MUMBAI - With
the world's biggest online auction house, eBay,
declaring this week it is buying India's best known
online auctioneer, Baazee.com, for about US$50 million,
e-retailing in the sub-continent has chugged up a gear
amid global projections of happy times ahead.
"E-shopping has taken off very well in India,
especially in the last one year or so, and is constantly
evolving," V V Kannan, president of interactive services
at Sify Limited, told Asia Times Online. Sify, claiming
500,000 subscribers and 850 cyber cafes across India,
reported that Internet retailing provided 39% of its
$64.54 million turnover last fiscal. "Overall, the trend
for online shopping is very positive."
The
reasons for this optimism, Kannan says, are an increased
availability in online payment options, a wider range of
merchandise, online tracking of shipments, 24-hour,
seven-day-a-week customer care, and a larger Internet
reach at cheaper costs.
Indian e-commerce hopes
to surge ahead on the back of the expected Internet
population explosion in the country. India has only 17
million people online, according to market researcher
IDC, but is expected to have 30 million Internet
subscribers in 2006. An IDC study estimates e-commerce
spending could cross $500 million by the end of 2006,
with a compound annual growth rate of 79%.
Similar healthy predictions have been made for
the region. According to eMarketer, e-commerce revenues
in the Asia-Pacific will zoom from $76.8 billion at the
end of 2001 to an exponential $338.5 billion by the end
of 2004.
Presently, leading Indian e-commerce
sites either struggle or have re-invented themselves
amid a cautiously predicted dot.com boom - part 2. Wiser
after the inevitably cataclysmic crash of ridiculously
planned Internet start-ups four years ago, any optimism
these days comes with guarded provisos rather than
yodeling hopes of what fatter and cheaper broadband can
deliver. Nobody wants another dot.com bust, even as
players probe what approach best fits a complex society
such as India.
"Portals/gaming/downloads are
very important to creating a community in India, going
by the nature of Indian society," Namita Jain, a retail
consultant, told Asia Times Online. "In fact, the South
Korean example of how successful broadband availability
has been in encouraging online gaming and community
building shows how far this business can be taken."
Unexpectedly, Indian Railways has become a totem
of hope for persevering Indian e-entrepreneurs. Buying
train tickets through the Indian Railways Internet
reservation facility can be a startling experience, as
this correspondent discovered. An instant email receipt
follows, with tickets delivered the next day, sometimes
well within 24 hours. Then, flourish the tickets to
general gawking and astonishment.
Online train
ticket booking might seem routine, but for Indian
travellers weary of seedy touts in railway stations or
sometimes all-night queues, promptly getting confirmed
tickets through the Internet seems like serendipity - if
not a minor miracle.
"Indian Railways offers a
shining example of an e-business trying to solve
India-specific problems," Hareesh Tibrewala, a director
with the pioneering Indian e-retailer Homeindia.com,
told Asia Times Online. "I do not foresee a huge sale of
books or music online in India, but something like
travel services should do very well."
Travel,
estimated as the fastest-growing sector in the business
to consumer (B2C) category, could make up nearly 60% of
the B2C market by 2006, according to a two-year-old
study by IDC. "With Indian Railways and domestic
airlines launching the online sale of tickets," an IDC
representative told the media, "this segment is expected
to grow at a phenomenal rate of 140%."
To
maintain momentum, meanwhile, leading online sites such
as Rediff.com position themselves as primarily news and
e-mail providers, with e-retailing as a colorful
sideshow offering cutthroat discounts. Or they
reposition themselves as Bangalore-based Fabmall
(earlier "Fabmart") did. From being an online retailer,
Fabmall shifted its focus to owning a chain of physical
stores that also sell groceries. Online selling became a
support system. Meanwhile, airlines selling tickets
through online auctions and retail financial services
and investment sites, such as Indiabulls.com, report
better business.
Announcing well-timed strategic
developments becomes another way to stay ahead. On June
18, Rediff.com upped its offered storage space by 200
times to became the first Asian free e-mail service
provider to offer a 1 gigabyte mail warehouse.
Realistically, the prospects seem brighter for
online service sellers than those hawking consumer
goods, as Indian Railways' success shows. "About 5,000
users book tickets daily, providing sales worth Rs 50
lakhs [US $108,425]," Vinod Asthana, group general
manager of the Indian Railway Catering and Tourism
Corporation (IRCTC) told Asia Times Online. IRCTC, the
marketing arm of Indian Railways, operates the online
ticket reservation program. Asthana says Mumbai and
non-resident Indians favor the facility the most.
"The volume will pick up once we allow corporate
and block bookings," Asthana said. He expects to soon
make available ticket booking through short text
messaging and reservation-status alerts through mobile
phones.
Online railway tickets can be delivered
to 102 Indian towns. The two-year-old facility has
experienced a 30% growth rate, says Asthana. His deputy,
J Vinayan, says the Indian Railway ticket-booking site
is "the fastest growing credit card-based e-commerce
site in the Asia-Pacific region".
Indian
Railways seems to have also cracked a major challenge
choking e-retailing in India. "Poor courier logistics is
our biggest problem," Tibrewala of Homeindia says. "The
best of couriers cover only 5% of the country. There are
many product restrictions, imposed either by law or
simply on account of supply chain issues. Recently,
pilferage has also been a cause of concern."
Another problem, Kannan of Sify Ltd points out,
is that even though a steady set of users shop online,
the number has yet to grow exponentially. "We are
beginning to see a compound growth there," he says. "A
lot of people in India are not comfortable using credit
cards, as compared to the West."
In spite of
operational headaches, old e-commerce dreams survive. A
two-year-old article, published last week in an Indian
financial daily, talked about e-retailing being in a
better position to give more buyers customized products
based on direct, interactive orders.
"It would
take a few thousand crores [crore=10 million] and a
decade for the consumer in rural or semi-urban India to
get the benefits of organized retail chains," wrote
Kumud Goel, former managing director of the failed
finance and retail site Jaldi.com. "Through the
Internet, it can happen in a few man-hours." The article
was titled "Notes from an Unrepentant Dotcommer: Lessons
from Failure".
Raja M is an
independent writer based in Mumbai, India.
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