E-commerce comes of age in India

About 40 minutes. That is all it took for Chinese mobile maker Xiaomi to sell 95,000 Mi3 phones in India through ecommerce site Flipkart in six flash sales, signalling the growing power of online retail in the country. The episode also proves that you can be the biggest retailer in the country or a smartphone maker trying to boost sales, but without a concrete presence in ecommerce, all your plans and strategies may not count for much.

"We will never go the traditional retail route in India," said Manu Jain, India head of Xiaomi. "In a traditional retail channel, the overhead costs get passed onto the consumer."

Ecommerce in India, with its over 250 million internet users and 900 million mobile subscribers, is only going to expand further. Realising this, even traditionally offline retailers such as Aditya Birla-led Madura Garments and Kishore Biyani's Big Bazaar are choosing to enter the online terrain.

"About 30% of our sales come from online sales via sites such as Flipkart and Jabong," said Shibani Mishra, chief of marketing at Indus League, which owns brands such as Scullers, Jealous-21 and Indigo Nation and is part of Biyani's Future Group.

Indus League has started its own e-shops, where users are re-directed to online portal Fashionara for payments. "Relying on Fashionara has helped us save costs in creating our own back-end infrastructure."

Arvind Singhal, chairman of retail advisory firm Technopak, said the move by traditional brick-and-mortar players towards online is a good one. "It makes sense for (traditional) retailers to have their own portals instead of depending upon other marketplaces like Flipkart and Snapdeal as these are already cluttered with multiple brands." He said retailers would do well to follow in the footsteps of US retail chain Macy's and create differentiated merchandise for online and offline.

Online retailing, both direct and through marketplaces, is expected to touch Rs 50,000 crore by 2016, according to ratings agency Crisil.

Gujarat-based Arvind Limited, which markets brands such as Arrow, Lee, Wrangler and Tommy Hilfiger in India, has started its online venture Creyate. The site lets users customise shirts and jeans online. "There is no point in being just another online marketplace where the competition is already so intense," said Tejinder Singh, chief operating officer of Arvind Internet. By next year, Arvind Internet is looking to compete with the likes of Myntra by launching a multi-brand online portal, where it will sell other brands as well.

Experts said such moves could give existing players, such as Flipkart, a run for their money in the coming years.

"The Tatas, Biyanis and Birlas have already made investments of over $2 billion (Rs 12,000 crore) each in retail. They can garner enough cash pile to take over online players such as Flipkart and Amazon," said Harminder Sahani, managing director of retail consultancy Wazir Advisors. The Tatas-led Croma set up its online store CromaRetail.com two years ago. It now earns revenue of Rs 1.5 to Rs 2 crore per week. "We have seen a rise in the number of people ordering big-ticket products such as TV and washing machines online," said Ajit Joshi, managing director and CEO of Infiniti Retail, which runs Croma.

However, many brands are shying away from setting up their own online distribution channels. "Some OEMs (original equipment manufacturers) may not want to set up online stores as it would compete with their distributors. The only draw for consumers to shop on an OEM site is the warranty and services offered," said Rachna Nath, head of retail consulting practice head at PwC.

Some who entered the online segment years ago are reviving their web strategy. Mobile retailer Sangeetha entered the online space eight years ago but re-launched its online platform last year. "The unique value proposition that Sangeetha's online portal shopno47.com is that it delivers in 47 minutes or less," said Subhash Chandra, managing director of Sangeetha Mobile, which has more than 250 outlets across the country. Currently, its website serves only Bangalore, but the retailer has plans to cover all of South India by next year.

But cracking the online market isn't easy. Future Group's online retail venture FutureBazaar, launched in 2007, failed. "We were too early in the market with FutureBazaar back in 2007," said Vivek Biyani, director of Future Group, who is in charge of the digital business.

Ecommerce is also a factor in the offline expansion strategy in India's $518 billion (Rs 31.5 lakh crore) retail sector. Aditya Birla-led Madura Garments, which owns brands such as Louis Philippe and Van Heusen, has launched TrendIn, an ecommerce portal that supplies across India. Even small traders are now ordering on this channel.

"The online channel is a big source of data collection. We learn great insights to what products are working in which geographies," said Shivanandan Pare, head of ecommerce at Madura Fashion & Lifestyle. "This helps us in our offline expansion."

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