E-Commerce in India built to last? eBay’s India ChiefMuralikrishnan sees positive drivers
Says rural India also has a marginal say and only 5% of eBay transactions are cash on deliveryeBay is a pioneer in online retail and its Indian arm sells perhaps most of the items that were done on walking up to a store or a dealer’s shop. eBay could be called the pioneer of e-commerce in India and is the leading online retail player at present. Apart from gadgets, books, gifts and all those usual items now sold online, eBay also sells second hand cars and bikes. Its payment gateway PaisaPay enables payment through credit and debit cards and Internet banking. eBay’s India country manager B. Muralikrishnan talks to YourStory.in on how e-commerce has evolved and how rural India is also using online as a medium to buy products, although it is only 9% of total transactions on eBay at present. The e-commerce model has come to stay and Muralikrishnan feels Amazon’s entry will not redefine eBay’s market leadership position in India. eBay is distinct from the e-commerce crowd that only 5% of its transactions are cash on delivery.
As a pioneer of e-commerce in India and globally, how do you see the e-commerce eco-system evolve in India over the last few years?
The Indian e-commerce market is sized at $10 billion by the IAMAI and growing at a rapid pace. Today, India has about 10 million online shoppers as opposed to the over 100 million internet users. According to the eBay India Census 2011 (eBay India Census), our annual study of online consumer consumption patterns, there are 3,311 e-commerce hubs in the country. This means that out of 28 States and 7 Union Territories, citizens of 3,311 cities engage with buyers or sellers on eBay India. Out of these, 1,267 are rural hubs and we see 1 out of every 10 purchases and 1 out of every 20 sales from rural India.
There are a few things, going well, that augur well for India’s e-commerce industry. One is the significantly increased supply side dynamism, especially over the last 2–3 years where we have seen large brands and manufacturers and offline retail chains show interest in the e-commerce opportunity. Once brands with offline recognition participate in e-commerce, comfort levels for end users will also increase. Also, this has sparked the imagination of many entrepreneurs and brought venture capitalists and private equity firms into this space as well. A lot of the funds coming into this space have moved into marketing, be it television, outdoors or online and this has increased consumer awareness about the e-commerce proposition. The e-commerce proposition is fundamentally driven by three factors: greater variety of products, cheaper products due to low operating costs and convenience, especially for users in Tier II and III locations.
How many unique monthly visitors does eBay have in India, and how is the traction currently in terms of purchases made per day?
eBay India has over 4 million unique visitors in a month. We have more than 3 million registered users on eBay India. Six products are bought every minute on eBay India.
On an average day on eBay India:
• A mobile accessory sells every 2 minutes
• A coin or note sells every 3 minutes
• A piece of jewellery sells every 4 minutes
• A portable storage device or pen drive sells every 4 minutes
• A health or beauty product sells every 4 minutes
• A mobile handset sells every 4 minutes
• A piece of apparel sells every 5 minutes
• A stamp sells every 6 minutes
• A watch sells every 7 minutes
• A piece of home décor sells every 8 minutes
• A car or bike accessory sells every 9 minutes
• A book or magazine sells every 14 minutes
• A toy sells every 16 minutes
• A fitness & sports item sells every 16 minutes
• A laptop sells every 19 minutes
• A home appliance sells every 21 minutes
• A digital camera sells every 29 minutes
• A MP3 player sells every 31 minutes
As buying online is getting popular, do you see more and more retailers getting online?
Definitely, more brands, manufacturers and retailers are already starting to set up an e-commerce presence than ever before. This could be an e-commerce-enabled store on a popular online shopping website or on Facebook or on the brand’s own website. This trend is likely to increase as customers spend more time online.
How do you see the online commerce models evolve in India, as more and more niche smaller players are now coming into picture?
e-commerce websites will need to be built for scale and have a clear business model to succeed in the Indian e-commerce market. We believe at this nascent phase, it makes more sense to have a horizontal play rather than serve vertical niches.
What is the kind of traction that you see with retailers currently at eBay? Which categories lead here?
In the early years of e-commerce, online shoppers were more comfortable buying books and gifts. As consumers have gained confidence and e-commerce has become more mainstream, gadget purchases gained traction and now consumers have evolved to buying even lifestyle products like jewellery, watches, fragrances, apparel etc. online.We have also seen an evolution in payment methods to over 90% of all payments on eBay India being via PaisaPay (electronic payments via credit card, debit card, net banking) from less than 15% in the early days. What is the road-map for expansion in 2012 in terms of merchants coming on-board?
We have a large Category Management team which evangelizes and on-boards merchants as well as helps them scale their business to sell to the over 3 million Indian shoppers as well as over 100 million global shoppers.
Any take on Amazon's entry to India? How will it affect some of the newer and smaller players?
e-commerce in India is at a nascent stage and evolving rapidly. At this stage, more reputed players will help expand the market and create awareness. We don’t see the influx of global players affecting the e-commerce market leadership that we have already created over the last 7 years as eBay India.
What according to you are the major challenges faced by online sellers and e-commerce ventures in India today?
The main challenge online retailers face is to evangelise consumers about the benefits of online shopping. Online shopping offers access to great variety of products, availability of great deals and convenience of 24 by 7 shopping in the comfort of one’s home. For buyers in Tier II or III cities, the additional advantage is that they are able to access products which traditional distribution channels have not yet brought to their city. On eBay India, consumers can choose from over 1.2 million products, lots of great deals in a secure, hassle-free environment.
To ensure customer safety we have introduced two pioneering services, i.e. eBay Guarantee and PaisaPay. These services guarantee a safe, secure and transparent transaction between the seller and the buyer.
PaisaPay, eBay’s secure payment gateway, allows consumers to pay conveniently through credit card, debit card, net banking or EMI. The payment is released to the seller only once the buyer confirms receipt of the item.
eBay Guarantee offers all eBay buyers a replacement or refund on all transactions in case they are not 100% satisfied with the product they purchased. The eBay Guarantee is aimed at instilling consumer confidence in online shopping promising a completely secure and satisfaction-guaranteed experience of getting the product they selected and paid for.
What according to you determines e-commerce success? Any specific lessons you want to share with younger startups?
Any e-commerce website which wants to succeed in the long term needs to have a clear, sustainable business model and be built to scale. Focus on the customer experience, provide customers access to quality products from trusted merchants, and make shopping and paying easy, secure and seamless. Young entrepreneurs need to have a clear focus on the target customer and cater to his or her needs.
Do you think COD is a hindrance to e-commerce in the longer run? What is your take?
Cash on delivery as a business model has its pros and cons. It is a good model for new e-commerce entrants as trust levels are low. It is however not a sustainable model to follow. The expenses involved in physically collecting cash, higher rejection rates and longer turnaround time to receive money make cash on delivery a less efficient model to sell merchandise online.
We still have challenges when it comes to delivery to tier II and III cities in India. Do you see scope for some innovation in these areas?
Due to increased internet penetration, enhanced awareness and limited penetration of offline retail, consumers from tier II and II cities are very active online shoppers.
eBay India has active buyers in 3,311 Indian cities. These include Tier II and III cities and even rural India. eBay merchants use private courier companies and the Indian Postal Service to deliver products to buyers from these cities.
What percentage of eBay users are from non-metros?
Consumers and entrepreneurs from rural India are increasingly plugged into e-commerce. As per the eBay India Census, there are over 1,267 rural hubs in the country. With 1 out of every 10 purchases and 1 out of every 20 sales from rural India, we are seeing a lot of traction from these cities. Metros (India) have a dominant share of purchases, with Tier II and III cities (Bharat) catching up fast. Metros contribute 51% of all eCommerce transactions while Tier II and III cities contribute about 41% of transactions and rural India contributes to 9% of transactions.
As someone at the helm of eBay in India, what drives you?
The opportunity that I have to pioneer and create a huge market for e-commerce in India.