Indian ecommerce industry has certainly crossed the inflection point, from where growth is inevitably exponential. Increasing faith of investors, rampant consumerism, increasing disposable income, great internal consumption story and increasing comfort of people with online medium would drive the ecommerce to prosperity. Sharing his opinion on various dimensions of ecommerce businesses in India including recent bubble and eBay’s position in the ecosystem, this time Iamwire caught with Muralikrishnan B, Country Manager, eBay India. In an exclusive interaction, Muralikrishnan said that the current hype and bubble surrounding Indian eCommerce industry is really unfortunate, there are many companies out there which do not have any significant differentiators but have attracted large funds and are literally flitting away money on internet marketing in global as well as domestic market. Here are the excerpts of the interview.
What is your take on current scale of Indian eCommerce, and how do you see the overall eCommerce industry in India?
There are two parts of answer to this – one is in terms of gain, trends and potential. In terms of gain as compared to global market eCommerce in India is still in very nascent stage. According to the IAMAI eCommerce report 2011, the market is anywhere about 0.4 to 0.5 billion (excluding online ticketing) which is still nascent. However, it is interesting to see the enormous growth rate and moreover I would say Indian eCommerce is at an inflection point. At present it is at point from where growth rate is inevitably exponential. It is happening because of multiple factors – on one hand organization like eBay which has been consistently evangelizing and marketing the concept of eCommerce to the consumers. Earlier, people were worried about shopping online, however now with fundamental solutions like PaisaPay and eBay Guarantee, consumers are experiencing secure online transaction. On the other hand, consumer’s increasing comfort in using the credit cards online along with forward looking policy of government (especially RBI) for facilitating secure transaction are driving the consumer’s faith in eCommerce and online retail.
ECommerce industry is witnessing increasing confidence from investors and consumer’s trust. According to you what are the reasons of such influx of funds, and why, despite of getting funds, most of the Indian eCommerce companies are still trading in red (negative profits)?
It is a very rational question; according to me the reason for increasing faith of investors are rampant consumerism, increasing disposable income, great internal consumption story and increasing comfort of people with online medium. People have now convinced that of online shopping because of better pricing, wide range, accessibility over demographic, time saving and convenience.
A lot of start ups are getting funded because people including investors are convinced that eCommerce is a big viable alternative to offline retail, this growth potential led to exuberance in terms of investment. However, candidly speaking, there is a certain amount of hype with ongoing investments in eCommerce. In fact, investments are going on sans a focus on building sustainable business model. Entrepreneurs are not working out to create differentiators. They believe providing products at a cheaper rate with the lot of funds splurged on the marketing would give them profitable business. I believe sustainable business cannot be built in this way. I think, business based on sustainable competitive advantages would thrive and survive in a long run.
The current hype and bubble surrounding Indian eCommerce industry is really unfortunate, there are many companies out there which do not have any significant differentiators but have attracted large funds and are literally flitting away money on internet marketing in global as well as domestic market. Sustainability of this sort of business model is questionable; such models only focus on acquiring customers without any stress on sincere customer loyalty and engagements. Ultimately profitability can be achieved through loyalty. However, everybody in eCommerce in India is in an acquisition stage which I can understand but I think some of the hype is unfortunately getting beleaguered.
Please comment on some of the new and innovative trends in Indian digital ecosystem that impressed you in last 12 months, and why
Two things actually one is social and other is mobile and both are interlinked to each other. One of the most interesting success stories in user stickiness in Indian eCommerce space has been seen with rapid growth of Facebook. In India, Facebook have 30 million users. Social media is bringing lot of people across demographics and geographies with engagement we have never seen before. The emerging markets globally including India are at forefront of adopting social network as a medium of engagement. And what social networking has done to the companies like us that it open up the platform to reach out and engage with consumers in an active manner. Social networking sites are very much supportive to consumer support as on eBay India’s Facebook page, we endeavor to involve in deep conversation and revert back promptly with the solution of consumer’s queries.
The second part is mobile – there are multiple trends we have been witnessing on mobile front. The reduction of prices of entry level smart phones (especially android enabled smart phones). With 3G network people are getting better quality mobile data network. All these landmarks have led to increasing usage of mobile internet. I think in the near future mobile internet would trigger the concept of mobile payments. In fact, the Indian Government is starting to use mobile payments for Mobile Inclusion.
eBay India launched its new mobile web transaction platform for smart phones along with application for price check for all mobile phones – how has been the experience and successes so far out of these mobile initiatives?
It’s been fantastic journey with all the mobile based initiatives, few months back we have launched a Mobile Web world platform just as pilot and we got interesting feedback from the consumers on navigation and features they want.
Now we are going to launch the next version of our mobile web transaction platform which integrates Paisa Pay. At present entire end to end transaction facility including payment and all safety on mobile web platform. In terms of result we are expecting lots of traction via mobile internet in time to come. Our primary focus is to develop engaging models for consumers on mobile However; transactions through mobile would take some time to evolve in India.
Lots of consumer’s complaints can be traced with various eCommerce players; however, eBay India has addressed this phenomenally well. What strategies and customer service programs you have enacted to overcome consumer’s issues?
eBay has been in India from last 11 years. We are a global brand with Indian heart. We have advantage of learning and all the technological advancement eBay has done globally. We have in-depth understanding of Indians consumer’s behavior. Our entire approach to customer support is very simple. There are two aspects of it, one is proactive and another is reactive – on proactive front, the biggest thing we have done in terms of service is PaisaPay because prior to launch of PaisaPay, people in India were apprehensive of transacting online. There was a sense of unpredictability and risk associated with online shopping. Hence on an proactive front, we have PaisaPay that ensures 100 percent safe and secure transaction.
The second is reactive front, as offline retail there can be some mistakes regarding product, shipping etc which happen unintentionally. However with eBay we take complete responsibility with Paisa Pay and customer support- we provide hygiene online shopping experience for Indian consumers.
How do you see the trend of top executives in corporate world deserting their secured career and foraying in to risky and volatile market of eCommerce as entrepreneurs?
Personally I am still a professional not an entrepreneur. However, if there is any smart professional with appetite to take a plunge in entrepreneurship, undoubtedly eCommerce presents an immense opportunity to create a big business. At the same time it is extremely risky and volatile. Looking back in mid 90’s there was a trend within FMCG & CPG professionals quickly joined IT companies and then people migrated to financial and insurance services eventually. In the same fashion, now it is turn to hop on to eCommerce bandwagon. However for me anybody who is in working in eCommerce industry in India is actually helping to disseminate the concept of eCommerce. If they are coming with intent to build a sustainable business model, then it is great. Meanwhile if they are doing so with intent of making quick bucks or for swelling their personal wealth promptly, I think it is not a smart thing to do because that take them down the way to make wrong choices.
As Amazon is set for its Indian debut – what effect it will have on entire ecosystem, and do you feel Amazon’s debut would intensify competition in the eCommerce market?
Yes, definitely, the entry of Amazon would certainly spark competition. Already we have been experiencing fierce competition. As I have said, eCommerce in India is in very nascent stage, having more global and trusted players will help expand market and actually make easier for leaders like us to grow easier and faster. I do not think it will have fundamental game changing impact but at the same time they are a good, credible global player, so it would be interesting to see them rolling out in India which is altogether a different turf. Meanwhile, there are chances that small online retailers and other eCommerce players may face the heat.
Do you think Amazon’s entry would also followed by some reforms in investment and valuation landscape in India?
I hope so, but it is too premature to discuss this. It all depends on VCs and fund houses – how they are taking this entire thing. But I do expect there would be certain amount of shake-up if and when Amazon would enter the Indian market.
What is the percentage contribution from Indian arm to the global group turnover? What would be the estimated registered users for eBay from India?
Actually we do not disclose any country specific data but eBay India is in very nascent stage in contrast of presence of eBay in global market. But given the growth trajectory, we are growing much faster than domestic growth rate of eCommerce i.e., 40 percent. However in terms of registered users, we have 3 million registered users and apart from that eBay India has 1.1 million fan base on Facebook.
Tell us about future strategies of eBay India and what can be expected next by eBay India in 2-3 years?
Look, our focus over the past few years is that we believe it is our responsibility to pioneer eCommerce in India by providing a combination of great value and fantastic solution and engagement to the consumers. We are also investing heavily in facilitating an overall good experience to consumers. Our main focus is to be the biggest online retailer in near time to come.