Market Expansion Strategies for Online Retail in India

April 26, 2018

Golden Papers

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In principle, quality can be assured, the costs are lower, there is consumer convenience of access, and distribution can be wider than normal retail channels. The key underlying reasons behind electronic retailing are: consumer time poverty, consumers wanting to have more control over time and place of transaction, the technology convergence allowing change to take place and growing experience of the benefits of the medium. The different categories of this major growth area fall into two distinct system ‘passive or interactive: Passive Systems. These are non-interactive one-way media, where the retailer can decide upon the content and timing of messages. They include all forms of one-way communication media such as shopping pages, or clubs on television, or one-way cable systems. The success of the Quality Value Convenience Network (QVC), using such an approach, is discussed below. This form of selling includes video catalogues or electronic media which demonstrate the product in use or provide further information. 2 Interactive Systems.

This type of electronic retailing allows for two-way interaction and includes the Internet or promotional touch-screen booths and kiosks for items such as airline or holiday bookings. Some systems can demonstrate the product in use and, in the case of touch-screens, give printouts or allow further enquiries from the database. A feature of both systems is that a credit card can, be used in order to secure the sale. The retailers that undertake electronic commerce can be classified in three main ways. 1 Virtual retailers: these have no shops or stores or physical presence in the high street, malls or out-of-town locations.

They trade exclusively on the Internet or on television and have to find new ways of attracting custom and serving consumer needs. Examples of these are Amazon. com and lastminute. com. 2 Two-channel retailers: these are established ‘retailers with stores that have developed an electronic retailing capability as a major or minor aspect of their business. Tesco can be regarded as a two-channel retailer. 3 Multi-channel retailers: these are established retailers which service customer needs in a number of ways, including shops, telephone ordering, the Internet, catalogues, and TV.

Examples would include Little woods and Boots UK and Ireland. As well as 1400 UK’ stores, Boots has mother-and-baby catalogues, the Wellbeing digital TV channel — although its introduction has been postponed — and transactional and information websites, handbag. com as well as wellbeing. com. Although many observers originally felt that electronic retailing would be dominated by new virtual retailers, it now seems likely that the c-commerce market will be made up of all three categories of retailer.

E-retailing, most commonly known as e-tailing is nothing but shopping through the Internet and other media forms. There are many things that are common between direct retail stores and online retail stores. Both have the process of billing of the customers and have to maintain a relationship with the suppliers. Bottlenecks Faced By Online Retailing in India Problems with the Payment System People in India are not used to the online shopping system and moreover the online payment system through the credit card is also totally alien to them.

Most of them do not avail of the transaction facilities offered by the credit cards. They are also dubious regarding the online payment system through the credit cards. Hence different payment options should be made available to them like the credit card, cash on delivery and net banking to give them further assurance. Problems with Shipping The customers using the online shopping channel should be assured that the products that they have ordered would reach them in due time. For this the retail companies have resorted to private guaranteed courier services as compared to postal services.

Offline presence The customers should be assured that the online retailers are not only available online but offline as well. This gives them the psychological comfort that these companies can be relied upon. Products offered at discounted rates The online retailers save on the cost of building and employee salaries. Some part of this benefit should also be enjoyed by the online customers by a reduction in the price of the product. The customers should be conveyed this message that they are getting the products at a discounted price. Language Problem

Most internet retail shops use English as their mode of communication. English may not be comprehensible to the majority of the Indian population . To increase the customer base, content in the online retail shops should be provided in local language. Another reason why the concept of e- retailing or online retailing has not gained prominence in India is that the Indians prefer to touch the products physically before buying them. This facility is provided through the multi-brand outlets, not available online. Studies have revealed the preferences of the customers towards the traditional shopping methods.

Hence the retailer online should first make it a point to spot the potential customers and accordingly plan out the product. If the customers are more open to online shopping, then nothing can be more beneficial. They save the time and effort to visit, departmental stores, shopping malls, etc. products can be delivered by a click of the mouse. Another problem is that the retail industry is standing on its point of inflexion and considering its infant stage, it would take time for the new concept of e-retailing to take off. Some online retailing sites in India E Bay is heading the race of online retailers.

In this race it has become very difficult to determine the online retail store that makes the products available at convenient and cheap rates. From this very difficulty has cropped up comparison sites. Comparison is done on the basis of an index which is constructed from the data available from different shopping sites. The bechna. com and the ultop. com are such sites though many more sites are entering this zone. The comparison sites not only help to choose the online sites that would be providing the best deal but also offline as well. Sites like Rediffproductsearch, Compare India. om have constructed the data that is taken from the conventional local retai;ers. These sites help the customer in finding out the local retail store that will best suit his purpose. There are divergent views on the future of e-retailing in India. Some experts are of the opinion that the giant, big brand retailers would dominate the small ones due to their wider investment capacities. It would be next to impossible for the small retailers and the kiranas to prove their existence in the battlefield of online retailing. Another viewpoint is that there would be an exponential growth in the online retailing business in India.

Home shopping through direct mail, agency catalogues, and direct response advertising already accounts for a significant proportion of spending by European consumers. New technology will add greater variety to the routes that already exist. However, many innovative IT home shopping systems have failed because they were not based on what customers needed but on what the technology could provide. This is surprising as most surveys of customers show that although they dislike routine shopping for commodities this does not mean they welcome technologically enabled retailing.

In practice, service levels are poor, with considerable amounts of time spent staring at unchanging computer screens; lead times are much longer than popping into a shop on the way home; and there are abiding concerns about security. One clear trend that is successful is the growth of the home shopping networks, especially in the USA. These are based upon the use of scudio demonstrations of products while a telephone s’lesforce stands by to receive orders. As the number of calls diminishes, the network operator is able to demonstrate a new product.

The system is therefore characterized by instant feedback on what items are popular and should remain on screen for longer periods or those that should be replaced. In addition, the overheads are low as there is only the need for warehouse storage, a telephone sales force and the rent of studio time. In the USA, a number of retailers offer televised home shopping. They include JC Penney Shopping Network, Home Shopping Network, QVC Network, Cable Value Network and Sky Merchant. The USA television retailing marketplace is segmented by product, brand and price.

The cable and home shopping networks are targeting the lower end of the market whereas QVC offers well-known national brands. The different networks are able to offer easy payment plans because they own company credit facilities and use promotional techniques such as direct mail coupons. The means of response is by telephone. TV-based retailing (for example, home shopping programmers such as QVC in Britain and Germany, and the extended TV advertising called infomercials) has proved extremely successful compared to the comparatively slow growth of retail sales on the Internet.

The British retailers Boots (pharmacy) and Sainsbury’s (food) have set up home shopping channels on pay-TV designed to provide information about health/wellbeing and good food respectively, although the Sainsbury’s channel was closed down in 2001. Many commentators believe that the introduction of digital TV in several European countries will enable shoppers to use their TV to buy goods on the Internet rather than by using a PC. The telephone/cable company NTL has 900 000 customers in Britain able to log on to any Internet website while watching digital/interactive TV.

However, in 2001 only 15. 9 per cent of digital TV viewers used their television sets to go online, while those that did so were rather more interested in entertainment, leisure, computer games and electronic gambling than in shopping online, although this may change? Retailing via digital television may be slow, to build a critical mass, but it is eventually likely to become a formidable Sector in its own right. Interactive systems — the Internet The Internet is an open worldwide computer network, linking together by fast data communication countless thn’!

Sands of computers owned by government, education, commercial and other organizations. No one actually owns it. The Internet is a set of protocols governing how data is presented by individuals and organizations wishing to provide information to others. Within the Internet, the World Wide Web (WWW) is a collection of linked documents or pages that span the Internet. They are accessed from the user’s own PC or computer terminal by what are called Web browsers, which are software products enabling the user to load and view a document relatively quickly or switch to other related documents.

Most large retailers of any size and many small retailers now have their own website, including Tesco, Iceland, Virgin, the Boots Group, Comet, Arcadia, HMV, and Gratton. Once established, the website allows a-retailer to conduct a targeted business 24 hours a day, 365 days in the year, with a potential worldwide audience. The Web is available and open to anyone with an Internet connection, irrespective of geography, time zone, or computer system. This makes the offer of retail products more accessible to the new global marketplace.

A small retailer with a new business idea can, in principle, use the Internet to access millions of customers in the same way as an international retailer. The technology also allows sophisticated digital images, video and sound. ‘Electronic brochures’ could include ‘three-dimensional’ aspects of the product that the potential customer could explore continuously. Example: Small retailers. Some smaller retailers are able to use the Internet to give themselves a national or international market.

Mike Maloney, butcher and sausage maker in the small -town of Mansfield, Nottinghamshire, now derives 35 per cent of his turnover from national sales over the. Internet of his award-winning sausages. Ron Higgins in Slapton, Devon, has set up the successful Slapton Village website to promote tourism and book accommodation, thereby encouraging additional turnover for his convenience store (the only shop remaining in the village). Mike Maloney www. emnet. co. uklMike-Maloney Ron Higgins www. slapton. org