per cent between 2007 and 2010 as compared to UK with 6 per cent, USA with 8 per cent and Japan with 21 per cent. In terms of growth of CAGR, China was expected to grow by 48 per cent as compared to UK’s 17, US’ 15 and Japan’s 9 per cent.

However, in all three markets including India that have been compared, there is similarity in the manner through which e-shopping is looked at. While earlier, customers sought to e-tailing because of the relatively lower prices, consumers especially in China and India are now motivated by factors of convenience and also product variety. For retailers this means that only price wars will not entice customers but factors like superior customer service and improved customer loyalty would bring them business. For example in China, it is assumed that the first purchases online are made through either Taobao or T-mall. Both companies are promoted by the Alibaba group of China. In India, the first purchases are usually made of the hugely popular, Flipkart and and in the United States people turn to the Jeff Bezos promoted with sales expanding to more than 60 per cent in a fiscal on an average. However, while in India and China the first purchases made online are of electronics and apparel, in the United States 63 per cent people would prefer to buy electronics via showrooming and not e-tailing., the US internet based shopping behemoth that was founded on 5 July, 1994 at Bellevue, Washington and is headquartered at Seattle had entered the Indian domain in June, 2013 and is geared to give our local startups some serious business. which is in serious contention of India’s top most e-retailing position, pumped in US$ 2 billion just a day after Flipkart announced inflow of funds to the tune of US$ 1 billion. With options ranging from same day delivery, constantly bringing in new products and price slashing, looks all set to challenge the many buying options that Indian e-customers now have.  In a statement released by Jeff Bezos, CEO of the e-retailing giant the intent  comes out rather clearly. He said, ‘With this additional investment of $2 billion, our team can continue to think big, innovate, and raise the bar for customers in India. At current scale and growth rates, India is on track to be our fastest country ever to a billion dollars in gross sales.’

Globally, Amazon is engaged in an intensive duel with Alibaba, the massive Chinese e-commerce giant that will soon conduct a New York Stock Exchange (NYSE). The buildup to the rivalry is interesting. Amazon has operated in China for about a decade under the brand. Even after building a solid reputation for customer service and product quality, the market share is too miniscule for its standards. In 2013, had just 2.7 per cent of the business-to consumer of B2C market much behind Alibaba’s which had a market share of 50.1 per cent. In the last few weeks however, According to Forbes, Inc has announced that it would set up a new hub for cross border operations in the free trade zone outside of Shanghai. Amazon says that it will use these facilities to connect Chinese customers to its global platform (Chinese people visit the global website to order for products not locally available but have to sift and navigate through a lot of foreign payment and deliver systems) allowing imports of products into China that are normally only available to Amazon customers in other countries. The facilities will also help Amazon further expand its base in countries where it does not have operations in far east and the rest of Oceania.

But, the most interesting segment of this debate is the option of Cash on Delivery method of payment. While India has a vibrant cash economy and as a result of which 80 per cent of Indian e-commerce tends to be Cash on Delivery (COD). In China too, the preferred methods of payment are usually cash while US strictly swears by the use of credit cards. Amazon in India and China has been quick to adapt to local preferences.

It is said that e-commerce as a business model is expected to stitch the whole world together. We have already seen Amazon’s preference for adaptability according to local tendencies. How soon markets like India and China would experience concepts of Black Friday and Cyber Monday will be interesting to watch out for. But just in case, Amazon develops the passage vision phenomenon, I would like to inform my readers that the Great Indian Online Shopping Festival, created by Google India in 2012 was in stark similarity to the American concepts. It was a huge affair and in 2013 it fetched more business. The reason why I have given this anecdote is that the Indian online buyer is a smart one. He doesn’t owe loyalty to a particular e-retailing website and scurries to find the best deal. And if that is not available, he may also get going to the nearest market place to strike one. There is no show of solidarity here when the interest is personal. Beware!
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