Online Retail Needs the IT Thrust

Conducting business online is the easiest and fastest of the existing modes of business and transaction. Which is why, e-commerce is becoming immensely popular. Online retail is a major segment in B2C ecommerce as it allows one to buy anything from anywhere and even look for deals for items and services with other sellers. From phone bills to books, nowadays even tickets can be bought online. In fact, the maximum number of online dealings in India is made at Indian railways ticket website irctc.co.in. The first major success in online retail was Amazon.com, which started as an online bookstore and later started selling DVDs, MP3 downloads, software, video games, apparel, furniture, food, and toys. It is currently the world's largest online retailer. Amazon's success encouraged many leading bookstores to start their online stores. After Amazon, other sites such as Yahoo.com and MSN.com also started online shopping channels selling other things too.

Retail market has come a long way and has realized the importance of IT in consolidating their market position. From smaller players such as Vishal Retail, Subhiksha, etc to giants like Reliance, everybody is vying for that online space. Reliance Retail is on the verge of rolling out its integrated e-tailing website that will include Reliance Fresh, Digital, Trendz and other verticals.

Despite the buzz, online retail is not without its hiccups. Problems, such as low credit card penetration and the high failure rate of debit card transactions have dampened the otherwise rosy canvas. As said, these are hiccups and not a major problem and so can be managed. Of late, some online sites, like the Flipkart permits payment on delivery model.

Key Trends in Online Retail

Adoption of cloud computing for internal operations with respect to lowering upfront investments and incurring incremental costs basis growth along with optimization of content publishing across increasing variety of devices & platforms, where new users come from various segments and guaranteeing a uniform experience is a continuous challenge.

Moving infrastructure from CAPEX to OPEX, via on location hosted services is another challenge. This is with respect to lowering upfront investments and incurring incremental costs basis growth. Also, innovation in payments is taking place --willingness to accept, process and manage payments across multiple channels. Dialogue and communication with consumers across multiple social channels and adoption of analytics to make effective & targeted communication with customers is taking place.

Challenges Faced in Adopting IT

Some of the challenges faced in adopting IT in eRetail are related to payment and logistics. Online payments & card based transaction is still in its infancy in India. eRetail is bringing in new users online and most of them are illiterate in online payments. The combination of both makes it a very challenging environment for the etailer, as scenarios like — double debit, refunds not processed by gateway to customer's account, high failure rates and frauds plague the industry.

Innovations around logistics to overcome the infrastructural challenge are anticipated. The innovations center around more educative information capture from the customer, restrictions & validations around shipping parameters and on time updates.

Expectations From IT

Better data centers, lower cost of bandwidth are definitely required for this segment to thrive in India. Combination of these two can alone reduce cost of operation by 15-20%. Uniform adoption of HTML 5 across all mobile browsers, so investment into building apps across multiple platforms can be killed. Consumer awareness is a must regarding online payments and online payment systems getting more robust and integrated, leading to lower payment failures and more users adopting it.

With inputs from Manmohan Aggarwal, Founder, Yebhi.com

Case Study







How an SME Successfully Leveraged e-Commerce





Sanjeev Katoch, based in Ludhiana set up his 'Indian Remi Hair Extensions' business in 2006. Prior to this, he was working with an airline until he met with an accident which paralyzed him waist downwards. While he was looking at alternative career options, he came across Alibaba.com, a B2B e-commerce website where several buyers had posted queries for Indian Human Hair. This prompted him to set up a business and use the e-commerce platform to export Indian human hair to international markets like the U.S. without traveling outside his office. Today, with a turnover of over $1.5 million, Katoch receives 95% of his business from Alibaba.com and strongly believes in the power of e-commerce to achieve his dreams.

"As Internet penetration continues to expand, with over 121 million internet users in India, we see a higher adoption of e-commerce by small businesses to generate further trade"

What are the IT essential solutions that can be used to increase the production, efficiency and profitability of SMEs in India?

India is a unique and very important market for Alibaba.com because of its large MSME population (26 million units), a robust domestic market and a growing export sector. India has emerged as a low-cost manufacturing base and an alternative supplier market to China for global buyers. Moreover, the entrepreneurial spirit that is unique to Indians is being further bolstered by various SME-friendly government initiatives, which we hope will continue with the new Union Budget.

As buyers around the world are looking for alternative sources of suppliers and products, we hope to better equip Indian suppliers for meeting the changing buyer needs, as well as making Alibaba.com their go-to platform for reaching out to local and international buyers.

The 'Online Marketplace', today, has advanced considerably as more and more businesses are getting comfortable with this space. As Internet penetration continues to expand, with over 121 million internet users in India, we see a higher adoption of e-commerce by small businesses to generate further trade.

Moreover, compared with other e-marketing channels, online marketplaces like Alibaba.com target a highly specialized group of business people who are interested in B2B trade. They offer features and support services that are customized for this special group and provide them with an efficient way to promote products directly to potential buyers. This can help businesses save a significant amount of resources and time from investing in means to drive relevant traffic to their company websites. This impacts the bottom-line of the business and thereby results in enhanced profitability of the business.

Please highlight some compelling IT solutions for Indian SMEs?

While serving the needs of Indian SMEs, Alibaba.com provides a comprehensive set of solutions to its users, proving to be an effective business tool. Alibaba.com also provides many interactive channels. For instance, through active product listings, inquiry exchanges, instant messaging (the Trade Manager instant online communications tool), Product Showcase, Biz Trends (Real Time Analysis of your online performance) discussion forums and other easy-to-use community features, suppliers and buyers using business-to-business e-commerce platforms form large, interactive online communities for information sharing.

As SMEs in India are now increasingly prepared to invest in Internet marketing methods, or marketplaces like Alibaba.com. Some of them have grown their businesses tremendously by investing in e-commerce and Alibaba.com in particular. With a promising SME base, India is a priority market for Alibaba with over 2.5 million registered users as of December 31, 2011 up 53% year on year.