Outlook online retail: 2011

Online retail is catching up its pace slowly but the future seems promising as many offline retailers are eying to hop on online platform to ensure sale over the internet. At the same time retailers are also looking online medium as an integration of their offline presence. The overall scene of online retail is getting better and better every year. Although the online travel industry is ruling the overall growth of e-commerce as per IAMAI report for 2011. The online travel industry will contribute around 81 percent of total e-commerce while online retail will contribute 6 percent.
Online retail will be the next big growth drivers of e-commerce amongst non travel category. However, so far e- tail has experienced growth only in selected product like PCs, laptops, AC, computer peripherals, accessories and storage; contribute the most 36% to e-tailing followed by cameras and mobiles contributing 25%. Personal products such as jewellery, apparels, cosmetics, apparels, shoes and watches contribute 19% whereas Electronic items like TV, Audio systems & other accessories account for 13% Balance 7% is contributed by Home & kitchen appliances (4%) and other online buying (toys, gifts, flowers etc.).
After breaking the jinx of global recession online retail has done well in 2010. Meanwhile 2011 is going great guns and online retailers are digging deeper for the new ideas to boost their sale and enhance user experience.

Key drivers for online retail in India:

  • Internet and PC penetration
  • India’s middle-class is mushrooming, with growing purchasing power and limited personal time
  • Increasing usage of credit and debit cards coupled with a growing young population who spend significant time online. Convenience of online product research, comparison shopping and competitive pricing
  • Mounting prices of merchandises– escalating fuel prices and at the same time online retailers are offering merchandises on discounted rate and extreme climatic condition especially unbearable summer heat across the India.
  • Increasing demand from tier two and three cities
  • Social networking sites are very much influencing in driving online retail in India. Many retailers are using it as a potent tool to get marketing and sales leverage
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India retail is witnessing the growth in online retail and online retailers are trying to experiment by inculcating new and fresh strategies to edge out others. So here we tried to point out the strategies which are the pick of the year so far.
New strategies:

  • Some of the retailers have come up with strategies like delivering the product in metros (Delhi) within 6 to 8 hours of order placed
  • Cashing in on the opportunities like IPL by online retailers. Retailers are providing IPL merchandises. They offer wide range of jersey, backpack, bags, caps and much more. The retail brands which grabbed the opportunity are Adidas, Reebok, Puma and oceanbed.
  • Some shopping portal has begun return facility for the apparels. That is a good sign now people will not have apprehension of fittings and so on.
  • Offers viz free shipping, payment options like cash on delivery (COD). This mode of payment (COD) is quite a hit in India as still online shoppers from tier two and three cities prefer this over online transactions. However, at the same it also registers highest return or drop rate in all modes of payments.

Although the online retail in India has covered many verticals but still there are verticals which are untouched. Here we tried to shed lights on the opportunities which can be proved as growth engine for online retailers
Opportunities to grab:

  • Grocery: Grocery is the prominent contributor in the overall business of Indian retail and if online retailers will add this it could be proved as roller coaster ride in their growth.
  • Drugs & Medicine: Online retailers have so far not touched this vertical. Given the fact that consumption of medicine in India is great, online retailers can grab this opportunity. 24*7 delivery facility of medicines can really boost retailer’s business and image as well.
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While the Indian online retail is evolving at brisk rate apparently different kinds of business models are also coming in to online retail domain. However, still the industry has to witness innovative and path breaking business models in future.
New business models:

  • Group buying: It has created a new sort of interest in online shoppers as it is mostly cheaper than what customers get in general. Group buying also helps customers to win some rewards and concession while convincing other customers to bid for the deal.
  • Daily deals:  Daily deal has created enough buzz amongst the online shoppers. It is getting popular for the reason of being cheap and handy. Various daily deals sites have come and many more are in pipelines
  • Rentals: This trend is also getting attention as few companies forayed in to renting books and toys. Readindiaread.com is an example of book renting whereas myeasyplay.com is an online toys library.