Sandhya Kaushik, a 32-year-old healthcare professional, bought a kitchen appliance online and saved nearly Rs 800. It wasn’t a one-off purchase, or the first time she had done so. Kaushik has been a regular on the online circuit for the past two years. Her purchases range from kitchen items and educational toys for her children to books and flowers. Her motivation: lower prices and sheer convenience. “Even if the physical store offers a discount, you end up paying more in transport cost. Also, it works best if you have a hectic schedule,” she says.
Kaushik is no aberration. Parul Suri, a 27-year-old consultant, also swears by online shopping. “In today’s fast-paced life, there is hardly any time to make physical purchases. An online platform not only saves time but gives you a lot of options,” she explains.
Kaushik and Suri represent a growing breed of people who see value for money in buying online. A Mastercard survey conducted in December 2008 reveals that the average number of online purchases in India grew to 2.9 in three months, up from 2.6 during the same period in 2007.
It’s a trend replicated in mature markets: in the UK, online buying outperformed the high street in 2008. A UK survey in December 2008 by Lightspeed Research revealed that 35.5% of the respondents preferred to shop online.
Convenience is the big draw
The economic downturn may have led more people to compare prices online, but the growth in e-shopping is not an outcome of the slowdown alone. Experts say it has more to do with convenience. “The slowdown may make consumers look for bargains online, but the phenomenon is riding on a bigger trend that veers towards convenience. A person who has booked a ticket from home hardly sees the need to do so in person in the future. This habit expands to movie tickets and hotel bookings,” says Kaushik Muralidharan, consultant, KPMG.
Deepa Thomas, senior manager, corporate communications and pop culture, eBay India, agrees that the current economic environment has helped, but adds that the wide range and deals offered online mean that even in a flourishing economy, people will continue to click and shop. “It is expected to grow 30% year-on-year,” she says.
The optimism notwithstanding, India is still at a nascent stage in online shopping. The e-commerce base in India is still very small—a fraction of the total retail spends. A study by the Internet and Mobile Association of India estimated B2C and C2C e-commerce volumes at Rs 9,210 crore for 2007-8, of which about Rs 7,000 crore was related to travel. But while travel transactions have taken off, the sale of merchandise has lagged behind.
Admittedly, weak consumer protection laws in India are hampering the growth in e-shopping. Buyers are not too sure of the quality of products and want the assurance of touch-and-feel before they loosen their purse strings. “This is mainly because of the fear of consistency; the product may be different from what you ordered,” says Devangshu Dutta, CEO, ThirdEyesight.
The price advantage
The second biggest advantage that the online shopping model offers is lower prices. Since most portals deal directly with the manufacturers, there are no real estate and intermediary costs involved. “We are able to pass on the cost advantage to the consumer,” says Sundeep Malhotra, CEO, Homeshop18.com.
This can bring down the price substantially. Adds Thomas: “We don’t sell to the end-customer directly. We are a platform for manufacturers and distributors and help them save costs associated with the offline model. This is passed on to customers.”
So if you are eyeing a Nokia N series mobile, you might be able to get a substantial discount by purchasing online. Or save on the price of an iPod Nano. But the online bargain offers have a wide range, with some products being sold without discount too. “That happens mostly with new products,” says Thomas.
Protecting the consumer
A major concern for consumers is the security of the transaction. One way to ensure safety is to pay directly from the bank’s Website. There are also virtual keyboards that help reduce the chances of unauthorised use of a credit card. “We have industry standard 128 bit SSL (Secure Socket Layer) encryption technology, so that whenever you submit sensitive information to us, like your personal details or credit card information, third parties cannot access it while it is in transit over the Internet,” says Arun Rajamani, general manager, consumer channels, Sify.com.
A useful introduction is the Cash on Delivery facility that some portals are offering. “With this system, you can have peace of mind as you don’t lose money in case the product is not delivered,” adds Suri.
Some online retailers have gone a step further in being customerfriendly. “We have a ‘No Questions Asked’ return policy—we give the customer 10 days to return the product at no extra charge,” says Upen Roop Rai, director, Times Internet. Such rules help instil confidence in the buyer that even though he may not have ‘touched and felt’ the product, he has the option to return it if he is not satisfied with the quality.
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