What is the size of the Indian bricks-and-mortar retail industry? How much retail trade takes place online in India?
The size of the Indian bricks-and-mortar retail industry is about Rs 5,88,000 crore. Of this, just about Rs 5,000 crore worth of business is organised. B2C e-commerce or e-tailing is estimated at about Rs 12 crore. In percentage terms, e-tailing is a mere 0.3 per cent of the total retailing business in India. Where would online retailing be in the next five years? Which countries boast of a high degree of online retailing?

Online retailing should be somewhere between Rs 500 crore and Rs 1,500 crore in the next five years. As e-commerce is a function of Internet penetration, online retailing will be extensive in countries where Internet penetration is high. That means the Scandinavian countries, the USA and Japan.

What are the benefits of online retailing over traditional retailing? Are there any disadvantages?
Internet is a superior alternative. In India, it will be a mixture of e-tailing and retailing that will work. With the passage of time, companies will have to address more than one way to reach the consumers. An e-tailer would like to strip out costs in the supply chain. A website for a company is certainly an add-on. It is yet another way for a company to reach its consumers.

What do you save through online retailing?
An online retailer’s savings can come from these: having no physical retail establishment to store and display products and lower inventory. Multiple stores may have to stock identical merchandise which might not sell equally well in all stores and end up being dead stock in some locations.

In which sectors online retailing will succeed?
According to the KSA annual consumer outlook, the consumers are more comfortable buying certain items. An illustrative list with a percentage of the consumers are: books and music 47 per cent, home furnishing 29 per cent, sports apparel 25 per cent, casual clothes 21 per cent, shoes 14 per cent, groceries 9 per cent and tailored clothes 9 per cent.

What is the most important aspect to be taken care of in Internet retailing?
As important as logistics is customisation. In the end, a successful e-tail strategy will be the one that has five elements: a strong brand, an integrated multichannel strategy, an emphasis on selling complementary products, an efficient distribution system and a process for leveraging consumer insights.

Indians are reluctant to use credit cards on the web. So, what are the payment modes you recommend for online retailing?
In USA, penetration of credit cards is much higher and people use them more frequently. In goods such as apparels, retail gross margin is as high as 65 per cent, whereas in India it could be somewhere between 35 and 40 per cent. This margin is enough to take care of credit card costs among other things. In FMCG, the margins are even lower at 10 per cent or still lower in India. Hence, e-tailing might not catch on so fast in India.

It is extremely important for a consumer to be comfortable before using a credit card at the website. They are a convenient way of paying online. In fact, they are one of the best ways of paying online. However, there are certain security aspects which are a cause for concern. Hence e-tailers would have to look at an alternative form of e-cash. Currently, lack of technology is preventing this from really happening.

How important is content for an Internet retailer?
That is more a function of the business model that the retailer chooses. In general, the Internet is about choice and the customer will be more comfortable with a retailer who provides information to enable an informed decision. Related content will always make an additional impact and at the same time will provide additional hooks. This is to be netted off against the cost of creating and maintaining the content.

What infrastructure an e-tailer must take care of?
The infrastructure that an e-tailer must take care of should have the following elements: One, customer service. An e-tailer must be able to handle individual and rapid responses, whether it is in taking orders or handling queries, problems and returns.

Two, logistics. Unlike a traditional retailer, where a customer walks into the store and picks up the merchandise, an e-tailer has to reach the product to the individual customer’s doorstep. In e-tailing, a shipment is possibly of a single item, to an individual customer. Hundred per cent accuracy is a must in this case. Keeping per-unit distribution costs down is also an important issue. You have also to ensure that the package reaches the customer’s doorstep when he is available to take delivery. Then consider returns, exactly a reverse process, which has similar challenges.

Three, conversion. If the customer does not find exactly what he is looking for, the system must suggest alternatives so that the customer is not lost.