BENCHMARKING ONLINE SHOPPING PORTALS & ANALYZING THEIR SCOPE IN INDIA

Abstract

India has an internet user base of about 137 million as of June 2012. The penetration of e-commerce is low compared to markets like the United States and the United Kingdom but is growing at a much faster rate with a large number of new entrants. Hence, it becomes inevitable to understand what drives the online shopping business. In the report we shall try to answer of the following questions, some in brief and some in great detail. Key Objectives-  To understand the key criterion Customer selects an online shopping portal.  To understand the retailers perspective on improving shopping experience.  To understand the threats & opportunities for the e-retailers specific to Indian context.  Benchmarking the top retailers against the key performance factors.  Understanding the future of online shopping for India 2020. Key Drivers of the industry - Indian online retailing growth is at an inflection point with key drivers being Increasing broadband Internet (growing at 20% MoM) and 3G penetration. Also, the rising standards of living and a burgeoning, upwardly mobile middle class with high disposable incomes. Then we can not neglect the growing availability of much wider product range (including long tail and Direct Imports) compared to what is available at brick and mortar retailers. Also,the busy lifestyles, urban traffic congestion and lack of time for offline shopping. In addition Lower prices compared to brick and mortar retail driven by disintermediation and reduced inventory and real estate costs. Increased usage of online classified sites, with more consumer buying and selling second-hand goods. Evolution of the online marketplace model with sites like ebay, Flipkart, Amazon etc. vii Key performance factors from customers perspective After interviewing and surveying 100+ odd respondents we found that the their were few key factors that determined the customer choice of buying or not buying the from the online shopping portals. These were-  Product Quality It still remains the most crucial factor for the customer. Attributes included are accuracy of product description in terms of quality,size, taste or color, reverse pickup services.  Product Range Is one of the key determining factors for the success of an online shopping portal.Attributes included here are various product ranges, sub categories, variety with them for different price points.  Competitive Pricing Has always been the discrimination factor, but has never been easier than times today. Attributes included are -Offers, Loyalty Discounts,Seasonal offers etc.  Timely Delivery Throughout the market customer is sensitive to the on time delivery of the products and the services. Where generic products offer delivery time to 2-5 days, generoc products may take 7-30 days.  Brand Value It was easy to expect the brand value as a key determining factor as that could be one of the ways to ensure a good quality product.Attributes included are the presence of differnent known brandsin product portfolio. While creating the performance matrix we used these performance indicators to judge the various online shopping portals. Key performance factors from retailers perspective After interviewing studying various industry reports1 we tried to understand what are the key areas each of the retailer is trying to excel. Our study found that few retailers performed quite well on the benchmarked areas while few terribly failed. It was also evident from their overall performance. So the goals from the retailer’s pint of view were- Supply Chain Expertise: Is one of the key factor that defines the profitability

1 Billett, S. (2010). Constituting the e retail workspace, Best practices in the online supply chain 38, 31-48 viii of any online retailer. Attributes includes - Investment in inventory planning, JIT system, 3PL etc. Then its Delivery Efficiency: Has become critical for not the customer but also the retailer. Attributes includes - Owning their freight, In transit delivery etc. Third important criterion was Improved Merchandising: Includes the retailer's ability to large product lines. Attributes include - Large No. of Brands, Large product range etc. Also, Customer Experience need to be enhanced for greater repeated sales. Attributes include- Easy user interface, reverse pickup services etc. And finally the call for tomorrow- Differentiation: Is one of the attributes that would distinct the portals from each other. Attributes include -e service, product portfolio etc. Online portals used for the Competitive Landscape Analysis2 Out of more than 750+ local online shopping portals we studied 5 of them in detail and marked them against each other to identify the best practised followed by them and identify the best and worst performer against various indicators. The portals identified for the same were- -Jabong.com (The recent success story, trying to make a mark in 18 months of its inception). -Flipkart.com (First Indian online shopping portal founded by Bangalore based Sachin Bansal and Binny Bansal in 2007) -Amazon.com (A recent venture in Indian market, yet to make its mark but stands strong in International presence) -ebay.in (An international brand in Online shopping but yet to discover its full potential in Indian markets) -Myntra (Indian by origin and famous for unique products at an exceptional value for Indian households)

2 Is a consulting tools developed by Zenesys Consulting to benchmark industry competitors. ix What withholds Indian market to reach its full potential? The domestic e-retail market has the potential to grow between $ 125 billion and $ 260 billion by 2024-25, according to an industry report. The report, 'E-retail: A boon for the current economic downturn' by First Data Corporation and ICICI Merchant Services, says urban Indian consumers are now confident enough to make online purchases of up to Rs 25,000, from Rs 2,000- 5,000 in the recent past. Having said that, what withholds the market from reaching its full potential?? We studied this aspect in detail to indentify that the reasons correspond to 3 levels forming a Scope Pentagon. Three levels are-  General market perspective and best practises followed.  Limitations of the retailers in terms of logistics and product merchandising  Limitations from customer’s point of view i.e. low credit card penetration and Internet coverage.