Sessions![Image2.gif (2598 bytes)](Image2.gif)
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.
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