What will need to change before we witness the equivalent of an online Wal-mart in India?

Question

Explain your answer in the light of the fact that a major chunk of Indian population still prefers a trip to the local market.

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Answer 1

First of all, not all Indians are aware of the internet technology or online shopping except for those who stay in metros & who are well educated. In a country where 26% or about 260 million of Indians are still below the poverty line you can't expect people to first of all shop at places like or equivalent to Wal-mart, shopping online is just another thing. What needs to be changed is the living standard of a common man who can identify the need for convenience wherein he can shop online instead of walking in to a shop for his daily needs. Change in the living standards doesn’t mean that one should start wearing expensive clothes or using imported day to day items, better education, better understanding of where the World is headed & keeping in pace with the new generation technologies could certainly change the standard of living. A lot needs to be done from the online marketing community as well to improvise on their marketing methodologies, make their products within the reach of almost every individual & create awareness. If a common man is educated & made to believe that online shopping is convenient & hassle free, then we can expect an increase in the online shopping community & that will obviously take time. It’s all a matter of trust & confidence.

Farhan Asim
Bangalore

Answer 2

India has not even fully accepted the culture of malls and one stop shopping yet and the same phenomena is more-so observed as a capitalist intrusion into the ‘Kirana’ store system while facing stiff resistance. India has an "Aaraam (relaxing) culture and people look for the facilities in the vicinity which saw the proliferation of the Kirana stores throughout the country providing high employability. Besides, the purchases are not made without a bargain and touch test of product by the majority India, leave alone any advance payments towards the same. The malls have found an acceptability among the upper middle and middle class in the metro areas but the extent of same is not enough to envision the selling style in the virtual markets.

Certain imperative changes are required in the;
1). distorted consumer perception - that bargaining is an essential ingredient of purchase and any purchase made without barring the gains of the seller is buyer's loss.

2). existing laws - which are rather fragile on cyber purchase issues of quantity, quality, and price and do not help an aggrieved consumer much. Also, the interests of the industry would need protection against any erratic consumer behaviour like buyer impersonation and consequent sale returns etc.

3). target market - as at present most of the purchases of daily need and grocery are made by the house -wives who are not technology savvy. Percolation of technology would be required in target segments before the success of the idea can be ensured.

Answer 3

An online Wal-Mart is only a question of time. Young, executive Indians are already shopping online, courtesy ebay, Rediff Shopping and the likes. Convenience is the operative word here. Added to that, some deals are best found online.

There is a clear dividing of 2 sections, one that prefers the act of
actually going to the store to shop and the other that orders stuff online. Still, the nuances of bargaining, visual delights of a buy-2-get-1- free offers, feeling fabrics to check its authenticity, the pride of winning a haggling contest with the vendor, have all been fused, coded, programmed [take you pick] into our societal [genetic, maybe] make-up.

Let's also consider that most of the population is either children or the elderly. What better way to spend time, constructively, than a walk to the neighborhood store to get fresh vegetables?

We, the Indians, are trying to hold on to the "Indianness" in our everyday lives. Wal-Mart will be successful only with a particular section of the society.

Answer 4

In a country like India where internet penetration is as low as 3% , an online Wal-mart will have a hard time reaching out to masses. However, the situation is rapidly changing in the metros, where nearly 27% of the country’s population reside. Here the internet penetration rate is quite high and an e-grocer will have a huge consumer base in terms of middle class population. However keeping in mind that nearly 97% of retail in India is handled by small stores the following changes need to be implemented to make an online Wal-mart a success:
• Provide a monthly line of credit using credit cards as small grocers do which is appreciated by most customers
• Provide home delivery to people within cities. Most cities are quite small and if public transport is used (Trains in Bombay) the cost of delivery will be quite low. This benefit will appeal to the working class who would not like for grocery shopping after a hard day’s work
• Since price is an important factor for people in India, offer prices lower than the going-rate. Operating margin can still be protected by making bulk purchases from suppliers
• Offer an extensive line of inventory, so that the most consumers need are met at the online store
• Allow payment-on-delivery facility as most people may not possess a credit card for payment
Online grocery stores like Peabody in Boston have already shown that such a business model can be economically successful if online grocers possess suitable experience and expertise to operate in the retail market.


Arijit Ganguly
IIM Kozhikode

Answer 5

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Answer 6

Initial thoughts which would come running to the mind answering such a question would be about technology, computer penetration of 4% in India, internet usage density of 2% etc. Holding that these are all important factors, we need to take a deeper look at other constraints .

•Purchase behaviour: the general public has an in-born tendency for retail shopping with the tangible presence of the goods with much of decision making happening at the store. An online shopping experience would never be able to give such a feel, and the general mindset of the people will have to be changed to achieve a successful online Wal-mart.

•Point of Purchase (POP) advertising: POP advertising is a major medium through which retailers attract customers and much of the sales happen due to instant decision making or attractiveness of the product even when it is not a necessity. Online retailers would have to devise an alternate and equally efficient online strategy by which they would be able to cover this gap.

•Socialization factor: research has proved that a sizable percentage of customers attribute an important socialization factor to the process of shopping. Winning over these people who look to converting shopping to a socialization occasion would also be a crucial challenge.

•Payment systems: order payment systems like credit/debit cards, Purchase-on-Delivery (POD), pre-paid shopping account etc are concepts for online shopping payment which would also have to be used in a much larger scale by the Indian public.

Answer 7

E-Retailing can’t exist and prosper on its own. Just a website or a provider firm can’t create E-Commerce revolution, it need huge amount of participation from other supporting industries too.

People buy stuffs online basically for three reasons –
a) To get discounts
b) For the ease & convenience of purchasing online
c) Absence of alternative, eg. when they can’t access the goods at a nearby store

The first and foremost thing required is a strong pan India distribution network which is current not provided by any of the courier services and the one provided by Indian Postal service is not that professional. Also e-commerce would need warehouses that enable storage of inventory which is also quite lacking in India. If the idea is to ship food items – both basic and processed, there would be an urgent requirement for cold storage facilities across the country. Lastly we need cost effective sourcing structures.

This business can bring in profit if there is infrastructural support in the following forms –
a) Channel for usage i.e internet penetration is still very low in the country. We need to provide alternate medium like mobiles and leverage on existing facilities like ATM to enable purchase of products online.
b) Total no of credit and debit cards are just 6 crores in India and most of their consumers are located in either metros or Tier I cities. In order to bring this facility to the masses, credit and debit card penetration needs to be far more.

Answer 8

McKinsey-Nasscom report says by 2008, e-commerce transactions in India will reach $100 billion.
E-retailing needs to be tailor-made for Indian infrastructure and audience:

Challenges:

1. As against the target of 3 million broadband connections till 2005 end, only 0.18 million were achieved
2. Lack of credit card penetration and uniform credit agencies
3. Fear of fraud over the net over payment options
4. Mindset of the Indians ( “touch and buy “ not “click and buy”)
5. Competition from fancy shopping malls springing up in India, which provide a great shopping experience and added entertainment value ( seen as hangout places ).

Solutions:

Payment system:
Availaibility of Multiple payment options like Credit Card, Cash on Delivery, Cheque, Net Banking etc. E.g. BharatMatrimony.com (payment at local post office) .Use of (SSL layer ) to protect against payment fraud.

Customer Service:
Provide Indian customers with assurance of smooth returns/ exchanges

Shipping (delivery) assurance
Use of reliable courier services to deliver the products spelled out explicitly on the site ,also guarantee about the insurance cover on the product in case of breakage during the supply

Offline presence:
Having an offline presence, by way of print, TV and billboard ads and mobile phones to market (as mobile-commerce is hitting )

Price:
A part of savings (reducing storage expenses , managing inventory ,brick & mortar cost) be passed on to the customers.

Local language:
Options to see product detail in local languages

User interface:
Keep user interface simple to make it fast and reachable

Answer 9

Customer Awareness in terms of variety ,flexibility and cost-benefits offered by e-biz, Increasing Income Levels , Better wired and physical infrastructure , govt. deregulation permitting retail hypermarkets , an integrated supply chain removing intermediaries , “consume now , pay later “ customer mindset will boost the success and number of online retail hypermarts.
But There are many purchases for which the personal shopping experience is still critical , personal products such as apparel. Consumers will prefer to buy high-cost branded goods personally. This will hold good in all cases where tastes and preferences are personal and not amenable to standardization.
consumers ,restricted to goods whose specifications can be examined, but which need not be seen and felt.
The electronic invasion of the marketplace is inevitable. The revolution will
rewrite market laws and reinforce consumer sovereignty.
The future canvas seems to hold a scene of electronic ordering coupled
with the comfort of doorstep delivery. I see a number of routine purchases in
urban households shifting to the Net, as it epitomises convenience shopping,
especially for working couples , for elimination of mundane shop visits. Successful sellers will be those who can promise timely delivery of fresh and quality merchandise. I
see the demise of roadside hawkers, replaced by delivery agents picking up merchandise from local warehouses. Low distribution costs , minimum inventory holding costs and a integrated supply chain will be the primary determinant of a cost-effective solution that provides the rationale for e-biz success.

Rahul Mittal
IIM Lucknow

Answer 10

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