online_shopping1

We are Indians & we don’t shop Online!!

Most of the Indian shoppers would actually like to touch & feel or even try a product before they would even think about parting away with their hard earned money to buy the product.
But this feature isn’t available in the online stores, though these stores are offering huge discounts & promise of a quality service, in addition to the convenience of shopping.
So how are the Indian customers getting adapted to this, or is it the other way around, that the online stores have to adapt to the Indian market? What’s the future of shopping?
There is a lot of euphoria in e-commerce right now and the industry in India is expected to grow by 47% to reach Rs 46,000 crore in 2011, according to a report published by Internet and Mobile Association of India (IMAI).  Considering such a huge market potential, I wonder what will be the role of online retail & Internet shoppers in fueling this growth.

An initial glance at the IMAI report can easily tell you that online retail isn’t doing that great compared to the whole market segment.  If you compare the share of Online Retail in the growth of the Total Online Commerce, one can easily see that there is huge potential for the Online Retails market to grow & capture the major part of the Indian e-commerce space.

Online Retail which primary constitutes buying computers & computer peripherals, cameras, mobiles, MP3 players, home & kitchen appliances, books, flowers,  toys & other gifts via Internet, currently has only 7.8 % of the e-commerce market share (where Online Travel Industry with players like makemytrip.com, cleartrip.com are the king makers with more than 75% of the market space). Source: IMAI

Activity Pattern of Indian Internet User

If you look at the activity pattern of Indian Internet Users, as described in the picture here, a majority of them look to the internet only for information about a product. The offline medium or the retail store becomes the Point of Sale instead of the internet store probably for majority of these information seekers.

Thus only 50% of these Information seeking people actually shop & pay on the internet. And a majority of them pay for Online Travel Booking services.

Consumer Behavior – Indian Internet Shopper

If you further look down at the reason behind this kind of consumer behavior we will find one basic attribute – the lack of which prohibits the customer from moving ahead to actually buy the virtual looking product & that single factor is Trust.

“99% of the people who are Active on the Internet but haven’t ever purchased online lack trust in the online merchants & quality of their products”

Lack of Trust

Most of non-shoppers do not shop online due to lack of trust in transactions.
1. Lack of trust in Payment security
Online payment via credit or debit cards isn’t preferred due to security concerns.
2. Lack of trust in Product quality
Unlike conventional shopping, buyers worry about online shopping. They aren’t sure if they will get good quality products online
3. Lack of trust in Delivery of Goods
When person is transacting over Internet, they are not sure who is sitting across the table. They are worried about delivery of goods. It includes issues such as delay in or non-delivery of goods.
4. Lack of touch & feel
Touch & feel of product being purchased lacks while shopping online. Online shopping is best suitable for products and services that do not require touch & feel experience by buyer. Probably that’s one of the reasons for books & ticketing being more successful than apparels while shopping online.

Probable Growth Parameters

Based on the above Consumer Behavior research, one can easily interpret that a Great (& not just good) Customer Service is the key to gain back trust of the Indian Internet Customer, backed by a WYSIWYG policy for the product i.e. a customer gets whatever he sees on the net.

Innovative payment mechanisms like Cash-On-Delivery should be employed along with simpler secured online payment gateways.

Policies like Cash-back should be used where customers should be given the convenience to easily return the products they are not satisfied with. This will take care of their fear for lack of touch & feel.

Guaranteed Delivery schedule along with self-imposed penalty will give the customer confidence related to delivery of goods. A very good example that comes to my mind is Dominos Pizza’s “30 minutes or free offer” to abolish fears of late delivery from customer’s mind.

In the end, we can say that with current changing consumer space, information awareness, upcoming new technology assistance, customer maturity & growth of Internet penetration in the Indian Market, the online retail is here to stay & has great potential in the overall internet commerce space, especially for India. It is a business with huge potential which is a revolution already & will be so in the near future.

What do you feel about online retail? Have you ever bought something else online other than a travel ticket? Do feel free to share …

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