Online retail in India is gradually picking up the pace and it seems that it has started showing its potential by captivating investor’s eyeballs and winning consumers trust as well. However, as the market continues to grow online retail has caught up its pace, alongside modern retail in competing with unorganized retail. The big question is that, is it going to be Brick &Mortar retail or online retail, which will change the face of retailing in India. Talking on the same premise, this time Iamwire has caught up with Kashyap Deorah, President, Futurebazaar.com. Reiterating on the growth of online retail and Future group , Deorah said that Futurebazaar.com is seeing a handsome growth of 100% every quarter. Our competitive advantage is higher margins and lower cost of acquisition than most players in the industry. Here are the excerpts of the interview.
How do you see the present outlook of online retail in India?
While there is critical mass of customers who have started shopping online, we are still in the early days of digital commerce. The shopping habits are getting formed as we speak and customers are still discovering what to expect from the online shopping experience. Businesses that can influence customer habits and own customer mindshare will win.
In last few months Indian eCommerce industry has been garnering a lot of traction of investors. According to you what are the reasons of such faith in investors and do you think some of the recent investments including valuations are a bit of hype?
Businesses are built by servicing customers, not investors. Lots of investors had raised lots of money to invest in digital scale businesses in India but were in their caves after the late 2008 meltdown. The pent-up need to deploy cash has finally found vent in a space that is generally accepted by investors and their LP’s as viable. While digital commerce will grow handsomely over the next few years and it is the right time for investors and entrepreneurs to place their bets, it is important to stay focused on the customer and their evolving shopping habits. That is where the battle will be won or lost. Expect a consolidation in 2013.
Tell us about the present operations of Futurebazaar and what growth you are eyeing to achieve?
Futurebazaar.com is seeing a handsome growth of 100% every quarter. Our competitive advantage is higher margins and lower cost of acquisition than most players in the industry. While the temptation is high to grab customer acquisitions by burning money faster and playing double-or-quits, we are building our operations for the long term and keeping our focus on customer behavior.
Who do you see as competitor in India and what impact eCommerce industry will have after Amazon entry in to the market?
The biggest competition to organized retail as well as online retail remains unorganized retail. Market dynamics are more likely to be driven by customer behavior by geography & category, and the margin models by geography & category. While eBay is a sizable international player that has limped its way to the top in India over several years and showing little sign of high growth, Amazon is likely to have a similar journey. Amazon will need to learn scaling pan-India logistics and dealing with Indian suppliers across categories, not to mention Indian customers who-are-like-this-only. Historically, they have not shown the DNA of leading in heterogeneous and unorganized markets like India with high price sensitivity. We are more worried about Flipkart and Home Shop 18.
What are the challenges Future bazaar is facing and what are you doing to outedge the existing challenges?
Our biggest challenge and our industry’s biggest challenge is to win customer trust. While we have inherited customers’ trust by being part of Future Group, we have yet to build their lasting trust in servicing them digitally and at their doorstep. We must build an emotional connect and trust with the customers at homes & offices, and that will come from an organization, culture and leadership that obsesses about customers.
Your professional career has been dynamic so far and you have experience of international market too. According to you what we can learn from international ecosystem and what we cannot or should not copy?
Several international markets have achieved much higher scale in digital businesses than India has. Building digital scale or scaling a business by 10-100x inorganically in a few years has not happened often in India. Seeing this happen multiple times in close quarters gives me the belief that this is possible. Other than this belief, international experience is dangerous. None of the rules apply, and borrowing from those rules gets in the way of making the new rules necessary to scale business in India. Unlearning international learnings is a bigger challenge than applying the international learnings in India
What is your take on mcommerce and how do you see the integration of ecommerce with mcommerce (digital commerce)? Do you think the amalgamation of both will have great potential?
My belief is that digital commerce is about the need to shop anytime anywhere. The Internet, mobile Internet, phone calls, kiosks, print/tv and other media at home are various ways to service this need. Our multi-channel thought is the reason we have always called it digital commerce as an amalgamation. We are seeing a significant pattern of India going broadband over wireless networks using telecom infrastructure. The gap between e & m is getting blurred both at the infrastructure and device level. It is natural that it will blur at the customer behavior level too as it relates to digital shopping. Once again, the key bet is to use the right device for the right use cases in a way that is customer-centric and not medium-centric.
What is the marketing mix of Futurebazaar?
This is our secret sauce and the biggest source of our competitive advantage. The customers we target and the ways we acquire them is fundamentally different from other players in the industry, and let’s just leave it at that.
What would be your suggestion for start ups in eCommerce or online retail in India?
Chase the customers’ wallet and not the investors’ wallet. It is hard but possible to build a profitable eCommerce business if you focus on your customers and not your competitors.
What you think about evolvement of deals centric online business model in India? There are lots of consumer’s complaints against deal providing portals and many consumers along with industry people feel that they are killing the industry because they are killing the trust factor. What is your opinion on this?
Besides travel, most Indian customers are shopping digitally for deals first, product access second, and convenience third. Deals on local services is a space I do not personally believe in and even if it is real, it is fundamentally a marketing/couponing business than a retail business. Unfortunately, the industry has started using it interchangeably with the online deals business. Our model is product deal centric, and we are seeing that if you deliver a great product at a great deal at the customers’ doorstep, it is a great way to build trust and brand affinity.