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“Proliferation of e-commerce sites can be attributed to the growth of smart phones and tablets”

Madhusudan Murthy, SapientNitro

The Indian eCommerce industry is in version 2.0. Unlike the last time around, this time there is more buzz, acceptance and demand, which augurs well for the merchants with shops online. Madhusudan Narayana Murthy, Director, SapientNitro spoke to DMA about the eCommerce phenomenon taking place in India, and how it is affecting the online payment segment.

How is the eCommerce industry taking off in India?

The Indian eCommerce industry is in its intermediate stage. It all started before the dot com (late 1999’s & early 2000’s) where the industry saw a good number of players thrive. There were early players like Bazee.com, indiatimes shopping, rediff shopping. However with the worldwide dot com bust, a number of players closed down. Of late (post 2008 timeframe), we’ve seen a rise of the industry again, with a number of eCommerce start-ups such as FlipKart, as well as international big players such as Amazon entering the India market. The second phase in India seems to have gained a lot more traction with a number of PE players entering the market and a lot of media spends by eCommerce players which include TV ad spends, online marketing and digital media. The industry may see some market consolidation in the coming months, but this time around the eCommerce growth is seen as exciting and stable.

Why is there a sudden spurt of eCommerce sites here? And do you expect them to be successful seeing the buying behaviour amongst Indian consumers?

Today, one of the key changes in consumer behavior has been the keenness to compare products and features between different brands. The convenience of sitting at home and comparing prices, features and products is compelling. Hence all of this occurs online. Online stores now offer that wealth of information and consumers have slowly started depending on those conveniences to make their purchase decisions and then based on price advantage place orders online. Hence the surge of e-commerce.

Secondly, proliferation of e-commerce sites can somewhat be attributed to the growth of smart phones and tablets. The data plans that are offered are inexpensive and enable the users to browse the net at an affordable rate. Traditional internet penetration is about 41 million DSL lines which is low as compared to the Indian population. However with smart phones & cheap tablets entering the Indian market, online access is simplified, where users don’t need to subscribe to fixed services, but can instead use the Pay-&-Go options available. By 2015, smart devices are projected to increase to 26 million which is around the same size as the market in the US. Hence the advent of smart devices at low costs and internet access are major contributors to the eCommerce industry.

With eCommerce emerging as shopping option, how is the online payment option evolving with this?

India & Asia in general have a popular payment mode – Cash on Delivery, an option which has been quite a rage. The buyer need not pay until the delivery is made at home, post which he also has an option to return the goods within 30 days. Along with the CoD option, traditional credit card, debit card, bank account payments have also been supported. The new option that has seen some traction is the equated monthly installment payment method that allows the user to make part payments instead of paying in full.

Are Indian consumers open to cashless transactions when they have been so used to handling paper money all this while?

Indian consumers are quite adept at cashless transactions since one of the safe payment modes adopted early has been payment via bank accounts. There have been a number of players front ending such transactions & have established the consumer confidence including players like CCAvenue, BillDesk etc.

The government has introduced cashless services. The Reserve Bank of India which is the central regulatory authority in India has stepped in to introduce cash-less service. The RBI has prepared a road map to provide card swipe machines to more than one crore retail businesses in the next three years to promote electronic transactions for ushering in a less-cash society in the country.

What are the payment options available to the users today?

Many payment options are available today including traditional credit, debit and charge cards, Gift Card handling, Coupons/Discounts, Invoice/Bill Me Later options but also new technologies such as  e-cash, mobile payments, Cash on Delivery, Equated monthly payments, mCommerce enabled payments, Payments via mobile service providers.

What is the future of Google Wallet, and mobile payment? What makes them attractive to consumers?

Google Wallet has been launched in the US market where some retailers have introduced a device that is able to accept Google Wallet payments. The popularity has to be gauged on how successful this is and the adoption by customers. As indicated above, mobile payments are the future mode of payments since this offers convenience to customers. It is possible that the future mode of payment is cashless and card less thanks to mobile payments.

What is the potential of these? Also are the marketers themselves ready for online payment?

The future potential of mobile payments is quite exciting as it intends to make the transactions cash-less & card-less. This provides convenience to the customers of not having to carry too much cash or cards but allows the security of monitoring the transactions in the real-time. Marketers in India are now slowly joining the online commerce bandwagon. Of late, since 2008 onwards we see Retailers including Future Bazaar, Shoppers Stop, Landmark etc launching their online Commerce initiatives. Slowly the trend is catching up, however the market hasn’t quite matured yet. There are distinct advantages of providing payment flexibility to their consumers and marketers have recognized this. The trend is to offer basic payment services & slowly expand the offering to include newer payment flexibilities to attract consumers.