Home Retail “Offline retail will not collapse in India due to e-commerce boom”

    “Offline retail will not collapse in India due to e-commerce boom”


    Manmohan Agarwal, Brand Owner, Yebhi.com and CEO, Bigshoebazaar, feels blindly copying the successful e-commerce business models from across the globe is no recipe for succeeding in the Indian market; however, what is actually required is understanding the Indian audience and winning their trust. Yebhi.com grew five times in 2011 achieving a revenue of USD 25.4 million (INR 125 crore) in the same year.

    Q. What are the products/categories most suitable for online retail? Which product categories are selling more on Yebhi?

    Well, with e-commerce growing at an alarming rate there is no particular category that can be labelled as a best seller or more popular. For Yebhi, all categories (shoes, apparel, lifestyle, home and kitchen, and lingerie) are doing well. As for the revenue share, shoes and apparel are major contributors as they are the most established, whereas others are fairly novice, both in the industry and on Yebhi.com.

    Q. Cash on delivery option is eating into the margins of e-tailors. Do you agree? Please explain in your context.

    I disagree. Cash on delivery is like any other payment option. It eases the customer, reduces his risk considerably. Besides there is a nominal fee paid to the banks for credit or debit card as well. So why should COD be eating margins of retailers. In our case, it is one of the most preferred methods of payment and rejection (or return) rate is negligible.

    Q. What according to you is the biggest hindrance to India’s e-commerce growth and what can be done to address the same?

    Trust is lacking among people when it comes to shopping online. People have very little understanding of reverse logistics, reverse pick-up, and have an inherent doubt that if they buy something and do not like it, it may not be returned whereas they have that kind of relationship with the local shopkeepers. Besides this there are doubts regarding the size and concerns about the touch and feel factor which is impossible in virtual buying. A relationship of trust needs to be established with people to allow e-commerce to grow in our country.

    Q. With physical stores targeting smaller towns for expansion do you think the online sales coming from small towns are likely to decrease once brands are available there?

    There is a limit to which how many stores can big brands open in small cities and far would the stores penetrate, whereas this can be quite easily achieved through e-retail stores like Yebhi where any brand is only a click away. Yebhi has delivered in more than 11,000 pin codes in the country and is still counting.

    Q. What role does shipping cost play in e-commerce?

    Shipping cost is the most expensive matrix in e-commerce industry right now. There are several major logistics companies that support the e-commerce industry. Due to lack of control and high degree of efficiency expected by the e-commerce industry, most e-commerce players are resorting to develop their own logistics network. This ensures greater control, higher efficiency, allows the brand to establish a relationship with the customer at the point of delivery and in case of any issue, the delivery person can take charge.

    Q. In Australia, suppliers and merchants have been asking online retailers to sell at a certain price. Is this happening in India also?

    Well, in India the retailer is offered the product at a certain rate, he can sell the product at any price between the MRP and the actual price without the interference of the merchants. Due to the absence of real estate cost of brick and mortar stores etc., e-retailers can offer better rates.

    Q. What strategies can help e-commerce players sustain for long?

    It is important to understand the Indian audience better to sustain in India. E-commerce players cannot blindly copy successful business models from across the globe and hope for them to work here as well. Indian audience thinks differently, behaves differently, they are sensitive to different things, offers, etc. Hence, it is of utmost importance to understand the customer, his current need, and evolve keeping in mind his latent need.

    Q. According to you what have been the reasons for consolidation of e-commerce market in India?

    With so many small players sprouting, consolidation is bound to happen in all nascent industries. The e-commerce leaders will acquire the small players creating an oligopoly. See, right now customer is at an advantage allowing them to make price comparisons and go with someone offering it to them at the lowest price but once the industry consolidation starts gaining momentum, major players will freeze the prices and offer a gamut of services to lure the customers. It will allow stabilisation in the industry. But I would like to add that the consolidation of the e-commerce market in India is still budding. It will still take a few good years before this becomes fairly visible.

    Q. What difference will GST implementation make to online retail?

    In my opinion, it is most likely that the product prices will more or less remain the same. Whatever the companies might save post implementation of GST will be utilised in strengthening the logistics and aggressive marketing.

    Q. Do you agree that Facebook e-commerce is the next big thing? Please elaborate.

    It will not only be Facebook shopping, it will take the form of social shopping. People spend a major chunk of their time in a day on social networking site and thus the e-commerce players will have to speak to people through these medium. It allows people to find real-time deals and viral a good deal soon after. They can take people’s opinion on the product they choose or even resort to group buying. I agree it certainly is the next big thing.

    Q. E-commerce has aided high-street collapse in UK. Do you see a similar thing happening in India in the future?

    India is still developing, whereas UK was developed when e-commerce had hit the economy of UK. Retail, both online as well as offline, is booming in our country. Hence, it is impossible to say that offline retail market will collapse due to the onset of e-commerce in our country.

    Q. Please comment on Walmart’s entry into Indian online retail.

    There is still time before Walmart establishes itself in India. They are, no doubt, the price leaders in every country they set foot in and would need to strengthen their back-end to compete with established players in India. The edge we have over them is the understanding of the Indian customers.

    Q. What is the ratio between your sales from metros and smaller towns?

    We get about 40 percent of our business from the top 10 metros and about 60 percent from the rest of the country.

    Q. What is the criteria for listing a brand on Yebhi?

    The main criteria for short-listing a vendor or getting a brand aboard, in order of priority, is quality, attitude, ability of scales, uniqueness of design, and value to customers.

    Q. How many new brands/categories will you be adding this year and which would they be?

    As of now we do have plans for introducing a few categories on the portfolio. We shall reveal it when we are ready to showcase the same.

    Q. Tell us about your marketing and distribution strategy.

    We have a warehouse in Gurgaon spread over 1 lakh sq.ft. It is a fully automated functioning unit which allows us to make the click-to-dispatch time less than two hours which has not yet been achieved in the industry. In Delhi-NCR we have our own delivery network “Yebhi Champs.” We are also planning to open new warehouses by the end of this financial year and also expand our delivery network to many more cities. We intend to take the customer satisfaction to new levels of customer delight.