Last half a decade in India has seen the emergence of a number of e-retail websites who have with much gusto and fanfare tried to establish their presence among the buyers in India. Indeed, these e-retail sites are now peddling anything from a baby diaper to a computer to expensive jewelry to designer clothes. While the industry of e-retail has seen a variety in the kind of items being sold, it has also simultaneously witnessed equally varied business models.
While on one end of the spectrum, we have http://www.flipkart.com that functions like a supermarket, only online, and on the other end we have http://www.olx.com that facilitates consumers to buy and sell stuff among themselves. Somewhere in between we have sites like http://www.ebay.in that connect buyers to sellers but don't take any responsibility of delivery, nor have any control over what products sell in which categories.
But one thing is common across all the e-retail websites. It is their failure in getting customers to use their websites to purchase items.
An argument often given is that e-retail space is extensively commodified and that customers usually don’t differentiate one site from another. The result is that customer loyalty for a specific e-retail website is very low. As a consequence, each e-retail website now invests a large amount in marketing itself so that their brands enjoy a greater recall among customers.
However, the benefits of such heavy investments into marketing haven’t been forthcoming. The customer base hasn’t equally risen with investments in marketing. As a result, most of the e-retail companies are incurring heavy losses.
It is not as if there isn’t a significant population of India that has access to the Internet. It is not that the population that is online is averse to spending money either. Typically, internet penetration is greater among the more affluent classes than in the lower socio-economic groups. Yet, a general lack of online purchase activity persists.
The problem, in my opinion, doesn’t lie with the Internet medium or with the e-retail vendors, or with the customer base etc. either. It lies elsewhere in a completely different socio-cultural dimension.
There exists a general deficit of trust in India, especially in financial transactions. We don’t trust our business partners to deliver on their commitments. Similarly, we don’t trust our shopkeepers to deliver honestly on their promises. We believe that when given a choice our shopkeepers would rather stick us an inferior product or an incomplete order.
That legal recourse is long-winded and often people-unfriendly only increases the risk that buyers face.
That’s why we don’t even home-order vegetables and fruits. We are sure the vendor will pack some inferior quality products and sell to us if we don’t do a due diligence on the items before paying for them.
It is this deficit of trust that plays a big role in defining the behavior of Indian customers online.
The Internet is a vast unknown space and the identity of the persons on the Internet is not always visible to everyone. The passive nature of interaction over the Internet makes it easier for pranksters, fraudsters, and criminals to misrepresent their identities and take advantage of gullible people.
Under these circumstances, an average Indian buyer feels very uncomfortable with the idea of giving away money for a thing that she has not inspected or palpated to someone she has not seen, met, or spoken to.
Not that an average Indian likes to even consider the possibility of taking a legal recourse in case of a dispute. Courts and judiciary are perceived with much dread and suspicion.
Therefore, the Indian customer chooses to avoid transacting over the Internet altogether.
Some of the e-retail websites have identified this problem and their communication has already started assuaging these concerns of their customers. For example, most e-retail companies are already offering ‘Cash-on-delivery’ payment options, money-back guarantees, and free replacements.
Are these steps sufficient to wipe out the trust deficit? Only time will tell.
Until then effort must remain towards winning the trust of the customers relentlessly and ensuring that under no circumstances the trust gets eroded. Only then would Indian e-retail companies will see a boost in their growth.
