Connecting between offline and online retail has become the buzzword in the digital domain through 2010, and recently, the big news of the day was when American local coupon seller Groupon turned down an offer of (reportedly) $6 billion from Google.
In India, there are dozens of new startups that have set up operations in the last one year, and most of them have completely copied the model from Groupon, some going as far as to copy the FAQs from the website completely without change.
In this me-too market, however, there are a few key players who are making an impact, and creating a new category for online retail, which in India is still dominated almost entirely by the booking of railway tickets through irctc.com.
According to experts, the online retail sector in India is still less than 0.1 per cent of the retail market in India. Amarinder Dhaliwal, Vice President & Business Head – Auto (Zigwheels.com) & eCommerce (Indiatimes Shopping), Times Internet Ltd, said that there was great scope for growth. “Traditionally, selling has been based around search, but today, in the US, around 25 per cent of buyers come from social networks, and 41 per cent use their mobiles as part of the buying process,” he noted.
Working in India
A new entrant in the field is Dealivore. They had set up operations in Hyderabad in January 2010, and expanded to Bangalore and Chennai, and have recently set up operations in Delhi and Pune as well. According to Managing Director Satish Madhira, what made them different from the competition was how they took into account the unique conditions of working in India.
This approach seems to be working for the company. Through only word of mouth growth via their Facebook page, the company had grown to over 2.5 lakh fans, and according to Madhira, 1-2 per cent of these fans shared deals on their Facebook profiles every single day.
Madhira further said, “There are two big differences in working in India. The first is that the system of coupons is not one which already existed here. In the states, you pick up your Sunday paper, and there will be a stack of coupons next to it offering deals, and people actively look for this. Here, the only people regularly doing things like that were fast food retailers like McDonald’s and Dominos. So internationally, you click on the deal, and once a minimum number of people are on board, the deal goes through. Here, we don’t want to make people wait for the deal. So, we guarantee the number of customers to the merchant partner and give the deal as soon as you click.”
Browse online, buy offline
The other big issue, according to Madhira, was that people were happy to browse online, but wanted to buy offline. He said, “We offer features like offline delivery of the discount coupons, and local customer support phone lines. Personalised service works in India, unlike in America, where the model is around self service. Less than a year since we began, 25-30 per cent of our business is now offline, over the phone. There is a greater element of trust when talking to a person, and so you might check out the deal online, but complete the deal offline.”
Trust is a key issue in the sector right now, a view shared by Snapdeal Head Kunal Bahl. Speaking at a conference in Delhi earlier this week, Bahl said, “When we sell discount vouchers, we are not selling a physical product. We are selling trust in our service. The most important thing for us to do is to ensure a good experience for our users, to encourage the sector as a whole.”
Agreeing with this, Madhira said that he was not worried about competitors doing more business, but rather was actually worried about competition that did bad business. “There was no existing market for coupons in India, so the whole sector is so new that as long as people do good work, all of us will continue to grow. What really worries me is when I see people who are out to make a quick buck, to beat the system instead of working with it, because they often make promises that they cannot keep, and this makes the customer think twice about the whole sector. That, more than competition, is something to worry about.”
He was, however, excited about next year’s prospects, pointing out that they had over 250 merchant partners now offering daily deals, many of whom were repeat customers, and felt that the improvement of Internet penetration and the introduction of 3G might massively grow the sector.