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.

An incident during one of the Christmas seasons helped me answer this question.  Christmas is the peak season in US for all retailers and majority of the online and B&M sales occur during this time frame. This is the time when kids hope that Santa will deliver all the toys that they wished for. The stakes are too high because one delayed shipment could mean a disappointed child who has been waiting for that toy for the entire year. So to set appropriate expectations, we added messaging on all our product pages telling the customers to place their orders before the cut off date to ensure Christmas delivery. However, few days before the Christmas Eve, our dashboards indicated that we would miss the Christmas shipment for about 300+ toy orders. We immediately formed a SWAT team and ensured that every single order was handled in a white glove fashion and shipped via overnight delivery. The team worked through the weekend to make this happen, and we certainly lost money on these orders. However we gained something really important – the trust of our customers.

This leads me to what I think is the most important factor that is necessary in growing eCommerce in

India – Trust. If we look at the Indian context, I feel that there is a general lack of trust between retailers and customers. Consumers don’t trust the retailers because they feel that they are either being over charged or that they wouldn’t be able to get appropriate level of customer service once the sale is complete. Retailers don’t trust the customers because they feel that the customers will take every opportunity to misuse the return or exchange policies. It is my opinion that this general lack of trust is the primary barrier that is impeding the growth of eCommerce within

India. Here are some of the practical techniques that online retailers can employ to improve this level of trust and build an environment where customers feel safe in clicking that “Proceed to Checkout” button.

1. Customer Reviews

Today’s customers are putting less trust on website marketing messages and becoming more influenced by recommendations from other people. Customer’s trust for an online retailer will increase if the retailer offers an ability to let customers share their positive as well as negative reviews about products or vendors. The key is to not “moderate” the negative reviews because by allowing customers to post negative reviews, it will actually enhance the credibility of the retailer as well as other reviews. Obviously, any foul language needs to be moderated but any genuine issues with the products or vendors must be posted along with the positive reviews.

1. Clear shipping and delivery commitment

At the time of setting up products for sale, clear shipping and handling time must be associated with the product. This information should be displayed consistently on all product pages so that customer’s expectations around shipping timeline can be clearly set.

1. Analytics & Personalization

Although personalized product recommendations and content do not directly increase customer’s trust, they do demonstrate to the customer that the online retailer is making a good effort in understanding the customer’s individual needs and is acting upon them. This implicitly improves the comfort level that the retailer is not just looking to sell products but is making an honest attempt in building relationship with the customer.

1. Operational Reporting & Dashboards

Online retailers must invest in strong operational reports that provide alerts and metrics on orders that have a risk of missing the service level that was promised to the customers. If you have recently implemented an eCommerce platform, chances are that at times orders will get “stuck” in various states. Therefore, it is important to establish thresholds around how long should orders stay in various states (such as “Processing for Payment”, “Preparing for Shipment” etc.) and then build automated alerts when orders exceed these thresholds.

1. Vendor Penalties

In the Indian context, majority of the eCommerce sites work in a “drop-ship” model. This implies that the online retailer doesn’t physically stock the goods, and instead relies on external vendors to directly ship the merchandise to customer’s home. In this case, it is extremely critical to set clear SLAs on how long will it take the vendors to ship the orders. There should be financial penalties built into the contracts if the vendors miss the service levels. Also, there should be penalties if the vendors receive excessive negative reviews from customers.

1. Price Match Guarantee

A Price Match Guarantee (PMG) is a store policy which entitles a customer to a refund of the difference between the store’s asking price and a competitor’s price. It can not only help build trust with the customer, it can also help reduce price competition across online retailers. This may sound counter intuitive but it is one of the most discussed examples in “Game Theory” and it has actually helped retailers in US to avoid direct price wars. Take for example a firm like

Circuit City that has a price match guarantee, which looks good to a consumer. But that guarantee really allows

Circuit City to charge higher prices since competitors will be discouraged from setting a lower price that

Circuit City only will match when it must.

1. Well trained call center

I recently called Airtel customer service to add Blackberry service to my cell phone. There was an issue with their automated messaging system that was directing me to a wrong group within Airtel. After calling 9 times, I gave up because every agent that I spoke to had the same scripted response that I should call back again and press option 2. The point I am making is that although it is important to train the call center agents around specific customer service issues, what is even more important is that the call center agents be trained to have good problem solving skills, and they should be empowered to own the problem resolution from end to end.

1. Fraud Protection

Not only should an online retailer ensure that the appropriate security certificates are setup to handle checkout related transactions, the sensitive customer and payment information should be stored in an encrypted format. The messaging on the site should clearly indicate that the checkout process is completely secure. In addition, there are third party Fraud detection services available that help flag potentially fraudulent transaction based upon credit card usage velocity and other parameters. These services would not only help reduce the credit card charge-backs for the retailers, but will also improve the sense of security and trust with customers.

1. Proactive, timely communication

Are we there yet? If you have gone on a long drive with kids, chances are that you have been asked this question. It is human nature to expect timely communication, especially when they are waiting for something that they have already paid for. The retailers should ensure that every single status update on the order generates an alert for the customer. Also, if the order waits in a specific state for a timeframe longer than what was promised to the customer, an email should be automatically sent to the customers to make them aware of the delay. If the delay is longer than a few days, customer should be contacted via phone and asked for approval for the delay or given an option to cancel the order.

1. Charge only after order shipment

Customers feel much more comfortable if they know that they will only get charged once the order ships. Currently, a lot of retailers charge the customer’s credit card immediately when customer places the order. However, they should consider authorizing the amount at the time of order and only charge the card once the order ships. This will also minimize any need to refund the amount back to the customer in case the order needs to be cancelled for any reason.

1. Self Service Capabilities

The more online self service capabilities (e.g. order cancellation, modifications) retailers can provide to the customers, it will not only help reduce the call center expense, but will also build more confidence with the customers. Customers will feel more in control because they wouldn’t have to spend 10 minutes with a call center agent to explain the issue – instead, they can directly resolve the issue online.

1. Real time inventory updates & safety stock

Retailers must invest in building automated capabilities that keep an up to date record of how much inventory is available for all their products. Products must immediately become unavailable for purchase from the site as soon as the inventory reaches below the safety stock. Canceling customer orders due to lack of inventory is a situation that all retailers must avoid because this not only frustrates the customers, it drops their confidence in the retailer’s ability to keep their promise.

eCommerce will see a significant growth in

India. However, the chasm between the early adopters of eCommerce and the ones who are waiting can only be crossed by building a strong level of trust with our customers – and winning them, one customer at a time.  

This incident got me thinking - how do you measure ROI on offering good customer experience? and more importantly, what are the acceptable boundaries around customer experience? A company can chose to offer a completely transactional experience with no regard for the customer. These are the companies, who I would argue, have a myopic view of how to make money. I would further argue that a bad, purely transactional experience is actually costing the companies more in terms of “opportunity cost” of losing the possibility of a repeat purchase.

In the Indian context, a lot of retailers think of customer experience as something that starts once the customer enters the store and ends immediately after the customer makes a purchase decision or leaves. The customers certainly need to be treated well during their purchase cycle, however, what is even more important is how they are treated after the purchase cycle. Numerous studies have suggested that a retailer’s most profitable customers are ones who make repeat purchases. However, it is ironic that a number of retailers in Indian market tend to focus on the current transaction, without thinking about maximizing the possibility of a repeat purchase.

Lets take this to the online world where a customer is trusting the retailer with their money without even taking an immediate possession of the goods. In this case, it becomes extremely important to ensure that there is a strong, clear and proactive communication with the customer during all phases of order life cycle. A number of Indian online retailers today send email or SMS alerts when order status changes. However, not many retailers actually follow-up with a customer after shipment is complete. It also becomes extremely important to quickly resolve any issues related to wrong shipment, defective or damaged delivery or customer returns. I am not suggesting that the online retailers go to the extreme of offering unconditional return policies or exchanges after even 1 year of purchase. However, I do think it is important for a retailer to demonstrate compassion, strong sense of urgency and an honest attempt to resolve customers’ issues. There is certainly the risk of customers mis using the system to their advantage. However, in my opinion, this is a small price to pay in return for winning over 90% of the other customers who had genuine issues with their purchases.

The user experience on the website is also extremely critical. In the Indian context, majority of the online sites try to maximize the use of banner ads and other promotions to showcase every single marketing message that could appeal to the customers. However, in my opinion, this approach actually makes the experience worse. Too much clutter on the home page is likely to confuse and possibly annoy the customers. I compare the user experience on an eCommerce website to the interior design of a B&M store. It needs to be simple, fresh, inviting as well as easy to navigate. The customers must feel in control and should be able to quickly find the products and complete the checkout process. In fact, studies indicate that if it takes more than 4 clicks to complete checkout, customers are much more likely to abandon their shopping carts.

There is a huge potential and market for eCommerce in India. Few players have already established good eCommerce capabilities and there are new ones on the horizon. However, the true winner would be the one who masters the art of offering a great customer experience. Technology platform and the breadth of assortment are certainly necessary in driving sales. However, a strong customer experience is extremely necessary in building lasting customer relationships.

Before I begin this journey, let me introduce myself. My name is Darpan Munjal and I recently moved to India after working for about 12 years in retail industry within US. Most recently, I was the Divisional Vice President of eCommerce at Sears Holdings (a $55 Billion retailer) and my team was responsible for building some of the best in class eCommerce websites within the industry. Before joining Sears, I did eBusiness consulting within US and led the implementation of a number of high volume web sites.

My goal of building this blog is to share my experiences, learnings, successes and most importantly, the failures that were part of building one of the largest eCommerce sites in the world. I think there is a huge opportunity in India to take eCommerce to the next level and my hope is that our collective experiences, discussions and learnings on this blog will help build a community that can lead that change.