Increasing e-commerce to boost jewellery industry
Online shopping may be a relatively untouched sector so far in India but it has been growing with an enviable pace since last couple of years. The Associated Chambers of Commerce and Industry of India (ASSOCHAM) in its recent survey has revealed that more and more Indian consumers are now opting to do their shopping of groceries and valuables including jewellery through online medias.
ASSOCHAM, India’s premier apex chamber of industries and commerce covering a membership of over 4 lakh companies and professionals across the country, has conducted the survey in Delhi, Mumbai, Chennai, Bangalore, Ahemdabad and Kolkata in this regard and as per feedback received from 3,500 traders & organized retailers, the shopping trend during 2013 has witnessed a substantial upward movement thanks to aggressive online discounts, rising fuel prices and wider and abundant choice offered by the online websites. Findings of the survey show a record growth of 85% in online trends over the usual shopping than last year (65%).
According to data made available by the governmental sources, India has internet base of about 150 million as of August, 2013. Having close to 10% of internet penetration in India throws a very big opportunity for online retailers to grow and expand and if the growth is sustained, India is expected to overtake the U.S. to become the second largest country in number of internet users. The data also reveals that three out of every five internet users in India prefer to do shopping online. This has made India, one of the most worthwhile markets for global e-commerce giants.
While data provided by eBay India reveals that a jewellery set is sold every 31 minutes through its network. eBay displays over 37,000 live listings of jewellery items ranging from big brands to micro-entrepreneurs. Loose diamonds are sold more briskly at every 10 minutes, gold coins and simple gold jewellery move faster online than elaborate gold jewellery, it says.
In a gold crazy country like India, surely, there are abundant opportunities in the segment of the jewellery market for a player to come in and develop a branded product that could be sold online, at more competitive price tags. Although e-commerce is still at an emerging stage in India, online portals offering jewellery are likely to break even faster than other categories, feel the industry leaders here.
The Secretary General of ASSOCHAM Mr. D.S. Rawat says, “India’s e-commerce market which was worth USD 2.5 billion in 2009 has gone up by USD 6.3 billion in 2011 and to $16 billion in 2013. This is expected to touch massive size of USD 56 billion by 2023 which would be 6.5% of the total retail market of the country. The reasons behind online shoppers number proliferating are factors such as home delivery which saves time; 24 hours shopping facility and availability of product comparisons.”
Apart from big players like Flipkart and Amazon, many small companies have also launched online showrooms for group buyingwhich enable customers to buy goods at a discounted price so long as a certain number of people make the purchases. Inspired by this trend, more companies are teaming up with such daily deal and discount sites. Retailers like Shoppers Stop, Westside and Pantaloons are also keen for the online shopping space for growth.
This business component is surely cost effective, easily reachable and profitable in many functional areas. Consumers and retail traders desire secured, simple and complete online shopping that would truly realize the range of power of the Internet. The year 2014 therefore looks more promising for the online industry in India.
A report published in The Hindu says that the industry is estimated to end 2013 at a market size of $1.8 billion, according to a recent report by the Internet & Mobile Association of India (IAMAI). And, if this does not seem astonishing enough figure, as per the report, the sector is growing at 55 per cent year-on-year.
With e-Commerce showing signs of becoming a household phenomenon, the year 2013 also saw many offline brands and retailers make their online debut either through own websites or through online marketplaces.
This year online marketplace model — wherein product is provided by third parties, while online platform and transactions are processed by marketplace operator — emerged as the preferred business model for companies, the report says.
This not only opened avenues for a lot of small and medium businesses to reach out to customer, but also helped save logistics and inventory storage costs for marketplace owner. In turn, with more choices available, shoppers had no reason to complaint.
“Overall, this year saw a battle between the two major business models of e-commerce — Inventory-led and Marketplace Models, the latter proving to be more efficient, scalable, sustainable and cost-effective; thereby gaining a lot of traction with a significantly higher return on invested capital,” Kunal Bahl, Co-Founder and CEO at Snapdeal.com, said.
Echoing similar views, Sanjay Sethi, CEO and Co-Founder, ShopClues.com, said, “The marketplace model emerged as the predominant play for e-commerce, not just for horizontal sellers but niche categories as well. Customers warmed up to the model as issues of trust, delivery, secure payments and the like are ironed out.”
Cars too sold online
Besides, rise in sales of apparels and accessories, one of the key trends this year was buying cars online.
“The top development in 2013 is the growth of the auto websites. Whether it is a new or used car, the consumers want choice and convenience and the Internet offers this to them. To illustrate, we have seen our traffic grow 10X during the year. Presently we have more than 30,000 used cars for sale on our site,” Vinay Sanghi, Promoter and CEO, CarTrade.com, said.
Online classified ads platform provider OLX said cars along with two-wheelers were one of its top selling categories.
What can one expect in 2014 from numerous e-commerce players? More products, more discounts, more users, better service and shift to mobile commerce.
“The year 2014 will be the tipping point year of e-Commerce. We will see aggressive consumer push and branding by different players, which will help in increasing a numbers of new users by at least three times,” Mr. Rungta said.
“We expect the number of online shoppers to go up to over 30 million in 2014. Better infrastructure in terms of logistics, broadband and Internet-ready devices will be also fuelling the demand in e-Commerce,” he added.
Ms. Thomas from eBay said, “The past year has also seen many brands and retailers make their online debut either through owned websites or through online marketplaces such as eBay India.
The year 2014 will be more defining in shaping up of the industry as players with sustainable business models and the ability to deliver scale will dominate the consumer’s wallet and win in the long-run.”
Nitin Raj, Chief Marketing Officer at Stylemydiamonds.com, said a booming economy and increase in credit cards supply to young audience in India would give a push to online shopping in 2014.
Shopping to go ‘mobile’
“In 2013, mobile commerce contributed almost 25 per cent to traffic and 15 per cent to revenue. In the New Year, we expect that it will grow rapidly and contribute to over 35 per cent of traffic and more than 25 per cent of revenues,” Mr. Rungta said.
Similarly Peyush Bansal,
CEO and Founder, Lenskart.com, said mobile consumption would definitely go up in huge numbers as customer can view and order the desired product through their mobile phones on the go.
Praveen Sinha, Co-founder, Jabong.com, said, “E-commerce industry will see a change from web to mobile in 2014. Mobile commerce will become more important than web, as most of the companies have shifted to m-commerce and rest will also shift to m-commerce in the coming year.”
“Mobile is slowly becoming the preferred medium for e-shopping, and the online customer is constantly shifting preferences for which device he/she uses to access the Internet. Shopping websites will have to tailor their offerings for laptop, tablets and smart phones,” Sethi of Shopclues said.
The year 2014 will see continuation of consolidation of business in the over-crowded industry, and experts expect clear leaders to emerge in terms of specific categories.
Talking about the profitability of players and consolidation in the industry, Mr. Sinha said, “E-commerce is capital-intensive due to inventory and infrastructure requirements, and, therefore, overall profitability can only come with some minimal scale. We need a reasonable size of Internet-savvy user-base for e-commerce to be successful, and that might still take some time.”
He added a few players, who might succumb to consolidation, would mostly be the smaller ones. Also, the transition would likely be due to too many players and overcrowded state of this market. To salvage their investments, consolidation would be the only way out. However, the same would not qualify for category leaders.