e-commerce on retail economy, and analysis of the readiness of Indian consumers

A Research Study On the impact of e-commerce on retail economy, and analysis of the readiness of Indian consumers toward online shopping Submitted in partial fulfillment of the requirements of the M.B.A Degree Course of XYZ University

PRINCIPAL’S CERTIFICATE This is to certify that the research study on “The impact of e-commerce on the retail economy and analysis on readiness of Indian consumers toward online shopping” has been prepared by Mr. XYZ reg no 123 under the guidance and supervision prof. XYZ of XYZ College, Bangalore

PLACE: Bangalore DATE:

Dr. XYZ (Principal)

GUIDE’S CERTIFICATE This is to certify that the research study on “The impact of e-commerce on the retail economy and analysis on readiness of Indian consumers toward online shopping” prepared by Mr.XYZ bearing the registration no. 123 is a bonafide work done, carried under my guidance and supervision during the academic in partial requirement for the award of MBA degree by Bangalore University. To the best of my knowledge this report has not formed the basis for the award of any other degree or diploma

PLACE: Bangalore DATE:

Prof. XYZ (Professor)

DECLARATION I hereby declare that this research study on “the impact of e-commerce on the retail economy and analysis on readiness of Indian consumers toward online shopping. Is a record of independent work carried out by me towards partial fulfillment of requirements of the MBA course of Bangalore University at YXZ Institute of Management The report has not been submitted in part or full towards any other degree or diploma.

Place: Bangalore Date:

XYZ Register Number:123

ACKNOWLEDGEMENTS The immense gratification this project work has given me does not lead to a sense of fulfillment unless I express my boundless gratitude to all those who made this work successful. I do recognize that mere thanksgiving does not redeem me of my indebtedness for all the timely help, support and guidance I received.

I script on this page my sincere thanks to each one of them: XYZ Thank You.

XYZ

Content 1 1.

EXECUTIVE SUMMARY

3 2.

INRODUCTION TO E-TAILING

TECHNOLOGY USED TO SUPPORT ETAILING

5

3.

7 4.

BENEFITS OF BUYING AND SELLING ELECTRONICALLY

RETAILING BUSINESS MODELS

9

CONSUMER FACTORS AFFECTINGTHE USE OF E-RETAILING

18

IMPLICATION OF ETAILING ON THE INDIAN RETAIL

21

5.

6.

7.

REVOLUTION SUCCESFULL ETAILING COMPANIES

33

RESEARCH DESIGN

43

DATA INERPRETATIPON

44

OBSERVATION AND SUGGESTION

54

8.

9.

10.

11

CONCLUSION

56

13.

ANNEXURE1

59

14.

ANNEXURE2

60

12.

EXECUTIVE SUMMARY

An integration of technological, economic, and cultural forces has made possible a novel and revolutionary distribution channel known in generic terms as E-Retailing. Although only in its infancy, E-retailing has the potential to change from the roots, the manner in which people shop as well as the structure of the consumer goods and retail industries.

Therefore E-retailing will need to offer benefits of superior quality to traditional channels in order to realize the more ambitious sales forecasts that have been set for it. E- Tailing is the latest buzz, and practically everyone is jumping onto this bandwagon every day; after all one of the biggest drawbacks of physical retailing is finding space and managing people. Web-based retailing seems, at least at first glance, to do away with all this with one click of the mouse. But e-tailing has its own complexities, and one is not going to get ahead in this race unless one has thought through all the relevant issues and structured an offering that combats these. E-tailing, after all, is a business like any other and requires all the discipline and planning that goes with it, in fact, more, because the entry barriers are lower than in most other physical businesses. The greatest unknown for retail managers is what the ultimate role of online shopping will be. Most observers recognize the value of online shopping for travel, books, clothing, cosmetics, and music. But it is still unclear if online shopping will reach its projections for everyday shopping.

Statement of problem There is a need to study and analyze the readiness of Indian consumer towards online shopping in the present scenario where e-retailing has not been a wholesome business platform individually.

Objective The main objectives of the study is to identify consumers present buying habits, the attitude of people towards online, their mental blocks, and through analysis of these factors provide solutions

Research methodology Data sources: The secondary data was compiled from newspaper, journals, magazines, seminar and web links and also research papers. The primary data was collected through an exploratory research.

Data collection instruments Questionnaires and interviews Sample size Research was done on a sample size of 100, convenience sampling was used and the sample size was stratified into software professionals, retailers, students, self employed individuals.

Major Findings It can be inferred that these respondents have no problems considering online shopping as another option of buying . Almost all of the respondents have expressed their loss of either time or money while going for buying grocery from a physical store. This shows that an online buying option might provide a better solution for customers who experience such losses.

Conclusion Considering the primary data collected through survey, its interpretations and inferences, it can be concluded here that though most of the respondents have not expressed their readiness for an online grocery buying option, the increasing transport expenses and time constraints may convince them towards online shopping in the near future. Since India has been witnessing a growth prospect in electronic retailing, a more structured and disciplined approach towards the further construction and planned extension of e-tailing may prove profitable and useful both to the buyer and seller. Besides Absence of entry barriers like any other physically existing business adds an advantage for an etailing business to enter and establish itself as a successful business option.

Retailing "Retailing activities are involved in selling goods and services directly to final consumers For r their personal, non business use through net. It also called as Web - tailing, or Internet Retailing, or E-tailing. "E-retailing" or "virtual store fronts" on web sites via online catalogs, either freestanding or as a part of a virtual mall. E-retailing has two dimensions of interactivity through an electronic or Web. The electronic communication is showing rapid growth indeed. The creation of the "Information superhighway" promises to revolutionize commerce.

INRODUCTION TO E-TAILING E-tailing or e-commerce can be described as transactions that are conducted over an Electronic network, where the buyer and merchant are not at the same physical location, For example plastic card transactions via the internet. Presently there are 4 million Internet users in India and the number is growing. Computer Hardware, cinema, Books, Music cassettes /CDs, travel tickets and gifts are sold through the net in a big way.

E-tailers do not have to maintain expensive showrooms or warehouses in prime locations; They operate through their web sites and thus save drastically on the real estate costs. The real estate costs in the metropolitan cities are sky high. Besides this, maintenance costs of a virtual store vis-Ă -vis a physical store are much less. Easy and comfortably -obtained info is another advantages that shopping on the Net offers. On the Internet, product information is just a few clicks away, all accessed in the comfort of a home. Traditional retailing stands out in stark contrast: the consumer searches frantically, runs up and down, grills a poorly trained store assistant who is unable to help him out. In the bargain, valuable time is lost. Simply put, shopping on the Internet for, say 15 minutes could save a two-hour trip to the mall. Consumers prefer to save this time so that they can devote

more time for their professional and domestic priorities. The greatest benefit of online commerce is its ability to establish interaction en-masse. Interaction refers to the ability of reaching customers on an individual basis and reacts appropriately to responses of individual customers. Interaction is a vital tool for mass customization. Examples are many and include online marketing of flowers, software books and education. This has also led to greater satisfaction among the online buyers.

According to a research agency, 82% of the online buyers have been found to be satisfied with their purchases.

Most Recent BCG Study - G & M , Tuesday April 2005 •

On-line retailing in NA - up 122%, $33.1b

•

Forecast for 2000 - $61b - up 84%

•

Top 50 account for 2/3 of business

•

Top 10 - 38%

•

Auctions & Books, Toys, Tickets, Music, automotive - top 3 over 70%

•

Canada - between 5-10%

•

Top categories - travel, computers/software, brokerage but auto , health & beauty, toys, home & garden growing

•

Customer acquisition - ave $38/customer, pure on-line $82

Implications???

Technology used to support etailing While many technologies can find use in retailing, the most important are electronic data interchange (EDI), bar codes, electronics mail internet, World Wide Web, product data exchange and electronic format.

Electronic Data Exchange (EDI) Electronic data interchange is the computer-to-computer exchange of structured information in a standard electronic format. Information stored on one computer is transacted by software programmer into standard BDI format for transmission to one or more trading partners. computers, in turn, translate the information using software into a form they can understand.

Bar Codes Bar codes are used for automatic product identification by a computer. The most common example of bar codes is of consumer products such as packaged foods, books, apparels and so on. These codes allow the product to be scanned at the checkout counter. As the product is identified, the checkout counters. As the product is identified, the price will be entered into the cash register, while internal systems are automatically updated.

Electronic Mail Electronic mail consists of messages composed by an individual and sent in digital form to other recipients via the internet. Internet is a decentralized global network of millions of diverse computers and computer networks. World Wide Web is a collection of documents written and encoded with the hyper text markup language. With the aid of a browser, the user can ask for these documents and display them on the user's local computer. Product data exchange is the exchange of data usually in graphical form that is needed to describe a product.

Electronic forms An electronics form is a technology that combines the familiarity of paper forms with the power of storing information in digital form. To the users, an electronic form is simply a digital analogue of such a paper form, an image which looks like a form but appears on a Computer screen and is filled out via mouse and key board. Here in this project I emphasize on the web based retailing or Internet retailing.

BENEFITS OF BUYING AND SELLING ELECTRONICALLY Benefits to Seller In an expensive global marketing scenario, products are sold using the multimedia. Due to the global reach of the Internet, the number of users accessing the site increases, the cost of advertising and many other costs per user decreases manifold.

The potential for virtual corporations without real stores, there by low movement and storage costs. Amazon.com is the biggest example of this- it does not have any physical bookstores. ™ Relatively small investments make the markets easily penetrable by so called ™ micro corporations. ™ Catalogs and other available information can be kept up to date. ™ Customer information can be stored during registration and their individual tastes ™ ™ ™ ™ ™ ™ ™ ™ ™ ™

tracked. This can then be used for a more personalized web page. The buyer behavior can be observed and measured.

Customer service can be further enhanced with email.

Commerce can be fast and easy and will not be tied to time or place.

Network Effect: Where the number of users. increases without incremental expenditure to the seller by the network effect (Word-of-mouth etc) created amongst existing buyers and the prospective ones.

Benefits to Buyers: The buyer can benefit from same advantages like the seller. In addition to the above stated, there exist the following advantages:

™ A lighter soles channel can lower price and at the same time it can raise thequality customer service. ™ Purchases can be made anywhere with a computer and a network connection. ™ The sellers can modify their supply faster to real demand due to easier feed back from the customer through e-mail. ™ The roles of the manufactures and sellers can be redistributed. Support will come from a party that is most capable of doing it. A network . savvy manufacture will probably support customers directly. An advanced retailer might on the other hand purchase the support from a third partly. ™ Communication through news and mailing lists has on products from other users. ™ People with similar interests (markets to the business person) will provide "word of mouth" advertising through these electronic means. This is the network effect mentioned earlier. ™ Benefits to Other Parties ™ Manufactures would want to have their goods on sale at as many points of sale as possible. ™ Distributors may think of the new market place as a way to differentiate their services from those of their competitors. ™ Banks fell that the new methods will increases the amount of financial transactions and the need for financing. ™ Computer and software industry will have another field to sell their products and services.

RETAILING BUSINESS MODELS There are four basic e-tailing (e-retailing) business models. These are as follows. First model is the, there is the channel supporter. There retailers basically use the Internet to support the existing channels than to generate extra sales. This means that the web is used to increase customers, understanding of products and services. It could

product mixes by inviting customer responses on web sites and charming them into buying decision in the stores.

Second model is that of a category killer. Sites like Amazon fall into this category. Its success by blending content, communicate and commerce and by offering an extensive assortment of products supported by user reviews and information tailored to individuals. third model is that of an Auctioneer. These sellers of goods services provides the content; community comes from matching sellers with buyers and setting bidder against bidder; and commissions on sales and advertising revenue generate the commerce. This can also provide an excellent opportunity for businesses to dispute discontinued or excess inventory from their shops or warehouses at the best possible prices.

Fourth and Last model is that if a vertical portal, these are basically sites which specialize in a particular industry or product category and also offer personalized information and advice as well as access to a community with common interests

COMPARISON BETWEEN DIFFERENT RETAILING FORMATS Providing Alternatives for Consideration A significant benefits for E-retailing (Internet retailing) compared with other retail formats is the vast number of alternatives that become available to consumers. Through Internet retailing a person living in Bangalore can shop at Chennai or Delhi or Bombay or even US. In less time than it takes to visit the local department store.

Screening Alternatives to form consideration sets In most product categories, consumers have prior beliefs and preferences about alternatives. Consumer use this information to make purchase decisions more efficiently by forming a small consideration let and then evaluating alternatives with in subset in more detail. The potential opportunity cost of overlooking the "best" alternatives that would have been uncovered by carefully inspecting the entire alterations. A particular advantage of web based (Internet retailers) over alternative formats is that consumers can screen information so that they can focus an alternation that match their preferences.

Providing Information to Evaluate Alternatives in Consideration Test One of the primary benefits offered by traditional retailers is information that enables

consumers to predict how satisfied they would be if they purchased various offerings.

The degree to which this information is useful to consumers depends on the nature of the information provided and its reliability. (i) Quantity of Information: Retail formats differ in the sheer amount of information provided about the merchandise they offer. Store based retailers also differ in the information they make available to consumers. Specially and department stores often provided trained and knowledgeable sales associates., the effective "data base" of attributes available to consumers is much greater at specialty and department stores.

Internet retailing should prove superior even to specialty and department store retailers in terms of sheer quantity of attributes information it can provide, about each stock-keeping unit. It should cost far less to add information to an database to Internet retailing than same information to sales associates through conventional training.

(II) Quality of Information: The quality or usefulness of information is determined by the degree to which consumers can use the information obtained prior to purchase to predict their satisfaction from subsequent consumption and customers confidence in reliability. Information economists distinguish three different types of goods, say search, experience and credence goods in terms of consumer's ability to known quality before and after buying. Search goods are those whole qualities and value to the consumers can be assessed easily prior to purchase. Experience goods are those qualities and value to consumer can difficult assessed prior to purchase a usage because quality can be assessed accurately after is use. For credence goods, quality cannot be known even after repeated purchase and use.

(III) Comparison of Alternatives: Retail formats differ in the extent to which they facilitate the comparison of alternatives in the consideration set. For example, most of instore retailer's stock alternative colors, styles, and brands in each product category. An appealing characteristic category specialist is breadth of selections and customer's ability to make side-by-side comparisons of brands. Similarly, consumers shopping apparel can compare the fit of different alternatives. In Internet retailers are selective in the information presented, where as in-store retailers allow the consumer to control the basic for comparison of alternatives. The combination of Internet shopping search, screen and

comparison and comparison features also should prompt consumers to make their decisions more rapidly. In so far as search and comparison minimize the possibility of regret over choosing a sub optimal product, both decision speed and satisfaction with the decision process should increase.

(IV) Ordering and Fulfillment: Retail format differ in extent to which Internet retailing is superior to other format Considering Delivery time, customer transaction cost supplier facility costs ,time saving, convenience etc as shown in fig

HURDLES Though the India has potential for E-Retailing, the hurdles as many, to list a few.

Taxation: The issue of taxation is the most vexing are there is no clarity as to where in the transaction should tax be applied. Should it be at the point of purchase, the point of delivery or at a point somewhere in between? Also if it has to be the point of purchase, say, these for a distributed processing with the seller's server physically located in the US where does the taxation take place, US have sidestepped the issue, currently, by making all Eretailing transaction tax-free for 3 years. But answers will be needed soon.

Limitation and Asymmetry of Infrastructure: Though the government has taken a step in the right direction by allowing private ISPs to offer services, it needs to move further and faster, constraints like the last link still exist.

Security Concerns. (Fire walls, 128 bit- encryption): This is a big hurdle, essentially a mind set issue where people would not be willing to enter their credit card number on the net. The 128 bit-encryption, which would makes it very difficult for anyone to lack into the data stream and providing, firewalls for company's Intranets and extra-nets is required. Also the issue of credit card number validation can be handled by connecting

the buyer directly to his bank which does the validation often which he is connected back to the sellers. site.

Risk of Default: Currently it lies with the seller. But with increased security of the financial transaction and allowing of digital signatures by RBI, this can be resolved to quite an extent.

Payment Mechanism: Site like Baba bazaar has resorted to cash payment on delivery.

But for sites, which fall in the service classification, each payment is not viable. Hence online payment mechanism is the only route. Which as mentioned earlier do mindset issues and unclear policies of RBI currently plague. Again, possibly this gray area could be resolved with the RBI's Internet policy due in January 1999.

Building the E-Commerce market place: This would include building of a vendor neutral, public infrastructure which would offer Internet protocols hookups to anyone without any restrictions on end-use and address domestic connectivity using internet protocols.

Confrontation with Existing channel partners (Alternate distribution channel): As manufacturers move more towards the net for selling their wares, the alternate distribution channels so created would directly conflict with existing channels.

Government clearances: Currently, there as a string of clearness required by anyone that would wish to set up a virtual shop. The clearances need to be obtained from ministry of Finance, ministry of commerce, Ministry of industry for the relevant industry etc.

Patent Issues (Brand positioning dissonance): A multi location brand may be positioned differently in different parts of the globe. A brand positioned as premium in India may be, for ex. a VFM in the US. By putting the sites on the net for all locations, there can be a brand dissonance for a buyer from India who happens to see the US site. This can be avoided to some extent by using the cookie information from the client's machine.

E-RETAILING AND IMPLEMENTATION DETERMINATION OF SUCCESS OR FAILURE OF E-RETAILING As number of retailer selling their products and services over the Internet grows, often success and failure are determined the same factors that contribute to the success or failure of any other business. There are: ™ ™ ™ ™ ™ ™

. Price . Selection . Advertising. . Customer Convenience . Customer Satisfaction . The total cost of business

Although consumers who buy goods as line are arguably more informed and affluent than consumers who don't the needs of these online consumers is the same as everyone else's.

According to "The world wide Internet opinion survey" by at ditech, an international marketing firm, as many as 32 percent of the Internets potential customers visit commercial web sites based on word of mouth recommendations. Just as in the case of Companies in the physical world, successful companies in the virtual world must advertise. And advertise they do. Like a virtual counterpart to telephone company's yellow pages, search engines like Alta- Vista and Excite present virtual customers with information about the online business that offers the goods and services a seeking.

It is quite clear that the potential for -e- retailing will depend on the number of users who have access to Internet in India; the number of products and services offered by Indian Companies; the skills and creativity employed in designing web sites; and the band width available for users and service providers.

CONSUMER FACTORS AFFECTINGTHE USE OF E-RETAILING Many factors will influence a consumer's decision to shop electronically versus in - store.

Here focus on the benefits pertaining to the consumer's information acquisition and processing that enable consumers to locate and select merchandize that satisfies their needs, because the fundamental benefits of E-Retailing is to lower the cost of information search and procurement. In summery, the growth of E-Retailing is dependent on the following factors.

Vast Selection: If the format does not allow for quick and comprehensive inspection of an expanded set of options, electronic commerce will mimic the shopping experience how available through catalogs and achieve a relatively low level of penetration.

Screening: If consumers cannot screen the large number of options made available, the advantage of vast selection will be outweighed by the costs of search.

Reliability: To be successful electronic retailers, allow them to reliable information regarding the product and services other wise consumes are unwilling to bear the risk, and continue their purchasing in-store shopping.

Product Comprises: To be successful, E-retailers must allow the consumers to tailor the basis for comparison of alternatives in order to make the system compatible with the process by which consumers prefer to make decisions. E-retailing format has the potential to provide superior information and quicker mode of shopping experience.

Apart from above all the factors, there are some other factors which influence the consumer to go E-retailing. These are as follows. ™ ™ ™ ™ ™

· Convenient to buy things over the net · There is more selection when things bought over net. · Getting the product at lower price. · It provides enough information on things sold over the Internet. · Save the time by purchase in over the net

Customer’s Perspectives & Behavior Why Do Customers Shop On-line?

•

Convenience

•

Cost

•

Choice

•

Customization

•

Communication

•

Control

On-line vs. Off-line •

Search - scope, agents

•

Evaluation - self, comparative sites, WoM

•

Purchase - regular, bid, barter

•

Possession - wait unless bit based

•

Use - similar, support

•

Disposition - scope, pricing format

Value drivers •

Give & Get Factors

•

Get - Product & Service Quality Dimensions

•

Give - $, time, effort, hassle

•

Value types - acquisition, transaction, in-use, redemption

•

Best, Lowest Cost, Easiest

Purchase decision

Individual Characteristics Age, gender, ethnicity, education, lift style, psychological, knowledge, values, personality

Environment Characteristics Social, family, communities

Buyers’ Decisions Stimuli Marketin Price Promotion Product Quality

Buy or not What to buy Where (vendor) When How much to spend Repeat purchases

Decision Making Process

Others Economical Technology Political Cultural

Vendors’ controlled System Logistic

Technical

Support Payments, Delivery

Customer service

Support Web design, Intelligentagents

FAQ, e-mail, Call centers, One-to-one

Transparency • Price & Cost • Availability • Supplier • Product

How costs become transparent •

erodes risk premium

•

more efficient search

•

buyer led pricing & auctions - price floor

•

rational shopping

•

less selective pricing

•

build customer base versus profits - changes price perception

Effects •

limits ability to obtain high margins

•

services & products become commodities

•

weakens brand loyalty

•

harm reputations re:price fairness

BUILDING LOYALTY •

Compelling Content

•

Customer Service

•

Personalized / Customized

•

Opt-in e-mail newsletters

•

Online registration & preferred customer programs

•

Gift reminder notices

•

Reorder reminder notices

•

Online communities

•

Incentive programs - in-house and/or third party

7 C’s of Etailing: •

Content - SmarterKids.com

•

Communications - Nordstrom, Dell

•

Customer Care - Land’s End

•

Community - HMV

•

Convenience - Gap, L.L. Bean

•

Connectivity - SmarterKids.com

•

Customization - Bluefly.com

IMPLICATION OF ETAILING ON THE INDIAN RETAIL REVOLUTION

E-retailing concept is very new to India many of companies were established in 1988-99, which are constantly working on E-retailing. These are companies like Eshoppee.com, fabmart.com Jaldi.com indbazaar, bababazaar and Indishop etc., these are exclusive site for the E-retailing the horizontal portals like Hotmail, India times, rediffcom an providing the shopping experience to the consumer. According Boston consulting Group and Nassom-Mckinsey survey, the Indian potential for E-retailing was 9 to 12 in 199899cross. Average E-retailing revenue per capital in India is den then a penny compared over $2-3 for China, $20 for Australia and $ 7.9 for New Zealand. The most optimistic estimate puts the total at Rs.50 crores by the end of the December 2000.

NASSCOM recently released finding of evaluate E-retailing scenario in India. As per preliminary findings of the survey the total volume of E-commerce transaction in India was about Rs 450 crores in the year 1999 -2000.0ut lines volume about Rs 50crors were contributed by E-retailers or B to c and Rs 400 crores by B to B. It is expected Rs 3500crors during 2000-03 about 300crors could comprise of retail and Rs3200 crores of B to B2B E-retailing in India is still in the infant stage. We tried to get some number for current E-retailing user base in India. Hotmail has 10 lakhs registered user in India. An IDC estimate is 4 lakhs (by end 2000), growing to 7 to 8 lakhs by 2000-2001. From above figures, a rough estimate of the Internet user in India in around 2-5-3 million.

Assuming 15% penetration i.e., 15% of the users actually making purchases on the net.

So E-commerce market is approximately 4 folds user. Assuming an annual spending 9 Rs. 500 per users. The current market may be approximately 4 lades user. The current market may be approximately 20 crores by end of the 2000. Even though the base is very small currently there is a growth expected in next six month after the ISP get opera

E-Tailing is emerging as an attractive alternative to the traditional brick-andmortar retaining. Chances are that they will co-exist profitably TO retail or to e-tail? That sounds like a Shakespearean dilemma. You ask any retailer, chances are that he will say both.

Retailing as an attractive business was slowly emerging out of the shadows. Quite a few corporate houses began looking at retailing as one way to corporate salvation. Notable among them are: the R P Goenka group, the Tatas, the S Kumars, the Rajan Raheja group and the Ajay Piramal group. And many more are still in the process of finalising their forays into retailing.

The dilemma Even as loose ends of retailing plans are being tied up, e-tailing has begun catching the attention of many entrepreneurs. Suddenly, you started hearing e-tailing names such as Rediff.com, Jaldi.com, Fabmart.com, Tsnshop.com and Satyamonline.com. This could well be the beginning of an e-tail revolution.

As the new sensation unfolds, it should be understood that retailing is serious business.

Thanks to the popularity of the Internet, e-tailing is assuming greater significance. A number of products and services are on e-tail offer and novel plans are being worked out by many e-tailers. Consider Skumars.com for instance.

Skumars who had earlier wanted to offer its franchise only to those having 2,000 square feet space has now improved its offer. It is now offering its franchise in Skumars.com to those possessing just 50 square feet space. So, the dilemma continues: to retail or to etail?

How large is the retailing industry? Is e-tailing large enough to take on so many players?

True, both retailing and e-tailing are still nascent and growing. One estimate by consultants KSA Technopak is that the organised retailing sector should be as large as Rs 5,000 crore and e-tailing in India should be just about Rs 12 crore. Says K

Vaitheeswaran, vice president (marketing) of the Bangalore-based Fabmart: "But then the growth potential for both retailing and e-tailing is tremendous."

What is the rationale behind such an assertion? Basically anything which involves a direct sale to a consumer at any point of time could be termed as retailing, be it selling of books, apparels, footwears, music or even grocery among other things. Such a retail trade could take place in a shopping mall, in a department store or in a basic mom-and-pop store or in a friendly neighborhood grocer's shop. Most of such retail trades that can be done through the brick-and-mortar retailing route can be successfully replicated on the Internet as well.

Distinct features True. However, if one bothered to get down to the nitty gritties of retailing and e-tailing, the differences in the way business is conducted in both the segments should become clear.

A retailer is restricted to a particular location, retailing is location-driven. But, an e-tailer can go global. Being local in nature, a brick-and-mortar retailer has to identify a good location for his operations and wait for customers. On the other hand, an e-tailer has to virtually attract a customer to his site and offer him exemplary services. In fact, location is no longer the key to success if e-tailing is what we are talking about. Thus, while the target customer remains the same both in retailing and e-tailing, the mode of conducting business is changing dramatically.

There is another distinct feature of e-tailing that is challenging. In retailing, as much as 50 per cent of the initial investment could go towards acquiring real estate. Postacquisition of real estate, a retailer has to spend considerable time, effort and money in setting up his shop, stocking inventory and creating display patterns. Thanks to webdriven retailing, an e-tailer has no such hassles. But, there is a challenge before him: retaining a customer who has shopped through his site.

Retaining an e-tail customer That is more than just a challenge. The primary aim of every e-tailer is to attract a prospective customer to his e-tail site. That calls for a large adspend. Naturally, there has been a surge in dot.com advertising in countries such as the United States. Dot.com adspends are so large that as much as two-thirds of the capital raised by dot.com companies are spent towards advertising. Adspends by dot.com companies are so huge that whatever savings achieved in the areas of real estate and inventory is more than offset.

The question still remains: after all that ad-spend, will the customer remain loyal to the etailing site? Says Kumud Goel, managing director of KLG Systel which owns the site Jaldi.com: "The Internet customer is very hard to predict and is different from the normal customer. Retaining him is not so simple. While a retailer expects strong loyalty, such a loyalty on the Net is difficult to obtain. A customer may shift from the Internet if someone else offers him a better deal."

That is why Jaldi.com will be using a mix of marketing tools such as public relations, advertising, promotions, direct marketing and Internet advertising to spread awareness among its target audience. Jaldi.com went a step ahead. Its offline promotions started with a successful consumer launch held at Priya PVR I theatre in New Delhi where 3,600 free Phir Bhi Dil Hai Hindustani tickets were given to every customer who logged on and registered at the site Jaldi.com.

What all these tell you is one simple thing: customer retention is the toughest thing on the web. Says K Ramesh, vice president of i2inext.com: "First of all, it is difficult to get a consumer come to your site. After he comes in, the task is to retain him and get him frequently. Once he is confident about you, he will use his credit card to make his purchases at your site."

On balance, retaining an e-tail customer is certainly a costly affair. For, in the world of the web there is nothing such as loyalty. Says Goel: "If you offer some freebies, a customer may keep on coming to your site, with the expectation everytime that there

would be some freebies out there. The moment you stop freebies, you could simply lose the customer." So, managing e-tailing promotion through freebies could be a tricky affair.

Changing economics That is one aspect of the e-tailing promotion. In fact, it has been observed in countries such as the USA, traditional retailers, despite the strength of their brand equity and their existing relationships with suppliers and customers find it extremely hard to compete online. Reason: the vast difference between the retailing and the e-tailing segments.

Though this is true, the web offers a host of advantages which may tilt the economics in its favour. The Internet world could transform much of the traditional economics of retailing. While a physical store caters only to a particular locality, the Internet reaches out to the world. The fallout: in e-tailing, the e-tailer goes for a bigger and wider audience and still be in touch with individual preferences.

Another approach that is emerging in e-tailing is to re-examine the normal retailing value chain. The web makes it possible to dispense with much of the traditional value chain altogether, thanks to direct sales by manufacturers to consumers. There is another side to this approach. According to some e-tailing specialists, web retailing also creates new points in the value chain. Example: Internet portals that act as shopping malls or intermediary aggregators such as Vasool.com that offer a new way of amassing buying power.

Certainly, the economics of the Internet offers a powerful first mover advantage. An ecommerce operation on the web can be scaled up at a low cost in such a way that its physical equivalent cannot. And even among e-tailers there is the first mover advantage.

If the first mover gets everything right - its website, its order fulfillment and distribution a newcomer might find it much harder to beat an established person at the game. Says Biren Ghose, chief executive officer (new media) of United Television which owns the site Tsnshop.com: "The first time a person shops on the Net is always a special occasion."

Shopping on the Net Fine. But, the question is why should anyone shop on the Net? What is the incentive to try a new medium of shopping?

If anyone has to try this new medium of shopping, there should be overwhelming reasons for doing so. The benefits must go beyond mere convenience. For one, the consumer will certainly be interested if he gets things cheaper on the net. Says Ghose: "The Net being a new medium, we have to convince people to use this new medium to buy." Adds Vaitheeswaran: "For convincing a customer to use this new medium, one has to offer an incentive to buy on the Net. Otherwise, it would be very difficult to get a customer to shop with you." According to consultants KSA, easier and faster shopping are the reasons for shopping on the Net. How? You can go to a brick-and-mortar retailer who could offer you 10,000 items in his store. Chances are that he might be 10 per cent out of stock. On the other hand, the Internet offers millions of products with no chances of an out of stock situation.

Easy and comfortably-obtained info is another advantage that shopping on the Net offers.

On the Internet, product information is just a few clicks away, all accessed in the comfort of a home. Traditional retailing stands out in stark contrast: the consumer searches frantically, runs up and down, grills a poorly trained store assistant who is unable to help him out. In the bargain, valuable time is lost. Simply put, shopping on the Internet for, say 15 minutes, could save a two hour trip to the mall. Consumers prefer to save this time so that they can devote more time for their professional and domestic priorties.

The hurdles Is shopping on the Net really catching on in India? The Indian scenario is quite different from that of the West. For good reasons. Indians have always been great shoppers and enjoy shopping anywhere in the world. With malls and departmental stores springing up in India now, Indians are just beginning to get a taste of things to come. Internet shopping is one such taste which the Indians have begun to savour.

There are hurdles here, however. One, need for a critical mass. This is vital for any successful e-commerce project. Consider: growth in e-commerce will come not from well-designed websites or web-marketing but from deeper penetration of the Internet.

That is why a case has been made out for increasing broadband Internet connections which are faster than the dial-up connections.

One estimate is that India has a mere 20 lakh Internet users, mostly concentrated in the metros. Web analysts feel that in many areas of retailing and commerce, Internet is unlikely to garner a sizable slice of the market. And that could be for several years to come. This is true, especially in businesses where margins are thin. Consider fast moving consumer goods, the FMCG sector. Says Devangshu Dutta, general manager of KSA Technopak: "In the Indian FMCG business, margins are as low as 10 per cent. Hence, etailing in such areas might not catch on."

Two, despite a higher Internet penetration, cities like Mumbai or New Delhi might not be a haven for an e-tailer. Reason: for things like grocery, there is a shop out there at every nook and corner. All that an individual has to do is just make a phone call and the goods are delivered at his doorstep. Thrown in along with free home delivery is a month's credit. In case of perishables such as fruits and vegetables, the Indian buyer prefers them farm-fresh. What does he do? While returning from work, they drop in at the vegetable market and complete their purchases.

Three, cheap labour. Thanks to easy availability of domestics at an affordable wage bill, quite a few of the rich customers hire them for doing domestic chores which include shopping. Four, the usual Indian aversion to use credit cards. Thanks to low penetration of credit cards and the lack of popularity of debit cards, e-tailing might find it an uphill task to catch on.

It is not just the aversion to credit cards. Says Viraj Savant, director, DBS Internet Services: "Elder citizens are averse to using even the computer." However, they are at ease while using the remote control of a television set. That throws up an interesting solution. Accessing the Internet through a television in the near future might be

something that an individual should be offered if e-tailing is to grow faster. The last and the most important hurdle to the growth of the e-tailing industry is the efficient management of logistics. Here the role of a courier company is extremely important.

Most portals offering e-commerce have tied up with courier companies. For instance, Jaldi.com has tied up with Gati for taking care of their delivery logistics.

There are other examples too. Blue Dart plans to enter the household shipment business in a big way to serve the needs of the online community in India. Looking at the coming e-commerce boom, Blue Dart is targeting a 80 per cent annual jump in its business, mostly from the shipment requirements of its online customers. For this purpose, Blue Dart has already invested Rs 40 crore to tune up its existing infrastructure and interface it with e-commerce potential.

On the technological front, Blue Dart is upgrading its intranet facility, linking 1,300 terminals with over 2,000 people at 70 locations to meet the e-commerce requirements.

This means that e-shoppers in these locations can log on to Bluedart.com and ask for the shipment of ordered goods from these e-shops. Also, Blue Dart has aligned with leading portals and e-shops like Rediff.com and Fabmart.com to meet their distribution needs.

What will work For an answer, consider the following. The most important cost advantage of

e-tailing

comes from whittled down shop front costs and elimination of intermediaries and economical distribution. For example, book e-tailing means giving out with big shops replete with slow-moving stock. Consider the case of Amazon.Com, where the orders go straight to the wholesaler. That means the working capital costs are cut down drastically.

Not just that, an e-tailer is paid before he pays his distributor. The implication: need for lower working capital.

However One has to compare these gains against certain web-related costs that have to be provided for. Running a website and servicing it to ensure that it is cent per cent reliable is not easy. Logistics and distribution are of utmost importance and that is where many e-

tailers are known to have gone wrong. While it is true that many e-tailers have been able to cut costs, they have lost large sums of money in the process of offering goods at low prices. A few of them who have made profits have ploughed them back for financing customer acquisition or retention.

All these do not mean an end to traditional retailing. E-tailing will have to co-exist with traditional retailing. Says Vaitheeswaran: "For things such as music and books, a whole new market will be created. This will increase the market manifold." E-tailers will have to work in combination with traditional retailers. Even the biggies in the business such as Amazon.com have realised this and are setting up distribution warehouses for the same.

As the combination of retailing and e-tailing set to deliver the goods, the trend of using the Internet as another service medium will gradually catch up. E-tailers like Jaldi.com have already set up kiosks in various cities which have been successful. Tsnshop.com makes use of its teleshopping network franchisees in various cities for selling its products. Says Ghose: "It helps in gaining customers fast as individuals have the option of returning the goods purchased if they do not like it. They can just go across to the shop. This gives them a certain level of comfort and confidence." Such a comfort and confidence-level is a must for a successful e-tailing venture.

Forecasts about e-tailing abound. Sample one of them here. Says Goel: "My forecast is that a 10-crore population shopping for a minimum of Rs 100 per year in the next one year. This should translate into a business of Rs 1,000 crore."

On balance, what we are witnessing at the moment is certainly a tip of the iceberg. Such is the growth potential in the e-tailing industry that it is not possible to put a figure against the industry's size or growth. So, there are pluses and minuses in the case of retailing and e-tailing. With so many hurdles around for e-tailing, it would be long time before e-tailing really catches up. But, the trend has begun. The model which will work in such an Indian context is this: a peaceful and complementary co-existence of retailing and e-tailing. 1

What etailing model is going to deliver the goods in the Indian scenario?

o

Collaborative commerce ( e-commerce) An e-tailer may collaborate with some manufacturers and suppliers.

Something that Easybuymusic.com has done. It has hooked up with warehouses of music companies and their distributors. So every time an order is placed with easybuymusic.com, it scans the warehouse closest to the customer. In most cases the distribution costs are substantially lower since fulfillment is done locally

o

Create economic value E-tailers should create economic value for the customer rather than a curiosity value. They should find out reasons, as to why customers should buy from a web site rather than a brick and mortar store and try to communicate this reason effectively.

o

According to the KSA annual consumer outlook, the consumers are more comfortable buying certain items. An illustrative list with a percentage of the consumers are: books and music 47 per cent, home furnishing 29 per cent, sports apparel 25 per cent, casual clothes 21 per cent, shoes 14 per cent, groceries 9 per cent and tailored clothes 9 per cent. e-tailing in India can be a success if the e-tailers change their business models and understand their customers more.

Examples of some succesfull etailing companies in India

This project report covered almost every aspect of e-retailing and its implementation.

Since this concept is very new in India, there are few companies who have adopted eretailing system and practicing. E-retailing is a hot business opportunity in india because, first no need to invest in showrooms in prime location which are very expensive here to set up, and secondly, as early entrants, you have the advantage of establishing before competition builds up In this industry project work attempt is made to look into practical implications of e-retailing in India as well as abroad. The case studies aim at just supporting the theoretical proposals made earlier. Taking instances of these companies, which have adopted the new concept, as an inspiration or motivation for other firms in future. The data which I have collected are from various dot .com. experts and professionals.

Fabmart Pvt Ltd Fabmart is a multi-store, virtual supermarket and has a music store with a collection of 8,000 music titles, which will be constantly updated. Other stores for books, garments, toys computers etc and also opened. Fabmart Pvt. Ltd. Was founded in August 1999 and the online music store was also launched in September 1999. Format has been founded by venture capital with an investment of over Rs. Five crores. It has been formed by a team of Six people, with over 10- year experience in Internet technologies, web solutions, IT and logistics. The team has grown to 14 and is expected to be 20 soon. The vision is to build fabmart into India's finest online virtual super market. To achieve this, the focus is a critical issues like security, back send logistics, customer service and brand, which will go a long way in establishing fabmart as one of the most preferred online retail stores.

A claiming a daily visitor number of 3,500-4,000, it is now planning to open some other stores dealing in grocery, jewelry etc., The "strategy is to build are store a time" says Vice president of marketing vaiteswarn. To repeat purchasing the team decided to

concentrate on ideation, conceptualization and marketing, learning other requirements to outsiders.

The products are directly purchased by manufactures and distributing the goods and service through Blue Dart shipments and Transporters to users. But to ensure a smooth run, it relies on a completely automated, web based solution developed in-house that works on a "virtual inventory model". M.D.V.S.Sudhakar told "what puts Fabmart ahead of this music online before ordering the CD or cassettes. Fabmart is trying to persuade Magasound and Milestone to feature 30-second audio chips onsite also providing recording songs exclusively for the site. This can be downloaded at Fabmart.com.

Sudhakar told Fabmart inputs 20% of the total music sales to be in digital format in 2-3 years and is gearing up for that day the biggest entry barrier, according to sudhakar in the brand. And, any competition will have to build a brand quickly to take on Fabmart.

Fabmart claim a 48 hour delivery time for 95 per cent cases. It is now planning to start overseas shipments in three months.

Secure shopping Guarantee and privacy Information Eshoppee.com General Manager Mr.Sidhartha says, making a purchase at www.eshoppe.com is 100% safe. When they request personal information from customers, such as name, address, phone number, credit card number it as done on secure services. They use industry standard technology to protect confidential information secured socket layer (SSL) - an advanced encryption technology that makes personal information unreadable as it travels over the Internet.

Working on eshoppee.com When customer places an order, they ask customer to provide information to complete and fill the order by filling out and submitting an on-line form. This information includes customer name, mailing address e-mail address and credit card information. All information regarding on-line customers is stored on a highly secured server that is not accessible through the internet. Eshoppee is committed to provide excellent customers service and their goal is to custom tradition on line they notify special offer and to customer on line information.

About Cookies A cookie is a small stored on web site give customer a unique ID. Cookies help make it

easier for customer to use the site and help them to provide information what customer needs. Eshoppee uses cookies to track new visitors to web site and recognize past customers.

Eshoppee.com has their own express pick up services for delivering the goods and service. It works round the clock, 24 hours a day, with no shipping charges. Eshoppee will give detail list of product is their usage process online. They give thewarranty for each and every product what they sold.

Jaldi.Com The online shopping driven portal site, founded on August 28, 1999, JALDI.COM is the flagship business to consumer E-Commerce portal company formed by KLG Systel and Satin Credit Care Network*. The company currently has a team of over 35 and is headquartered at the Electronic City, Gurgaon. JALDI.COM's vision is to be a "comprehensive" E-Commerce portal that will serve as a one-stop-shop for an entire range of products and services - changing the paradigm of shopping for Indian consumers.

JALDI.COM's "Consumer is King" philosophy drives the site to provide customers a "satisfaction guaranteed" shopping experience through the Internet. The site provides the most comprehensive range of products from consumer electronics to lifestyle and apparel and from provisions to games and kitchenware. With over 50 well known brands already in partnership with JALDI.COM, the company is gearing up to be the best way to shop presently. JALDI.COM offers products from manufacturers such as Avon, Coca-Cola, Funskool, Gillette, LG, Pepsi Urbanwear, Reebok, Royal Crystal and Sony among others, and vendors such as Clips for stationery. JALDI.COM has also tied up with ICICI Bank for its consumer financing service. JALDI.COM offers a faster, simpler and more transparent option to conventional shopping. The site provides buyers with buying guides and a comparison shopping tool that empowers them to make smart buying decisions.

Competitive pricing and free home delivery are additional advantages that Jaldi.com offers. The site is diversifying every day and eventually with e-mail, chat and online communities it intends to offer Indian citizens a whole new way of life.

The company's business model is based on a partnership strategy with goods and service providers. A commitment to partner with best of breed international and local brands

coupled with a cutting edge technology proposition is the driver behind the success of JALDI.COM's vendor strategy. To realize its vision of bringing E-Commerce to the mass audience, JALDI.COM is in the process of setting up over 300 Cyber kiosks all across the country. These kiosks will serve as access points to consumers who currently do not have access to a PC or to an Internet connection to shop for products and services online.

Courier partner, Gati ensures delivery to the customer's doorstep within 36 . 48 hours across the country. The customers can pay via cash on delivery or credit card and can also avail of the online financing facility for the purchase. In the case of a credit card transaction the user information is encrypted for additional security.

JALDI.COM, power shopping!

JALDI.COM's range of products is clearly segmented into categories that help consumers search for and choose their products easily. The various categories include Household, Electronics, Personal Care, Kitchenware, Apparel, Health, Fitness, Toys & Games, Sports & Outdoors, Lifestyle, Exotica, Gifts, Provisions and Stationery among others.

JALDI.COM provides access to a wide range of prominent consumer brands that exist in India and abroad. Some of the better known include Avon, Borosil, Braun, Coca-Cola, Enchante, Funskool, Gillette, Johnson & Johnson, Kenstar, Leo Mattell, LG, Moulinex, Parker, Usha International, Videocon, Reebok, Thomson, Shriram Honda and Sony.

Apart from shopping from their desktops, consumers can also access JALDI.COM from the Cyber kiosks which the company is in the process of setting up. Around 300 of these kiosks are being set up over the next 3 months across 20 cities in the country.

JALDI.COM not only provides consumers the convenience of shopping round-the clock but also provides free home delivery within 36 to 48 hours from the time of placing the order. Delivery is based on product availability.

Apart from the above services, JALDI.COM also offers guidance and support to its shoppers. JALDI.COM helps it shoppers with their buying decision by providing guides that contain information to help them do a cost-benefit analysis of various products. The portal also provides information on personal insurance, provided by existing Indian insurance companies. The literature provided is aimed at educating shoppers who do not have sufficient or easy access to the available covers. JALDI.COM also offers a range of promotional offers and discount schemes to its shoppers. Frequent shoppers are offered

special loyalty points to make repeated purchases attractive and valuable. Registered members are awarded an initial bonus of 10,000 tree loyalty points. With each purchase consumers add loyalty points to their personal accounts, and these points can be redeemed in the form of discounts against their next purchase.

Easy steps to Jaldi shopping 1. Enter WWW.JALDI.COM and login as a guest or register as a member and get free loyalty points and email.

2. Choose the item you wish to buy from various product categories.

3. Enter your preferences of brand, size and price or enter no preference in each category to see a comparison matrix displaying details and features of all the brands available for that product.

4. Once you have narrowed the search to a product, click on the catalog view to see the complete description and picture of the product.

5. Purchase the product by entering the quantity and clicking the 'Buy' button given against that product and add it to your shopping cart.

6. Specify the mode of payment whether cash on delivery, credit card or online finance.

7. Get free delivery of the product right at your doorstep within 48 hours of placing your order.

Cool Features of jaldi.com Comparison shopping: JALDI.COM is the pioneer of the concept of comparison shopping in India. The web site has a built-in technology which helps shoppers to compare various brands of a product on parameters of price, size and features before they buy. This not only provides consumers the convenience of accessing all brands under one umbrella but also saves them valuable time and money compared to conventional shopping.

Online financing: One of the distinctive services that JALDI.COM offers to its shoppers is online financing. JALDI.COM has partnered with select finance companies to provide online credit and thereby empowers its customers to shop without the financial worry.

Easy repayment facilities are available to customers for paying back amounts against their purchases.

Free home delivery: JALDI.COM offers 24 hours free home delivery of all its product

irrespective of their quantity ordered by customers. Products are delivered at the customer's doorsteps within 36 hours of placing the order and at a time convenient to the customer. The delivery of goods is subject to product availability and financial clearance, if required.

Competitive prices: A JALDI.COM shopper is assured of getting their product at extremely competitive prices. This is because JALDI.COM sources its products directly from the manufacturers, or in rare cases from retailers Online. Consumers pay no premium for shopping E-species: A totally unique concept e-species is the online community programmed on JALDl.COM that aims to create a virtual identity for shoppers based on their buying habits at the website. Discounts and promotional offers vary for each species and shoppers can morph from one species to another based on a system of bonus points, depending on the extent of their online shopping. Free e-mail facility: All JALDI.COM registered users enjoy afree POP 3account - name@jaldi.com, which can be accessed from mail clients such as Microsoft Outlook, Outlook Express, Eudora, etc. through a web browser or at the JALDI.COM web site. Members receive useful information updates about ongoing promotional offers, discounts and also new product launches via their JALDI.COM e-mail account.

Loyalty points: Frequent shoppers at JALDI.COM are offered special loyalty points to make repeated purchases attractive and valuable. Registered members are awarded an initial bonus of 10,000 free loyalty points. With each purchase consumers add loyalty points to their personal accounts, and these points can be redeemed in the form of discounts against their next purchase.

Personalized pages: .My Jaldi Page' is a free facility to create a web page on JALDI.COM based on customer interests and usage. As part of the' 'My Jaldi Page' customers get e-mail, stock and weather updates, their favorite stationery for e- mail and constantly updated status of their current account information including transactions conducted, repayments if any and special promotional offers.

Buyers guide: JALDI.COM shoppers can rest assured that they are making an educated purchase decision as the site provides buying guides to its consumers. The buying guide contains relevant information to help shoppers analyse the cost effectiveness and benefits

of a product before buying it. It also includes product reviews conducted by experts and feedback from other consumers who provide ratings for the product. For first time buyers of a certain item, the guide provides direction and serves as a cautionary tool.

Cyber kiosks: As a major step towards bringing E-Commerce to the mass audience, JALDI.COM is in the process of setting up over 300 Cyber kiosks all cross the country.

These kiosks will serve as access points to consumers who currently do not have access to a PC or an Internet connection, thus enabling them to shop for products and services at JALDI.COM. Baba bazaar.com Bababazaar.com a Delhi-based grocer also has an active role in the purchase, stocking and packing of goods. The site has tied up with Delhi's SINA market. Each day, at 11 in the morning, company staff collects all orders, prepare purchase orders and go to INA market to make purchases. The merchandise is brought back to the Noida (Delhi Suburb) office where it is packed and then dispatched. What form it takes on and when the company wants to move beyond is not known. When the outfit began, the Company even relied on its own dispatching arrangement. But that, which taken, the form of maruti vans with ice-boxes, has since been rented out. The customer pays an additional Rs.25 on service charge for the delivery. But for the company, it means a single hub and zero inventories. There's a slight hitch, though, orders received after lOam on any day a delivered only the following day. Mr.Bharat Sexena, Chairman is networking on this cycle with an experiment eight "since a lot of households do their shopping on a weekly basis, they plan to tend tracks to different parts of the city on different days. That will help optimists. Operation and cut costs and deliveries. It was visible in weekly purchase of Rs.500 and above. The new system should be tried out by next month. Eshoppee.com General Manager Mr. Siddhartha S. has given the Top Tips for safe shopping: ¾ Shop at reputable sites that you are familiar with or that have recommended to ¾ you by some one trust. ¾ Make sure you know the business address of the company before you buy and ¾ keep all the documentation. ¾ Get to grips with terms and condition of the sale before you heard over any ¾ money.

他 Check the serves is secure before inputting any confidential information.

Be aware of site that ask for excessive information or require credit .card details before you make a purchase. 他 Trust yours instincts -if it seeks dodge. 他 Never disclose yours passwords or leave these lying around. Don't make these too obvious. 他 If others have access to you computers don't leave you credit-card details or passwords in the browses.

RESEARCH DESIGN STATEMENT OF THE PROBLEM There is a need to study and analyze the readiness of Indian consumer towards online shopping in the present scenario where e-retailing has not been a wholesome business platform individually.

PURPOSE OF STUDY The Internet is rapidly transforming the world into a global market place. The internet is turning the globe into a small place where anyone can go anywhere and transact with anyone else they wish. Sooner or later, every business will have to be on the Internet. It.s just the same as needing to have a phone and a fax. Traditionally, business has been on a store-front. This involved leasing some retail property, buying enough inventories to fill it, hiring and training some sales personnel. Having done this, one would be automatically be in business. Later came the scene of the tele-marketing approach. This in turn would involve printing and distributing catalogs, getting a call center, arranging for suppliers who can fill in the orders, hiring and training some internal sales personnel.

Now the direction has changed towards E-commerce. A few companies like Amazon and Dell have understood and have addressed this issue promptly. The purpose of this project is to study the E-Retailing market and how it implements itself in the retailing industry in India.

OBJECTIVES OF THE STUDY ™ To study the E-Commerce dimension of business and the business model. ™ To study the effects of consumer, retailer and manufacturers. behavior on ERetailing. ™ To examine the impact of new channel on industry structure and competitive advantages of firms. ™ To analyze the competitive environment, market place and E-Retailing advantages. ™ To analyze how to build the E-Retailing and implement the E-Retailing system in the industry. ™ To analyze E-Retail practices and its potential in India.

™ ™ ™ ™

SCOPE OF STUDY It assists entrepreneurs to analyze the retail market It would help to increase the awareness of retailers.

It looks at the retail industry close and upfront, so that it would help in implementing the strategies and developments.

™ It would be of use to know how actually E-Commerce will create value addition to the business. ™ It gives a clear picture of feature of E-Retailing.

METHODOLOGY The data supplied was grouped into two main categories - primary and secondary data.

The secondary data was compiled from newspaper, journals, magazines, seminar and web links and also research papers. The primary data was collected through an exploratory research . interviews, opinion of various executives, software professionals, practitioners, a number of dot com companies, E-shopping providers, many big retailers etc.

LIMITATIONS The e-retailing concept is in the nascent stage in India. This provided limited information for further research. The information was also closely guarded by the executives.

Secondary data was sparingly available. This restricted the data collection process. The sample size is also confined to few individuals in Bangalore.

Data interpretation Analysis on the number of people who own a mobile phone

The analysis on the number of people who own mobile phone was done to identify if there is a potential for mobile phone to be an instrument that can be used for shopping online, either to place orders or make payments.

graph showing no. of people owning mobile phone

respondents

100 80 60

%

40 20 0 yes

no re sponse

The above diagram shows that 90% of the respondents own a mobile phone and only 10% of them do not posses mobile phone. From this we can infer that mobile can be used effectively as one of the shopping instruments shopping instruments for instance, to book movie tickets etc.

Analysis on the number of people who own a credit card The analysis on the number of people who own credit cards was done to find out the extent to which Indian consumers are familiar with electronic modes of payment, and to find out the degree to which it can be used to make online purchases.

respondents

graph showing no. of people owning credit card 80 60 40

%

20 0 yes

no response

The above diagram shows that only 60% of the respondents in the survey owned a credit card, and 40% did not posses a credit card. This shows that good percentage are already using credit card for purchases. However could be a problem to consumers who do not possess a card but want to shop online and therefore an alternative mode of payment may have to be identified.

Analysis on the number of people who have used internet for shopping in the past This analysis was done to find out the degree to which consumers are aware of the concept of online shopping and also to determine the number of people who have had some experience with online shopping.

no. of respondents who have shopped online in the past 100

no. of respondents

80 60 %

40 20 0 yes

no response

From the above diagram we can infer that only 10% of the respondents have used internet for shopping and a whopping 90% has never ever shopped online, from this we can infer that, a huge opportunity exists in this industry, if the entrepreneur is successful in changing the buying habits of consumers.

Analysis of the shopping frequency across different categories The following analysis was made to find out the categories of product that was most popularly sort after and also to determine the level of frequency in the respective categories.

shopping frequency 6 5

electronic goods

no of respondents

4

books /m us ic

3 2

apparel

1

travel

0 once a once in once in once a month 3m ts yr 6m ts frequency

From the above diagram we can infer that electronic goods and books/music are the categories sort after most popularly and most often by online shoppers. However travel tickets and holiday packages are also bought on the internet, at least once in a year.

Analysis of the shopping experience The following analysis was made to examine the customers feedback on online shopping, and thereby determine the areas that needs improvement. And also to determine those features that impressed the customer most.

cumulative fequency

customer experience 36 34 32 30 28 26

Series 1

parameter

From the above diagram we can infer that the feature that online shoppers enjoyed most was the excellent product information, followed by wide choice and delivery. Hence this can be promoted as a unique selling point by online retailers.

Analysis of customer’s important shopping considerations The following analysis helps in determining the consumer behavior of shoppers in general, and what factors are most important in order to satisfy consumers.

cumulative frequency

shopping consideration 50 40 30 Series 1

20 10 0 touch and s ecurity feel

choice

s afe delivery

factors

From the above diagram we can infer that security is of utmost priority to online shoppers, followed by touch and feel factor, safe delivery, and choice. Hence care should be taken to make sure that these deliverables are provided to the consumers to an extent that is possible.

Analysis on the important shopping considerations of consumers an analysis on the shopping consideration of people was done to find out their most important priorities while shopping, and to determine their expectations as far as online purchase is concerned.

cumulative freqency

shopping priority 30 25 20 15 10 5 0

Series 1

safe s ecurity delivery

quality

price

factors

From the diagram we can infer that safe delivery and security ranks high in the minds of online consumers, followed by price and quality, this proved that consumers consider security as a major reason for their apprehension for not shopping online. A secure system of payment and proper delivery system could solve this problem.

Analysis on factors that could drive consumers toward online shopping The analysis was done to identify way by which first time consumers could be encouraged to shop online. And which factors were most appealing to them.

cumulative frequency

factor that will encourage shoopers to buy online 40 30 20 10 0

Series1 Series2 price discount

free internet

free and speedy delivery

service, warranty

factors

From the above diagram we can infer that price discount was the most appealing factor that encouraged them to switch to online shopping, the other factors were safe and secure system, free internet facility, free and speedy delivery, and service/warranty.

Observations and suggestions 1.90% of the respondents own a mobile phone and only 10% of them do not posses mobile phone. From this we can infer that mobile can be used effectively as one of the shopping instruments shopping instruments for instance, to book movie tickets etc.

2.60% of the respondents in the survey owned a credit card, and 40% did not posses a credit card. This shows that good percentage are already using credit card for purchases.

However could be a problem to consumers who do not possess a card but want to shop online and therefore an alternative mode of payment may have to be identified.

3. Only 10% of the respondents have used internet for shopping and a whopping 90% has never ever shopped online, from this we can infer that, a huge opportunity exists in this industry, if the entrepreneur is successful in changing the buying habits of consumers.

Extensive promotions and wide spread advertising on the benefits and convenience of online shopping could be a few strategies.

4. Electronic goods and books/music are the categories sort after most popularly and most often by online shoppers. However travel tickets and holiday packages are also bought on the internet, at least once in a year.

5. Feature that online shoppers enjoyed most was the excellent product information, followed by wide choice and delivery. Hence this can be promoted as a unique selling point by online retailers.

6. Security is of utmost priority to online shoppers, followed by touch and feel factor, safe delivery, and choice. Hence care should be taken to make sure that these deliverables are provided to the consumers to an extent that is possible.

7. Price discount was the most appealing factor that encouraged them to switch to online shopping; the other factors were safe and secure system, free internet facility, free and speedy delivery, and service/warranty. Hence discount sales could be used in order to attract consumers towards online shopping.

Conclusion Considering the primary data collected through survey, its interpretations and inferences, it can be concluded here that though most of the respondents have not expressed their readiness for an online buying option, the increasing transport expenses and time constraints may convince them towards etailing in near future. Since India has been witnessing a growth prospect in electronic retailing, a more structured and disciplined approach towards the further construction and planned extension of e-tailing may prove profitable and useful both on he buyer and seller’s side. Absence of entry barriers like any other physically existing business adds an advantage for an etailing business to enter and establish itself as a successful business option. Though not evident from the research, the general notion that is followed while considering electronic purchase is the concern for security of payment system. Hence,E-tailers need to develop a payment model that consumers will accept, and create systems based on this model.

Scope for further research The research conducted was limited to few people in Bangalore city in India and hence the findings and conclusions might not be applicable for the whole country on whose context the background theory is based. So, it can be said that an increase in scope and sample population for further research in the same context may lead to further fact finding.

Annexure 1

Questionnaire Sir/Madam, I, Nishith.Krishnamurthy, presently pursuing MBA at MP Birla Institute of management, am currently doing a project as part of my academic requirements. The project titled .An analytical study for estimating the consumer readiness towards e-tailing in Indian context. Requires your valuable responses for the analysis part. So, I request you to kindly help me successful completion of the same. I assure you here that all the responses will be utilized strictly for academic.

1. Age group a. 16-19

b. 20-25

c. 30-40

d. 40and above

2. Occupation a. Professional

b. Homemaker

c. Self employed

d. Student

e. Other specify

3. Income group a. >1.5lacs pa

b. 1.5-3lacs pa

c. 3-4.5lacs pa

d. <8lacs and above

e. 4.5-8lacs pa 4. Do you own a mobile? a. Yes

b. no

5. Do You Possess a Credit Card a. Yes b. no 6. Have You Ever Shopped Online a. Yes b. no

7. If yes, which category, and how often, if no, move on to question number 10.

Product category Electronic goods Books/music Apparel Travel/holiday

At least once a month

Once in 3mts

Once in 6mts

Once a year

8. How important are the following considerations while shopping online, rate on a scale of 1-5 1 being highest and 5 being lowest a. Price

b. Quality

c. Security

d. Safe delivery

9.Rate Your Experience

Parameter

Excellent

Good

Convenience Choice Delivery Product information

10. Any specific experience, describe

Fair

Poor

Very Poor

11. What are your reasons for not purchasing online a. No credit card

b. Security concerns

c. Not Internet savvy d. Not user friendly

12. What are the factors that could drive you towards online shopping, rank them a. Price discounts

b. Free Internet service

c. Free and fast delivery d. Service, warranty 13. Rank products that you would not mind buying online a. Electronic goods b. Books/music c. Movie tickets

d. Travel and holiday packages

14. Your suggestions to improve online shopping experience

Thank you for your cooperation, have a great day.

Annexure 2 BIBLIOGRAPHY: • Armstrong "The Real Value of on-line communities HBR-may 1995.

• Bergen "Branded varients" A Retail prospects Journal of Marketing.

• Fredrick, J.Riggins "A Framework for identifying web-based Electronic commerce opportunities" July 1998.

• Joseph Alba, Jhon.Lynch "Juterative home shopping" Journal of marketing a July 1997.

• KSA Retail summit 2000.

• Philip Kolter "marketing management.

• Sumitra Dutta" The Global Internet "100" Infrastructure strategy June 1997.pp.21-35.

• Shikhar Ghosh "marking Business sense of the Internet" HBR marchApril 1998.

• "Shopping secrets" Business today Aug 2000 pp 84 Data quest Aug 1999.

• Shishir prasad "E-retailing" Business world may 2000.

• "The Strategist" Business standard April 2000.

• The business times."Managing e-c.ustomers successfully" .

• Vanita Kohli "Net shopping" Business world April 2000.

•

"Web marketing" A & M April 15 pp.105