Consumer e-commerce market: Strategizing e-retail for the Indian context

Abstract

Consumer E-Commerce can be broadly defined as buying and selling of products and services on the Internet. The B2C and C2C E-Commerce industry can typically be classified into the following categories. 1) E-tailing, comprising Online Retailers and Online Auctions 2) Travel, comprising Travel aggregators, Tour Operators, Hotels and Railways 3) Classifieds, comprising Online Jobs, Online Matrimony, Online Property, Online, Automobile and General Classifieds 4) Paid Content Subscription, comprising research, articles, exclusive videos, etc. 5) Digital downloads, from Internet to Mobiles and internet E-tailing of goods and services, with huge growth potential in India, is expected assume a position of central importance in the near future. E-tailing is already gathering market share of total commerce very fast in India. Venture Capitalists opine that the inflection point for Indian E-tailing industry is only 10 years away. With FDI approval granted for multi-brand retail in India, the day is not far off for FDI approval to the E-commerce space as well. This will see big names such as Amazon, Buy.Com, etc. soon entering the growing Indian e-commerce space. With larger and bigger players, consumers will be able to gather more competitive price information with only a click of the mouse. Hence it will be interesting to study the overall business models in the e-commerce space, and more specifically the challenges and impact the e-retailing industry will have on the Indian market. Amazon.Com was the pioneer of the E-retail space. Jeff Bezos’ innovative idea of selling books from his garage by taking orders online has now developed into the world’s largest online store. Adopting a similar model, e-retailers with online presence but no physical outlets have mushroomed in India – Myntra, Koovs, Flipkart, eBay, etc. to name a few. The benefits of e-commerce have also prompted brick and mortar stores such as Future Group, Arvind, etc. to take the e-retail route. Further, with service sector contributing to more than 50% of India’s GDP, Internet is also definitely a vehicle that can be very effectively used to promote, sell and perform services in India2 . To sustain the online retailing model in India, a robust business model is required. An attempt to chart out the detailed modus operandi of e-retailers in India would be the focal point of our study. Role of FDI approval in this space will also be an interesting aspect to analyze differing strategies for local and foreign players. E-Commerce is the future of shopping. The Internet economy will continue to grow robustly especially in developing economies such as India. Internet users would start buying more products and buying more frequently online. A detailed competitive study of both new and established companies in the Indian e-retail space will give a holistic understanding of the challenges in this business. It will be structurally impossible for most pure Web retailers—unless they hit Amazon.com like scale—ever to turn a profit, let alone to take a dominant position. The clear advantage in retailing goes to big highly skilled traditional retailers that use the Web to extend their already potent physical presence. Strategies have been recommended by identifying whether and how big players can consolidate the growing Indian e-retail industry by achieving economies of scale.