By Pupul Dutta
While there have been several downward revisions for the GDP growth of the Indian economy in the past couple of years, there is one segment that seems to be growing by leaps and bounds: the nascent but burgeoning e-commerce space.
The country has been witnessing an e-commerce revolution of sorts, transforming the way people shop, not just in metros but in smaller cities and towns as well. From apparel and electronic items to grocery and luxury goods, almost everything is available and sold online.
According to experts, the 70% year-on-year growth of the roughly $10 billion e-commerce market in India is expected to continue for the next few years. So far, it has been largely dominated by the online travel industry (80% market share), with electronic retail (e-tailing) holding the distant second spot (6.48% market share). Nevertheless, more and more players are entering the e-tailing space and India seems to have just scratched the surface here. Within e-tailing, according to eBay data available online, technology products are the most popular (44%), followed by the lifestyle category (35%).
Express Computer spoke to some of the e-tailers across various categories to find out their technology challenges and how they go about putting together various software tools to run their websites and keep customers happy.
Most e-tailers swear by in-house solutions rather than off-the-shelf products, since the former cater to their needs better and offer more flexibility in terms of customization and scalability.
Says Ankit Khanna, VP – Product at Snapdeal.com, “For large-scale businesses, in-house solutions work best, as there are just too many things involved which a branded or off-the-shelf software can’t handle. Also, with in-house solutions, managing the entire user base becomes much easier.”
Shopclues.com is another e-commerce start-up that uses in-house solutions. According to Founder and CEO Sandeep Aggarwal, “We built our technologies using multiple open-source tools. It was done in-house because we had unique requirements and no off-the-shelf solution seemed to meet them. Also, we are building our business for long-term horizon and with very high level of scale in mind. The biggest advantage of an in-house solution is that it is fully customizable, scalable, familiar, and you can develop technology around the company’s processes.”
On the flip side, an in-house solution turns out to be more expensive, has a longer gestation period, and requires very specialized skills to develop and run.
Some companies are also known to have experimented with off-the-shelf products but later chose to come back to in-house solutions. One such example is Mydala.com, which started off by using Zen Cart, an open-source shopping cart software, but later switched to in-house solutions.
Tools that help companies manage and improve customer loyalty and satisfaction are extremely important for any business. Perhaps even more so for online shopping destinations where there is little face-to-face interaction with customers and a lot depends on how user-friendly the site is and how sophisticated the tools are at the back end.
Here again, most players that EC spoke to prefer in-house solutions. Dinesh Agarwal, Founder and CEO, IndiaMart.com, a B2B website that brings together buyers and suppliers, says, “We do use a CRM application, which is developed in-house. As a business, our aim has always been to be extremely accessible to our customers and there are multiple channels like a toll-free phone line, e-mail, online posting that can be used to reach us. All queries and feedback that we get are centrally received and then directed to the concerned person for efficient resolution. Once the query is resolved from our side, our teams actually get back to the customer to ensure that they are satisfied with the outcome.” All this is only possible with an in-house solution that knows your needs perfectly well, he adds.
There are some who take a blended approach—mixing homegrown solutions with branded packages. “We follow a two-fold approach for CRM. We address customer queries through an in-house solution while for complaint resolution we use SugarCRM, an open source software,” says Ashish Bhatnagar, Co-Founder and CTO, Mydala.com.
As far as loyalty programs are concerned, most online shopping sites use a point-based credit system. Various activities fetch customers bonus points. For example, a referral system that allows users to invite their friends to shop on the website, fetches them additional points that can be redeemed later. Also, online shopping sites gift their customers starting credit and bonus points on birthdays and anniversaries. This not only ensures another transaction on the site, but also assures the company of some new users who would shop to redeem those points.
Analytics: the next step
Dealing with a huge volume of customers and inquiries is not an easy task. That is why e-commerce sites find analytics as a necessary tool to not only understand the shopping pattern but also to bring back popular deals.
“We have a full layer of analytics as part of our technology stack and we have developed 100% of it in-house. Shopclues.com is very obsessive about measurement and hence, it forms a very important technology tool for us,” notes Aggarwal.
Snapdeal.com, on the other hand, uses a combination of in-house solution and an Adobe tool. “We use analytics of two kinds – for web and data. We have to keep track of what happens with the visitor when he or she is visiting the site, so for that (for web) we use Adobe’s Omniture. For data, we prefer our in-house solution,” asserts Khanna.
He further says that with the help of analytics, the company’s various teams are able to meet their KRAs. “It is about tracking their daily matrix or reports using sophisticated algorithms to predict how certain customers would respond in future,” he says.
According to Pranay Chulet, CEO, Quikr.com, “We do use analytic tools to analyze customer behavior. For example, we track visits to our index page. We also track how our customers use the ‘refine your search’ section, and we use chiclets on these pages.” [Editor’s note: Chiclets are (often squarish) icons or logos of social sharing or RSS feed sites]
Despite the best efforts and intentions of the e-tailers, however, not all is hunky dory in the Indian e-commerce space. According to a venture capitalist who has invested in a renowned shopping site but does not wish to be named: “In India, most companies are at a very early stage of technology adoption. Most of them are using standard off-the-shelf tools and have limited horse power in terms of things they are building. More importantly, most e-commerce companies are not thinking about innovations. This is their biggest challenge.”
Another big challenge is on the payments front. Making payments online in an easy, smooth and secure way without too many hassles is considered a major challenge for e-commerce, in addition to the relatively low penetration of credit cards in India. Says Bipin Preet Singh, Founder CEO of Mobikwik.com, an online recharge site, “The whole online ecosystem is still in a nascent stage in India, with no clear focus on how it should evolve.”
According to an estimate, as many as 40% of online transactions initiated on e-commerce sites result in failure—an uncomfortably higher number by any standards. Many start-ups offer cash-on-delivery to tackle the twin problems of low credit card penetration and failed transactions, but that is not a sustainable situation according to most experts.
The challenges do not end here. Once an online shop is up and running (which is relatively easy and cheap to do these days), one of the key technical and logistical problems it faces is that of scaling up to meet growing traffic and fulfillment demands—that can come from any nook and corner of the country for a national e-tailer.
Says Khanna of Snapdeal, “Besides handling ever-increasing rush of customers, we have the task of making all our in-house systems scalable to match up to the growing demand. Secondly, it is very important to change the technology based on the evolving business model.”
That is why it is very important for e-commerce firms to keep a hawk’s eye on their tech infrastructure.
“Regular and periodic monitoring of the infrastructure, keeping in mind the volume projections, helps us move forward,” says Chulet of Quikr.
Lastly, security of the entire infrastructure is another problem that many start-ups tend to ignore. “Business owners generally ignore the importance of authentic software due to budget constraints. They even fail to take the initial steps to secure and protect their online business through installation of authentic protection services like antivirus and firewall protection, which is indeed a crucial step for successful online business players. In India, a number of entrepreneurs use unauthorized software on their servers, which usually does not come with upgraded online security. Such pirated software leaves room for virus, malware and trojan attacks, making it highly risky to process online transactions through their systems,” says the venture capitalist who spoke on condition of anonymity.
The road ahead
The e-commerce industry has been witnessing a boom despite all the challenges it is plagued with. And the future of this industry only looks brighter as more users join the online rush, especially through mobile devices. However, the biggest concern of every company is to sustain their customers as, given the number of websites, the deals are just getting cheaper and more lucrative, making it difficult for the players to do business profitably to retain even their most loyal customers. Already, customers are beginning to compare prices on multiple sites and go for the cheapest options.
In this backdrop, only those e-tailers that use the most advanced tech tools and offer the best customer experience on their sites will remain in business. And, of course, those with very deep pockets.
pupul.dutta@expressindia.com