eCommerce in India - A blog by Darpan Munjal

While we were wrapping up the last minute shopping for our trip back to India last week, my daughter insisted that we go to Toys’R’us store –she wanted to buy that new Barbie she had seen with her friend few days ago. As we were walking down the aisles of the store, it reminded me of my childhood. I used to love toy cars a lot and every time I used to go to the market with my parents, we would go to the Toys store almost as a ritual. The store was probably less than 700 sq feet in size and yet, these toys were like hidden treasures – hard to find and it was up to the store owner to show the toys he thought we might like. None of the toys had any price displays on them and store owner would “tailor” the price depending upon which customer he was talking to. The total assortment was probably less than couple hundred toys. And yet, as a consumer, it was hard to find what you were looking for, not to mention that comparing prices across different stores was almost impossible. On the other hand, my 4 year old daughter even knew the exact location of that Barbie in the 50,000+ sq feet Toys’R’Us store!

The organization and maturity in the retail sector is inevitable in India. As the retail sector gets more organized, there will be more and more consistency in the assortment as well as the user experience across various stores. However, the retailers must demonstrate one aspect to be really successful – transparency of information. Gone are the days when retailers could charge any amount, without worrying about what another store in another part of the city was charging. Gone are the days when retailers could get away with no regard for customer service or the overall purchase experience. In today’s world where information is only a few clicks away, the retailers must demonstrate leadership in accepting what they don’t do well. If the retailers don’t listen to their customers, customers will find other channels (e.g. Discussion Forums, Blogs) to voice their opinions as well as research what others are saying about the retailer. We should not undermine the power of these community based channels – take for example the incident where one of the installation engineer from a large cable company (Comcast) was caught on tape, sleeping in a customer’s house. The video was posted on YouTube, resulting in about 1 million views. Comcast had to issue a formal apology to the customer.

The online channel offers a great vehicle for retailers to demonstrate this leadership and they must capitalize on that. For example, a number of retailers still have reservations about posting negative customer reviews for the products on their web site. At first, this may sound logical. However, I would argue that by showcasing negative reviews on the site, the retailer is actually demonstrating a position of leadership and authority that actually results in a higher trust with their customers, thereby increasing loyalty and sales. Now if there is a product on the website that has consistently received only negative reviews, it is likely that the customers will not buy that product. However, instead, this will steer the customers towards a more satisfying product in the category. This also helps the retailer make better assortment decisions so that thy can constantly prune the assortment for the better products. Overall, it is a win-win situation for retailers and the customers.

Let’s take another example – the transparency in pricing. Costco – a discount warehouse retailer in US excels at this. Shoppers are handed out saving booklets for an entire season, where they can see what items will be available at additional savings on which days during that season. Although some would argue that this is against the fundamentals of promotional pricing, where there is a risk of customers “gaming” the system by only purchasing items during the promotional periods, thereby eroding the margins. However, in today’s world where price comparison services are available at the click of a button, customers have a lot of options to begin with. If they know that their trusted retailer will have a certain item on sale few weeks later, they may be willing to defer the purchase decision instead of buying the item from a competitor.

The web channel can also be used to listen to the customers and help improve their perception about the retailer. Some companies have actually appointed web community managers whose job is to actively participate in discussion groups and immediately resolve customer issues that are posted on those discussion groups. Take for example, Starwood Hotels. They have a Customer Service coordinator who is constantly seeking feedback and responding to customer issues posted on the discussion boards. This flyertalk post is an awesome example of how Starwood Hotels (A leading hotel chain) leverages internet to openly seek feedback on issues and complaints and immediately addresses them by engaging the senior management. You will see so many customer complaints in this forum, however, at the end of the day, almost every customer is won over by the passion and empathy demonstrated by Starwood to resolve customer issues.

When customers ask for help, report a problem, protest or offer feedback, it is within retailers’ control to seize the opportunity to build loyalty and turn unhappy consumers into raving fans. Perhaps it’s time to think of the call center not as a cost center, but as a valuable touch point and marketing vehicle that can be used to build long lasting relationship with the customers.

In the Indian context, the web is still not as mature and the information about customer reviews and purchase experience is not easily available. Customers still use word of mouth as the primary vehicle to research products and to make purchase decision. However, it is only a matter of time when the web becomes the primary channel for customer research in India – as the retail sector gets more organized, the customer segment will also get more organized and utilize the online channel to share and research purchase experiences. Retailers who build their foundation around transparency and customer centricity will enjoy a sustainable competitive advantage over others.