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E-commerce: Treading warily

By , agencyfaqs! | In | December 29, 2000
Even as the overall hype around e-commerce rages unabated, success eventually lies in how well companies innovate and market

Sabil Francis
agencyfaqs!
NEW DELHI, December 28,

This summer, Mala Mirchandani, a Delhi housewife, ordered a rare CD of Punjabi religious music through iBaya Business Services, a Mumbai-based online shopping portal. Predictably, the wrong CD arrived. Mrs Mirchandani braced herself for an argument and called iBaya. In a move very uncharacteristic of Indian shops, iBaya accepted the returned CD and sent the right CD in its place. With apologies.

Mrs Mirchandani informed her husband about the episode. And Mr Mirchandani? Well, his full name is Sanjay Mirchandani, and he happens to be the managing director of Microsoft India. Today, Microsoft is exploring options for a tie-up with iBaya, though Mirchandani says his wife's experience did not influence the decision.

No credit card? iBaya will take cash-on-delivery. Not on the Net? iBaya will send its salesman across. Delivery is free and iBaya offers a 30-day money-back guarantee, no questions asked. All the same, it will take more than that for e-commerce to really take off in India.

For many regions in the country, the only infrastructure is a dirt road, trundling bullock-carts, and the occasional bus. Less than 5 per cent of Indians use the Internet, most of them for chatting and e-mail. Few have credit cards. And those who are Net enabled and have credit cards are still averse to punching their card numbers on to the Net. And in a country which has a creaky logistical network, e-commerce will have to bank heavily on better CRM, better service, better infrastructure and better PR to even make a mark.

Yet, slowly and surely, companies are awakening to the potential of e-commerce. The banking and financial services are aggressively promoting online services, and the rest are taking the small first steps. And the other industries are catching on. Earlier this year, for the Alto, MUL launched the same campaign on the Net and on television. For its dark rum, Bacardi Martini used the Net to target metro-based males in the 25-to-40 age group. Companies such as Fabmart are selling music through the Net.

Right now, the results are not very encouraging. According to the IMRB, the number of 'active users' of the Internet in the top 16 cities is around 1.37 million (against this, the number of active users across the country is estimated at around 2.2 million). Out of this, only 2.9 per cent - about 60-65 thousand, of whom 40 thousand are urban - have bought or sold at least one product or service online.

Of course, there is a silver lining. In what is becoming a common practice, 23.8 per cent of Internet users have looked for information on products and services on the Net. And even if they do not plan to sell online, companies have to address information seekers on the Net. "Online marketing, once the 'last mile problem' has been dealt with, will be a reality. We may be at a very nascent stage today, but companies will have to become online-solutions savvy," warns Ashok Ghose, vice-president, marketing, Media2India.

At the same time, addressing information seekers on the Net has become the revenue model for some companies. Such as Delhi-based Indian Agribusiness Systems Pvt Ltd (I@S), which invested around Rs 6.5 lakh as a one-time investment in software to set up a dotcom, which has running costs of Rs 10 lakh per month. I@S has a magazine in Hindi and English, which has a circulation of around 50,000. The company also sells research reports on agricultural commodities, is an auction site, and is planning to make its site pay.

With around 70 research officers all over the country watching the commodity markets, I@S hopes to be a one-source stop for commodity traders, and hopes to break even by mid-2001. Says Sunil Khairnar, CEO, I@S, "We are not looking at clicks. Traffic figures alone are meaningless. We hope to address those who are willing to pay for premium information."

Another idea is to make people comfortable with the idea of e-commerce before actually launching them. Citibank, which claims to have successfully migrated 33 per cent of its customers to the Net, is following this model, with cards that have an upper limit of Rs 1,000. Says Sriram Jagannathan, head, Internet and mobile communications, Citibank India, "The focus is on the functionality of the consumer, rather than the technology that we can access. We are looking at the up-gradation to WAP, but to exploit that opportunity, we must first make the customer comfortable with the idea of e-commerce."

Making the customer comfortable is the key. Market research by IMRB shows that for transactions above Rs 10,000, most consumers were uncomfortable with the Net. While they were still willing to take a walk to the nearest grocery, they preferred the Net to buy computer hardware or software.

They will have to buy a lot more if e-commerce is move ahead at a speed greater than that of a bullock cart at full gallop. And for that, a lot more marketing and convincing needs to be done.

© 2000 agencyfaqs!