Sessions

The second session  then continued with a talk on Business to Retail Model by Ajit Balakrishnan, CEO, Rediff-on-the-Net

Retailing on the web in India takes on a different dimension. In the US for example, retailing as a concept was in vogue for over thirty years before the Internet came in. Then retailing made a transition to the net from the 'real' mode as it was happening. In India, on the contrary, there was no real retail movement worth mentioning and, instead, retailing is showing signs of leapfrogging several stages directly on to retailing on the net.

This means that there are no real models to try and port on to the net in terms of retailing and all experiences are almost first time. Nonetheless it might be worth while to consider a few models based on experiences abroad because a few commonalties exist - the net helps segmentation and  lowers carrying, delivery and production costs.

The Goldman Sachs internet index, developed by Goldman Sachs, spells out a few factors that are relevant to retailing on the net.

• A powerful brand helps create its own pull on the net. (This was further reiterated by Rajiv Nair, President, Microsoft (India), while speaking to domain-B. He feels that E-commerce is bound to succeed and it is only a matter of time before it does. branding will also be a by-product of e-commerce, even for commodities. And for this he quoted the interesting example of two brothers in the US who sell lobsters on the net at LobsterNet.com).
• The seller should have direct fulfilment capability of the customer requirements.
• Content creation
• Access to business sustaining capital. The businessman needs deep pockets to survive in this business since business will come only with volumes and volumes are not likely to come with such small numbers in PC users and internet users. Interestingly, Rediff has found that the average surfer buys only 2-3 times annually on the net. This means that the site needs to get enough customers to keep it in action round the year.
• In e-commerce there is a lot of advantage by being the first off the block since the first one always gets noticed and advertisers and customers tend to reach for them more.
• In this context there is limited online competition, atleast in the initial stages.

Online database that will maintain customer profiles and shopping habits so that contents and offerings can be made suitable for the customer will add value to online retailing. Besides, breakeven will come some way down the line for the retailer. But a good equity capital base can be a sustaining factor, as is the case with amazon.com that is still in the red but is hot in the capital markets.

In the Indian context, the inhibiting factors for e-commerce are the low PC user base, the telecom infrastructure, the low Internet population and lack of support for e-commerce through appropriate legislation. Contrary to popular belief, Rediff's experience bears out the fact that security is not a major issue for inhibiting e-commerce.

Only 40 per cent of online customers have credit cards while only about 50 per cent of online transactions are done through cards. Besides, the major customer group, women, hold a lesser share of the cards and unless there is a major boom in credit cards, much of the online business will happen as it does now, VPP or courier delivery against payment. Another limiting factor would be the high service charge of about 4 per cent on card purchases even though the average spending now is about Rs. 800-1000 per year. In the area of security the secure electronic transaction might turn out to be a failure while secure socket layer (SSL) would be the solution to the security problem on the net, given that the encryption standard allowed by governments vary.

The last speaker for the session was Shriram Adukoorie, consumer and commerce group, Microsoft Corporation who spoke on trends in e-commerce.

E-commerce has been a unifying factor for global businesses. The only advantages they carry is globally competitive standards, without respecting size or the financial clout. In fact, small and medium businesses have the advantage of speed when it comes to responding to business situations on the net.

On another front, e-commerce takes technology to a different plane more than what enterprise computing did with ERP, supply chain management or customer relationship management.

E-commerce has helped organisations reach the customer faster without any intermediaries. Dell, the PC maker, does daily business of more than $10 million on the net.

E-commerce helps reach customers directly and focus on the strengths of the business. The infrastructure going into e-commerce helps focus on specific customer groups, products and markets which can be analysed.

Although e-commerce can be compared to EDI (Electronic data interchange) the latter is more expensive and takes longer to implement. The only advantage of EDI is that it helps integrate with the supplier easier, due to standardisation of systems - and this alone is not enough for it to be preferred over e-commerce.

For the companies that are starting to move towards e-commerce the initial effort would be to integrate web applications with legacy systems. Such a trend would be seen in the initial years.