eCommerce Blog

eCommerce Blog – Opportunities in US and India (by Darpan Munjal)

Announcing – eCommerce Showcase for India

Posted by Darpan Munjal On October - 5 - 2009
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Over the past several months, I have been in touch with several bright entrepreneurs who have recently launched or are planning to launch an eCommerce related offering in India.  I am really excited that we have so much focus and energy around eCommerce and I really think that the landscape is about to change in India.

There is a perception out there that eCommerce is not really picking up in India and that companies are struggling to scale up their offerings. There is no question that the overall market is still pretty small in terms of numbers. However, we shouldn’t ignore that all factors are slowly moving in favor of eCommerce. Retail is getting more and more organized, availability of global brands is larger than ever, internet penetration is climbing and some internet retailers have started to focus on customer experience as a way to differentiate. Most importantly, and I can personally attest to this one , there are some extremely talented individuals who have recently launched new ventures and are passionate about making a big difference in the eCommerce space in India.

I’ve been thinking about this for a while – Read the rest of this entry »

E-Commerce in India – Is it really Profitable??

Posted by Sachin.Singhal On May - 3 - 2008
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In one of my previous posts, I had extended the invitation to Commercewiki readers to contribute to this blog. This post is by one of the readers – Sachin Singhal who has done a great job in articulating the profitability situation of eCommerce in India. Thanks Sachin for your contribution – comments are welcome from everyone.


Yesterday I was listening to Avril Lavigne’s song “Tomorrow is a different day” and certainly believe it to be true when it comes to e-commerce industry in India.

No Doubt, Travel portals are outperforming in India. Travel alone constitutes 50% of Rs 4800 crore online market in 2007-08. Recently MakeMyTrip has touched whopping Rs1000 crores of turnover. It around 20% of total e-commerce market. It’s expected that travel portals will grow 65% annually. We are experiencing an exponential growth in this vertical. Are these companies making profit or able to break even? How much is the average cost of acquisition? Well these questions still lingers me. The average cost of acquisition in E-commerce industry is around Rs 1100. If the average order size on these travel portals is Rs 4000 and typical net margins are 6-7% (That too on the higher side), these portals will make only Rs 300 on average. That’s far below the cost of acquisition.But the big question arises how the Non-Travel Portals are performing in India? Read the rest of this entry »

New Venture Series – Social Shopping

Posted by Darpan Munjal On February - 13 - 2008
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It is human tendency to resist change. The most natural instinct is to continue doing things the old way. And when changes are implemented, we try to fit them back into the mold because of our comfort level with how things used to work in the past. That is kind of how online shopping has evolved. Even in the western world, not many physical retailers believed in online channel during its infancy – they looked at it more as a distraction. However, when they started understanding the potential of online shopping, more and more retailers began to build an online presence. However, they did everything in their power to ensure that the online shopping works as close to the physical channel as possible – whether it was pricing decisions or merchandising decisions or logistics – everything was designed to work similar to how it works in the physical store. Most of the online retailers overlooked the power that internet offers around connecting individuals so that they can help each other in making better purchase decisions. Since then several new age online retailers have come up and have started capitalizing on the true potential of internet, and the role it can play in changing how people make their purchase decisions. These new players have started questioning the well accepted norms such as “category managers are the ones responsible for selecting the product assortment and making the pricing decisions” – Why should an internal category manager’s intelligence be better than the collective intelligence of hundreds of thousands of online users – who use these products day in and day out?

This question is the premise of my topic today – a topic that is near and dear to my heart and the one that happens to be first in my series of new venture ideas – Community based shopping. Before we go further, let me just clarify what I mean by community based shopping. At the most basic level, this describes an environment where online communities or users play a key role in helping other people make their purchase decision. As you read this post, I am sure one thought would certainly go through your mind – is India ready for this? At a time when internet hasn’t reached the home of a common man, when users aren’t even able to do their own online shopping, how can we expect them to help others shop online? This is a good thought and at a high level, it makes a lot of sense. However, we really need to dig a bit deeper to understand the real opportunities.

 

For a few minutes, let’s keep the issue of internet adoption in India aside (I promise, I will come back to it later). Let’s just evaluate, at the most basic level, whether the concept of social shopping makes sense. If we look at most online players today, the notion of human touch is missing from the online shopping experience. For all its power, Google can’t tell shoppers what’s cool or what their friends or like-minded consumers recommend. Same is the case with majority of the shopping sites. A search for men’s shoes on a typical shopping site Read the rest of this entry »

Business Ideas for the digital India

Posted by Darpan Munjal On February - 5 - 2008
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As the internet penetration reaches the average household in India, the digital eco system would need to evolve, opening up several gaps in the value chain. If you are an entrepreneur or dream of becoming one in the near future, there are significant opportunities related to internet/eCommerce that might give you a first or early mover advantage for the Indian market. Until now, my blog has focused on discussing trends, opportunities and best practices at a macro level. Now, however, I think it is time to make things a bit more interesting, and start focusing on specific concepts or business ideas that can be monetized in the Indian context. Over the next several weeks, I will be posting a series of blog articles which will showcase different business ideas in various categories related to internet/ online commerce in India.

Needless to say that these are just ideas and an idea alone cannot make a venture successful. End of the day, it is about execution and the team. If you have a strong team, with solid execution, the chances of your success are significantly higher even if you don’t have a killer/unique idea. Read the rest of this entry »

Is Web 2.0 Overrated?

Posted by Darpan Munjal On December - 21 - 2007
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At least that’s what I felt after attending the Web innovation conference held in Bangalore this week. I don’t understand why folks spend so much time slicing and dicing what web 2.0 means. I could hear some people even talking about Web 3.0 – some of the gifted ones even offered a glimpse into Web 4.0!!  Now, come on! Isn’t that a bit too much? We are not talking about a software release which comes in different versions with a predefined set of features. We are talking about evolution of the internet economy here. Don’t get me wrong – I definitely think Web 2.0 is a beautiful thing and the power of communities has a huge potential for the new economy. But that’s exactly my point – people need to think about the applications of this concept, as opposed to getting hung up around the text book or Wikipedia definitions of Web 2.0. Ok, enough with my ranting – it wasn’t all that bad. There were some decent speakers as well – like Rohit from Techtribe who offered some good insights into the dynamics of online communities.

It would be great to see more businesses in India that are built around the power of online communities. A lot of people feel that online communities may not be a good fit for the Indian culture, but I strongly feel that the communities can be very successful if the right incentives are offered to them.  I am posting the slides that I used for my topic at the conference – “the future of eCommerce”. eCommerce is definitely an area
Read the rest of this entry »

Where is the differentiation ?

Posted by Darpan Munjal On October - 17 - 2007
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My daughter will be turning 5 in a few days and unfortunately I wouldn’t be able to celebrate the birthday with her because she is currently in Chicago with her Mom. So I was talking to her on the phone, and asked her what would she like for her birthday present. She thought for a few seconds and then asked me inquisitively – “Daddy, how are you going to get me a present? You are in India, remember?” Smart question, I thought. But few seconds later, came an even smarter response from her. “I know!” “How about if you order it on your computer and, like before, I will get it in that brown box from Toys’R’Us .com“. I thought to myself – wow my little daughter is growing up. She may not understand what eCommerce is but she does understand that you can do something in the computer, and few days later a brown box is waiting for her in the front of the house! She almost believes that Toys’R’us has deputed little magical Santas inside every computer, and they are able to send exactly the toy children wish for!!

What really impressed me was the fact that she remembered Toys’R’Us.com and could associate it with someone who could help in meeting her birthday wish. This got me thinking about how online retailers in US have been able to create a unique enough differentiation for themselves where customers know exactly what these retailers stand for. There are some retailers in US that are still struggling with this, but at a broad level, most of the retailers (online as well as traditional) have found a unique proposition for the customers. Whether it is the largest assortment (Amazon.com) or value for money (overstock.com) or discount electronics (Newegg.com) or Jewelry & Gifts (Bluenile.com) or upscale household category (William-Sonoma) or a great service experience (Zappos.com), there is a lot of differentiation. If a 5 year old can recall Toys’R’Us when they are thinking of toys, imagine how easy would it be for a grown up to do the same across various categories. Then I thought about the Indian context and I tried really hard to think about all the unique things that the online retailers in India stand for. I thought about product assortment, pricing, categories, service and after trying really hard, I wasn’t able to come up with any meaningful differentiation that really sets one retailer apart from other. True, there are some retailers that offer a bigger assortment than others – but more or less all other dimensions are similar across most of the online retailers.

Then I thought, what is it that Indian customers think about before shopping at one retailer vs. other. I also asked this question to a lot of individuals who I know have been online shoppers for quite some time. The results of this “unscientific” study were very disturbing Read the rest of this entry »

5 things to consider when starting an eCommerce venture

Posted by Darpan Munjal On September - 18 - 2007
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The other day, I met someone at a conference who mentioned to me that he was planning on starting an online retail venture in India. He said he has already begun the software development for the platform and one of his friends is a great SEO person so marketing should not be an issue. Is there anything else critical that he should plan for, he asked? Although his level of planning (or lack thereof) didn’t give me a lot of confidence in his venture, it did give me few ideas for topics that I should write about in my Blog.

 

Although technology plays a critical role in building an eCommerce operation, just focusing on a technology platform without careful planning of other factors is a recipe for failure. I have heard a lot of people say that successful eCommerce companies require a strong technology orientation and should therefore, be led by a technology team. Although a technology leadership can certainly help, having a strong technology foundation doesn’t obviate the need for traditional factors that make a retail business successful. Customers don’t buy products in an online store just because they love the technology. At the end of the day, it comes down to having the right mix of products, at the right price, coupled with a strong execution and end to end experience that is difficult for other competitors to copy. No doubt that technology can and should play a key role in all above factors. However, one must remember that technology is like a foundation of a house, it is a necessary component, and if poorly designed, it can destroy the house. However, Read the rest of this entry »

Top 10 Blunders in eCommerce Design

Posted by Darpan Munjal On July - 10 - 2007
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So you have built a decent looking eCommerce website, pumped up the marketing spend and you are getting good amount of visitors on the site. However, you are facing a problem that most of the newer online retailers face initially – your conversion rate is extremely low. You are baffled why majority of the visitors are not purchasing anything on the site and you ask your head of marketing to look for the answers. Although having a good marketing plan and execution is necessary in bringing visitors to your site, a lot of times, the answer lies within how your website is designed. Here are the top 10 blunders in eCommerce design that can cause the conversion rate to go south -

 

Blunder #10: No “About Us” page or privacy policy

 

Educated consumers look for certain things on a site they might do business with. Are there privacy polices? Do they have a return or exchange policy? How about shipping costs and timelines, are they posted? Are there any real sounding testimonials and pictures of the warehouse or sellers that let me get an idea that this company is for real, especially when dealing with newer online only retailers? Although it is reasonable to assume that most people don’t read such things as the policies and the like. But the fact that they are there builds confidence in the customer, that yours is a serious business.

 

Blunder #9: Where is the price?

 

Nothing irritates a visitor more than to read all the excellent product description and sales copy, only to read it all and still have to ask the most important question… how much is it ? Read the rest of this entry »

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