Internet Retailing

The rise of the Internet has led to some phenomenal changes in the way business is conducted in various industries. In retail it has opened up a new avenue for retailers to reach out to customers and suppliers in markets where they do not have a physical presence. It has presented opportunities for deepening customers relations, streamlining operations cutting costs and discovering new sources of revenue.

In the more mature retail markets of the world the websites of most of the retailers enable business to be conducted online. The reason for the emergence of e-retail as viable source of business stems from the fact that it can offer a larger basket to the consumer. For example, the largest brick and mortar book store chain Barnes and Noble offers 20,000 books at any point of time. on the other hand offers 4 million books. It is also one of the few businesses that allow the consumer to shop at any time and day as suited to him. He can shop 365 days a year, 24 hours a day and 7 days a week. Electronic retailing may also be looked upon as a case of reverse marketing where the consumers seek our products.

According to the Data monitor, Global Internet Retail report, the global Internet retail sector grew by 28.1% in 2004 to reach a value of $ 544.6 billion, representing a compound annual growth rate (CAGR) of 46.3% over the 2000-2004 periods. The same report forecasts this market in 2009; the global internet retail sector is forecast to have a value of $1130.6 billion, an increase of 107.6% since 2004.

Drugs and health & beauty aids form the largest segment of the Internet retail sector, yielding total revenues of $ 127.8 billion, representing 23.5% of global sales. In terms of value, Europe generates 44.4% of the global internet retail sector. Amazon generates the largest revenues within the global Internet retail sector and accounts for 1.3% of the global value.

The Scene in India

The e-commerce market in India saw frenzied activity a few years ago, with just about everybody getting into the act. However, after the dot com bust, the Business to commerce (B2C) market in India is now showing signs of revival.

According to the Internet in India [I cube] Report, 2007 published jointly by the Internet and Mobile Association of India and IMRB International, the number of internet users in India in the ever user or claimed user category has touched 46 million in September from 23.2 millions in September 2006. During the same period, the number of active Internet users has reached 32 million.

According to the report the growth of Internet users is primarily driven by the fact that:

1) The number of people who know how to use a computer unaided has grown to 65 million up from 15.8 million on 2000.
2) 70 per cent of the PC literates have used the internet time or the other in their lives.

As can be seen from figure the number of internet ever user has doubled since 2004. The number of PC literates is growing steadily over the years and has grown by 270% over the year 2000. The growth of ever users and the active users i.e. those who have used the internet once in the past one month, has been even more impressive, with 540% and 950% growth respectively over 2000.

Internet trials are increasing in the small cities and non-metros as more users become a part of the global community.

The usage of the Internet is increasing in the small towns and non metros. From 27% in the year 2001, the change has been significant wherein the non metros and the small towns account for 39% of the total Internet users in India.

The three current e-commerce leaders – India times, Rediff and eBay – focus on Internet friendly categories like apparel, electronics and jewelry. There are some categories where Internet players can’t compete with traditional channels. If a mattress is sold online, the cost of shipping might outweigh the price itself. This understanding of what works and what doesn’t is a primary reason for e-commerce to envisage a growth.

Across the world, e-tailing is the fastest growing segment in e-Commerce today. While various business models exist, typical sites of retailers who look at the e-tail option start with being an information portal and in the second stage, becoming e-tail sites. A major key to the success of an internet portal which conducts business is its ability to deliver at the right time, to the consumer connectivity with the consumer, communication and factors like the warehouse and the speed delivery. Efficiency in dealing wit the customer right from the time, he /she logs on to the website to the time the order is actually fulfilled is an important aspect of what one may call the e-marketing mix.