August 03, 2011

 

I don't care about e-commerce bubble in India

Here is my bullet-point take on the discussion on E-commerce bubble in India.
  • My earliest online shopping experience is from 2003. I had ordered a dozen music CDs from EBay. Broken CDs were shipped (or they got damaged during shipping.) I returned the CDs but never got the replacement. Multiple mails were ignored by seller and EBay. My trust in online shopping dropped below zero. My experiment of shopping online met an early death.
  • In last 6 years, I have booked train tickets only via IRCTC. Only once I went to the actual ticket counter when repeated attempts to book tickets for a group failed on IRCTC (blocking close to Rs 10,000 in the process) and those tickets had to be booked urgently.
  • In last 3 years, I have booked movie tickets on BookMyShow. If I can't book tickets online, I don't watch the film.
  • After hearing ample praise about Flipkart and Infibeam, I restarted shopping online at the beginning of 2010 with them. As you can see, I am not an early adopter in strictest sense.
  • In last 18 months, I have bought dozens of books, movie DVDs, phones, printer, laptop bag, laptop cooling pad, portable hard disk and headphones from variety of online stores (Flipkart, Infibeam, IndiaPlaza, Ebay, and more recently LetsBuy.) Collectively I have spent more than Rs 40,000 on these purchases. Every single item has been arrived in excellent condition. My skepticism about getting the delicate printer (actually, print-scan-copy machine) shipped in good condition were shattered when wonderful folks at LetsBuy packed it nicely and sent with BlueDart.
  • I am not counting ordering Dell laptop on phone as online shopping. The amount of running around required to get a laptop from them is a story of another post.
  • Point is, my shopping habits have changed irrevocably in the same way IRCTC and BookMyShow changed the ticketing habit.
  • Excellent discounts, free shipping and cash on delivery are some really strong USPs with which Indian e-commerce services are attracting new customers. While the companies themselves might be losing money to offer these features, they are changing the consumer behaviour in a big way.
  • I wouldn't be surprised if consumers check the products like phone in a offline store and check the best deal available online before making purchase decision. From my limited experience, as of now, the prices of phones from online stores are not matched by the electronic store in the neighbourhood.
  • There are going to be companies who will capitalize on this new behaviour. Even though, the current online audience is estimated at 100 million, these are among the people who have disproportionate purchasing power. The opportunity is quite clear.
  • Now, all players may not have/get the required capital, execution skills or plain luck to be a long term player. A few players who do deliver and tide over the obstacles will own the market. The investors are probably betting that their investment is going to be the one that will turn out to be among the eventual winners.
  • Frankly, as a consumer, I don't really care if a company gets valued at 1 billion dollar or 3. If some companies get affected when the so-called bubble bursts, I will simply switch to the surviving player. In the worst case, I can go back to shopping the way I used to before 2010, though chances of that happening seem low. And, unless you have material interest in survival of specific companies, neither should you worry about the bubble talk.
  • Rephrasing the same, some specific companies may or may not survive in the long run, but online shopping as an industry is here to stay.
  • Well, I lied about the subject. I do care about success of e-commerce companies. I want them to succeed in a big way. Arguably, this is the biggest opportunity that Indian internet industry has seen till now and many startups are well-placed to ride this wave. A few big success stories will put the startup ecosystem in a new orbit.

2
Comments:
One good side effect of online retail expanding is offline retail comes to its senses. Those who can't justify their existence have to shut shop (Borders). We need this in India as it will help us burst another bubble -- real estate. Commercial/retail rentals are unnecessarily high and they need to drop. For that we need retail space demand to drop.
 
Anonymous,

Though, online shopping will continue to grow, I have reservations about it affecting the offline retail seriously, in next 5 years or so.
 
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