E-commerce in India: From convenience to choice

And this time I was not surprised when this friend of mine from a far remote corner of the country informed me that her recent purchase was actually an original off the runway dress straight from a leading fashion event. By now I know that like many, even she is hooked on to a popular luxury e-commerce Indian site which not only gives her the chance to access the latest in fashion but has also made it absolutely simple for her to buy anything of her taste in just few clicks. This friend who had to relocate to a small town due to personal reasons always used to crib about lack of branded or in-vogue things at her place but since the day I had introduced her to few established e-commerce sites in India there has been absolutely no looking back. From books to apparel to accessories, she has tried it all and is thrilled at the way e-shopping has transformed her shopping experience. Not only is she herself convinced about it, she has also got few friends and colleagues of hers to log on to these sites and order stuffs which are not available in their vicinity.

As a consumer, her online buying behavior has moved on an up curve with time, she started with items like books where the chances of product damage during transit were less plus the purchase value was small. With positive experiences by one e-retailer and one courier company, she slowly started to order high value items from different sites and now is completely convinced about the benefits of e-commerce and reliability of online transaction in India. Yes, consumers like hers are not the majority and there are many who are still wary of transacting online but then the fact that she is ordering so many high value items from such remote corner is definitely some indicator.  In yet another similar incidence, there is this acquaintance of mine who is in a habit of changing his mobile phone every few months. During his last purchase, he managed to get a model of HTC delivered at his door far before than I could have bought it. He had pre booked it online from yet another popular Indian e-commerce site!

Isn’t it interesting to see such trends happening in India now? While for people like us e-commerce is not something new and by now we are quite habituated of transacting online but then the majority of Indian consumers still live in tier 2 and tier 3 cities who have enough reasons to not shop online, be it internet connectivity or lack of awareness in terms of using their cards online. While for us, convenience or price differentiation triggers our online behavior, for them it is the choice and availability of products.

Though not hugely upbeat, but there are enough statistics now which is directing towards the change in online buying behavior of Indians beyond metros. As per last e-commerce census by Ebay, 3,296 Indian cities shopped online in 2010 and of this, 2234 were Tier-2 & Tier-3 cities. Founder of naaptol.com, a best deal marketplace site says that 90% of his business comes from rural India. The company advertises its deals across product categories in newspapers and customers in the rural market are placing orders—not at the click of a mouse but by punching in the contact number given in the ads. As per the March 2011 data for online banking in India, 48% of users are from metros and 52% come in from non-metros, while last year the data was different with 57% from metro & 43% from non-metros. Yet another e-commerce site Letsbuy.com has sold LED TVs of as high value as Rs. 1 lakh and above in tier 2 and 3 towns where the product is not available through normal retailers.

From necessities like ticketing and banking to luxuries like fashion apparel and high end gadgets, consumers from different parts of the country are logging in and trying to buy these online. Not only the list of products being bought has expanded, even the ticket size of online transactions has increased now. There is need for convenience, an aspiration for luxury products and money to spend; lacking was the avenue to access such stuffs in remote towns which gets fulfilled by many big and reliable web shops now. The behavior is definitely changing but is it significant enough for all these e-commerce players to have a sustainable business model? Yet to see how many become revenue wise successful in long run, though few online players have already created a difference and made that impact!

*In case you would like to read the ebay e-commerce census of last year, you can download the same from here.