A Perspective: Why Indians do not buy online

Having worked at Amazon, we know that a bad winter or simply a snow-storm will mean “bonus” sales during Christmas as against a mild Winter.

[Editorial notes: Guest article by Ashish Mehta, Cofounder & CEO of Sokrati. Ashish Mehta shares his insights/reactions to a recent article Why Indians do not buy online, which was written by Kunal Shah of Freecharge]

I think the inference drawn in the article seems a bit myopic since the topic / issue is way too large to have only one reason – that Indians are handicapped without assistance. I do not believe that’s true.

Repairing (Ecommerce) cannot be canceled
Repairing (Ecommerce) cannot be canceled

While ‘per capita non-travel ecommerce spends’ (measured only amongst the broadband users) spends on Ecommerce is increasing manifolds as compared to the US (in terms of percentage increase YoY), it still remains very low in absolute terms. Having worked with several ecommerce players in India, we know the daily transaction volumes range anywhere between 400 orders for a very niche site to over 10,000 orders a day for larger sites. That’s not insignificant J given that the Ecommerce scene in India has developed only over last 2 years.

However, a more relevant topic could be “Why Indians do not buy Online ‘that much’ as their US Counterparts” and there are many reasons. Some of them, as per my opinion are as below:

a) Check-out process: While US has 1 click check-outs, in India its at least 5 additional hops (and that too on non-brand site) before a confirmation arrives; and the user is forced to go through myriads of confirmations and reconfirmations before the transaction is successful. We see significant amount of drop-offs at this stage – about 40% compared to about 10% – 15% in the US. The numbers would have gone up by at least 25% right here if things were better.

b) User Experience & Analytics: E-Comm companies in India are still figuring out the analytics (and there’s a very long way to go here) and how to optimize the site lay outs, the search results, pricing strategy (compared to the inventory levels), homepage inventory management, etc.; while significant dollars go in R&D in the US around providing the best user experience & maximizing the yield of every pixel on the homepage or internal pages.

c) Convenience – It’s extremely easy to find & buy most of the items within a 1 mile radius in India while most things in the US is on an average 15 miles away. Add to that the extremities in weather. Case-in-point – Having worked at Amazon, we know that a bad winter or simply a snow-storm will mean “bonus” sales during Christmas as against a mild Winter.

d) Price sensitivity & Haggling behavior – We’ve seen and personally experienced how folks do check prices for say electronics gadgets online and go to their local Croma store and bargain with the person to match that price. Surprisingly enough, the local stores do oblige and the user simply buys the item offline.

Consider bargaining with the lady at the counter in Wal-Mart by showing the price difference on Amazon.com 🙂

e) Inventory – There’s also a heavy focus on stocking only the popular products and discounting them to drive sales; but there’s still a long way for off-beat categories like printers, home theaters, computer peripherals, baby products, etc to develop the depth needed.

e) Digital Goods – This also form a significant part of US Ecommerce (non-travel) industry – which in India is marred with piracy across the board.

f) And there are several other factors like below that would further account for the disparity –

– Credit Card penetration

– Broadband penetration (non cyber-cafe traffic)

– Infrastructure issues (Many players still don’t ship to tier 3+ cities yet)

g) Finally, Assistance: We at Sokrati infact believe that the assistance could really help enhance Ecommerce. In the US you have significant amount of user reviews & comments which is nothing but assisting the user to make a decision. In void of the richness of user reviews, the Indian user relies on the local sales rep to figure if it would really be a good buy.

What are your thoughts?

» Ecommerce plus: Read Pluggd.in’s coverage of ecommerce segment.

[Notes from Pi team: If you want to share your insights vis-à-vis customer behaviour/sales, do connect with us : team@NextBigWhat.com]

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