E-tailing (or electronic retailing) is the selling of retail goods on the Internet. It is the most common form of business-to-consumer (B2C) transaction. Now it has become the new shopping method. When most of the consumers spend more time for social meetings, entertainments and other recreational activities, there is hardly any time for physical shopping. E-tailing sites provides exclusive feature which no other retail outlets can offer and makes the customer shopping experience new and worthwhile.

1. Emerging trends in E-tailing:
A novel perspective
Presented By
Anju Aruja, Belli P K
Department of Business Administration
College of Engineering, Trivandrum
Date: 27.11.2012

2. Introduction
A decade before shopping experience was always hectic. We used to go shop to buy things from
A to Z. at that time shopping was more over a fighting arena, where we bargain with shop
keepers, complaint enormously, have cold war with other customers for the ownership of limited
stock products, rush to the point of sale for billing, runs for a fast check out. But now we are not
worried of shopping, we are least bothered for limited stock products, moreover we get more
offers, more customized products, with reasonable prices and everything is possible with a
‘click’. Welcome to the era of E-tailing…
The year 1997 is considered the first big year for e-tailing. This was when Dell Computer
recorded multimillion dollar orders taken at its Web site. Also, the success of Amazon.com
(which opened its virtual doors in 1996) encouraged Barnes & Noble to open an e-tail site. E-
tailing was started in India in Early 2000. The increasing penetration of technology enablers like
internet, broadband, 3G, laptops, PCs, smart phone, tablet, dongle etc and the growing young
demographics and changing consumer lifestyle has become the key drivers of E-tailing. A recent
report states that E-retail has been gaining ground and is expected to touch a market size of
around $70 billion (Rs 3, 56,000 crore) by 2020 from the present Rs. 2,700 crore in India. In fact,
the industry is upbeat and feels these estimates are conservative, and the growth and market size
could be even higher by 2020.
E-tailing (or electronic retailing) is the selling of retail goods on the Internet. It is the most
common form of business-to-consumer (B2C) transaction. Now it has become the new shopping
method. When most of the consumers spend more time for social meetings, entertainments and
other recreational activities, there is hardly any time for physical shopping. E-tailing sites
provides exclusive feature which no other retail outlets can offer and makes the customer
shopping experience new and worthwhile.
The Internet has evolved into an important retail channel, with millions of online consumers
across the globe turning to it to make their purchases. Despite the financial crisis and recession,
the Internet and other new channels continue to drive long-term shifts in consumers’ purchase
behavior and the way products and services are distributed. Convenience, value, and selection –

3. key catalyst for growth: The online retail channel has consistently outperformed in comparison
to store growth and weathered the recession well because most consumers are valuing low and
transparent prices, convenience, and comprehensive assortment of goods and services. Even
though internet penetration growth does not have a direct relationship with online retail market
growth, online retail market dynamics change as the global internet penetration changes. Also,
rapid expansion in online population boosts international expansion for most retailers. Some of
the reasons why customers choose e-tailing are
1. buyers find the products online that they cannot find in stores easily
2. buyers buy the products online as they save time by shopping online
3. buyers find better deals online.
Altogether, the market potential is huge. Online retailers who want to capture the growing
number of online users — and their growing funds spent online — will need to look beyond the
markets of developed countries and think globally about their online strategies.
“There is only one boss: the customer. And he can fire everybody in the company from the
chairman on down, simply by spending his money somewhere else.” As rightly observed by Sam
Walton, retail is all about customer experience and taking it to the next level. In these changing
times, price is no more the only differentiator; customer experience has emerged to be equally
important.

4. Contents
India: The potential market
PwC’s 15th Annual Global CEO Survey indicated that half of CEOs in developed countries
believed that emerging economies are more important to their company’s future. With the
developed markets witnessing an economic turmoil, emerging countries are fast becoming the
retail hotspot for foreign players. In the past five years, retail chain giants such as Wal-Mart,
Tesco and Metro Group, saw revenues in developing countries grow 2.5 times faster than their
home markets. India provides an opportunity for retailers seeking to make investment in the
emerging economies to participate in the growth and increase their global presence
India’s retail market is expected to cross 1.3 trillion USD by 2020 from the current market size
of 500 billion USD. Modern retail with a penetration of only 5% is expected to grow about six
times from the current 27 billion USD to 220 billion USD, across all categories and segments.
The current estimated value of the Indian retail sector is about 500 billion USD and is pegged to
reach 1.3 trillion USD by 2020. The penetration level of modern retail (currently 5%) will
increase six-fold from the current 27 billion USD to 220 billion USD in 2020. The Indian retail
sector is expected to grow at a CAGR of 15 to 20%. Factors driving the organized retail sector
include the following:
• Higher incomes driving the purchase of essential and nonessential Products
• Evolving consumption patterns of Indian customers
• New technology and lifestyle trends creating replacement demand Increase in rural
income as well as urbanization
• Increase in easy access to credit and consumer awareness
• Growth of modern trade format across urban, Tier I, Tier II and Tier III cities and towns
• Rapid urbanization and growing trend towards nuclear families
A strong GDP growth, rising consumer confidence, consumption-based behavior, increasing
income, and a large pool of consumers provide windows of opportunities for global retailers to
invest in the Indian market. Largely deals are happening in the online model whether it is
pharmacy, apparel, baby care or books. Considering that we have the youngest population in the

5. world, such companies are bound to see growth, making it inevitable for financial investors to be
present in this segment.
Modern retail has been in existence for some time now and there have not been many cases
where kirana shops had to shut down due to an organized player coming up in the neighborhood.
In fact, large retailers had to reinvent and evolve their business models to arrive at a format that
could compete with a local mom-and-pop-shop. One such innovation leads to the era of e-tailing
in India. According to Google, India has more than 100 million internet users, half of whom
make online purchases, and the number is growing every year. With such a large market size,
retailers as well as consumer goods manufacturers are entering the web space to attract potential
customers.
The average Indian consumer has been experiencing increasing time-poverty these days. People
have been spending more time commuting to and at their offices, on leisure and recreation, on
vacations, in grooming and maintaining their well-being, socializing, teaching school-going
children etc. leading to limited time available for shopping and such activities. There is an
increasing emphasis on reducing the stress and time taken for routine activities (household
chores/ shopping etc.) and maximizing the time spent with families and friends. Convenience in
terms of ease and time, information, decision-making, transactions and flexibility has been a
major factor influencing adoption of e-commerce. This factor to a large extent also plays out for
apparel e-tailing. Increasingly consumers feel stressed to drive to a crowded mall and navigate
through it to buy a garment. Rather, they prefer the convenience of shopping at home and getting
the goods home-delivered. For them, this allows comparison of designs and prices at their
leisure, and in the privacy of their homes, without having to deal with either hovering sales staff
or the rush of the stores.
The Internet’s ubiquity gives online brands the capability to reach all Indians, even those with no
access to an online payment facility, as most brands offer Cash-on-Delivery (COD) options,
offering them the luxury of seeing the product before making payment for it. In fact, COD has
been a one of the big factors for online retailing to take off in its second innings in India (first
being in the year 2000).

6. There are several models through which e-tailers are targeting their customers:
• ‘Standard’ - This is the basic model wherein products are listed on the web portal, and
customers browse and buy the products e.g. www.flipkart.com
• Deal based - These sites focus on providing lucrative deals across product and service
categories e.g. www.snapdeal.com
• Club based –These sites position themselves as private shopping clubs and are open to
members only Eg. www.fashionandyou.com
• Marketplaces - These sites essentially bring together buyers and sellers and serve as a
platform for their interaction e.g. www.ebay.in
Multi-brand route - Few players have cashed in on early-bird benefits and captured a significant
online market share: Myntra.com – an online fashion store for women and men launched in
2007; Yebhi.com (Big Shoe Bazaar India Pvt Ltd) launched in 2008, is the fastest growing
company in lifestyle category in India; Futurebazaar.com – an online retailer which caters to the
fashion and apparel category, launched in 2007.
Among big cities, consumers in Mumbai topped the numbers of online shoppers, followed by
Ahmedabad and Delhi. However, shopping on the net is gaining traction with consumers beyond
metros and Tier I cities as well and gaining momentum across the country.
In e-tailing customer preference, customer convenience has been given more importance.
Customer needs, demands etc is different in different countries. The strategy applied in US may
not work for India. In a thickly populated country like India, e-tailers have to come up with a
completely localized strategy. Here are some of the examples
Dilligrocery.com services the Delhi NCR area and offer home delivery free-of-cost if the bill is
over 2,000 INR or they charge a flat 50 INR (which in today’s world is less than the cost of fuel
one would incur to go to a modern format for shopping groceries) for delivery. They have a
turnaround time of one to two days. They even have a clear return policy which is important for
online retailers.

7. Greenytails.com has a common website for India and the US. In India, they service Bangalore
and Hyderabad and offer free home delivery with an extra service charge in a few areas. Their
website is well-designed and user-friendly. The prices are also competitive with the regular
grocery stores. They currently offer ‘cash on delivery’ mode of payment which is actually a good
way to get customers to try the website,
Availability of the right merchandise at the right place, in the right condition, within the right
timeframe and at a minimum cost is the primary objective of retail supply chain management.
Poor infrastructure and the availability of only a few organised supply chain and logistics players
further increases the problem for retailers leading to a delayed availability of stock and huge
costs. With the government investing heavily in infrastructure, and with global logistics
giants investing in India, we shall soon witness the consolidation in the supply chain and
logistics sector. This will help retailers and consumers significantly.
Exploring the rural market
70% of the population in India lives in villages. e-tailing is not limited to large cities. As per
IAMAI, ~48% of the total urban internet users were in smaller cities (with population below 1
Mn) and only a third of internet users were in top 8 metros in 2011. Other factors that have been
equal contributors towards the rise of online buying in these cities are growing aspirations,
changing lifestyles and increasing purchasing power of people. Consumer awareness of the latest
brands and fashion trends has further fuelled aspirations to own global products and brands, but
the limited availability of these in tier II and II cities is driving consumers to go online and shop.
Another driver for growth is multiple payment options offered by players (like cash on delivery)
and the flexibility in product replacements/exchanges, which have instilled confidence in the
small town consumer and created trust in online buying. The eBay India Census 2011 indicates
that ~40-50% business in the online space comes from consumers from tier II and III cities.
Retailer inspired by the wall-mart story of growth in small town America, are tempted to focus
on smaller towns and villages in India. However, a careful analysis of the town strata-wise
population, population growth, migration trends of customer spending analysis reveals a very
different picture of India

8. India 1 India 2 India 3
Consuming class Serving class Struggling class
· Constitutes only 14 %
of the country’s
population
· Most of these customers
have a substantial
disposable income and
they form part of
usually called as the
upper middle and the
lower middle class
· Includes people like
drivers, house hold
helpers, office peons,
liftmen, washer man etc.
· These people make life
easier and more
comfortable for the
consuming class or
India 1.
· Research indicates that
for every India one at
least three India Twos
are there, making up
approx. 55 % of the
population but due to
low income they have a
very little disposable
income to spend on
buying aspirational
goods & services
· It lives hand-to-mouth
existence, so can not
afford to even aspire for
good living.
· Unfortunately this
segment will continue to
be on the peripheries of
the consumption cycle
in India, in years to
come.
Source: Future Group Research, Published in the Book “It Happened in India” by Kishore
Biyani, 2007 issue.
Chennai based market research firm Francis Kanoi estimated the size of the rural market to be
INR 1, 08,000 crore annually. During the survey in 2002 the firm took into account four
categories - FMCG, durables, agro-inputs, and two- and four wheelers for their estimation. Rural
incomes are growing steadily as well. NCAER data shows while the number of middle-class
households (with annual income between Rs 45,000 and Rs 2.15 lakh) is at 16.4 million in urban

9. India, the figure stands at 15.6 million18 in the rural areas, data from. Largely this rural market is
untapped and there is huge opportunity for retailers
It is in the context that organized retailing is emerging not only in urban area but there is a trend
of planning deeper and wider penetration of rural network in Rural India, which has been
prompted by greater recognition of the potential of rural market especially in the FMCG &
consumer durable sector. At present, Rural India accounts for 55% of the total retail market and
it will grow by $ 90 billion in the next 5 years, the fact is that nearly 70% of India’s consumers
are in rural areas and more than half of the national income is generated by rural India.
“The economic growth may have come from urban India; it is rural India that will now lead the
way”. Today more than 50% of FMCG & consumer durable products are sold in the rural
market. Over the last two year FMCG sales in rural India has grown 14%, while the growth in
urban India has been only 8%. More than 50% of all new mobile phone connections and 40% of
all vehicles are sold in rural India. Though Indian rural market is widely scattered, about half of
India’s rural population lived in just one sixth of 6, 00,000 villages. This means that an organized
retailer can target 50% of rural population by reaching out just to about 1, 00,000 villages.
Initiatives to explore rural Potential:
During recent past a number of initiatives have been taken to explore rural potential,viz.
1. Establishment of 1200 multipurpose retail outlets in rural sector( DCM Haryali, ITC
Chaupal, Tata Kisan Kendra, Aadhar etc. ) & 2700 Kisan Seva Kendra by IOC
2. Designing of products according to specific need of rural sector ( LG Sampoorn TV,
Samsung- Guru mobile chargeable by solar energy, Tide Natural –a 30% cheaper version
of Tide Detergent by Proctor and Gamble )
3. Inclusion of NGO’s and self help groups in Channel of Distribution (HUL-Shakti
Project, Tata Tea’s Gaon Chalo, TTK Prestige NGO involvement )
4. Change in advertising strategy-Substitution of National level Brand Ambassadors by
Regional Brand Ambassoders, language and display more suitable to rural audience, Use
of rural folks by Coca Cola

10. Emerging ways to tap rural market by e-tailing
Some of the major problems in e-tailing in rural areas are lack of infrastructure, sophisticated
transport facilities. India is developing at a faster rate, with more investments in infrastructure
and connectivity; it appears that former stated problems are going to be solved. One of the
advantages of e-tailing in rural market is that buyers can buy products which are not available in
their stores. Most of the electronic gadgets, branded products, automobiles etc can be found on
internet. Rather than involving a middleman customer is directly speaking to the company.
It is not possible for the e-tailers to have frequent shipment to villages, reason being it is costly.
So the effective method to reduce cost is to deliver goods once in a month. The e-tailer on
receiving the orders sorts it and place it under the hub to which the villagers are connected. A
group of villages may be under a hub according to the distance of village to hub. Always the hub
and village having shortest distance are connected. A hub may be connected to 15-20 villages.
So the e-tailers deliver the shipment to hubs, from the hub it is distributed to the villages or
villagers can collect it from a nearby hub. This method can improve logistics and at the same
time reduce cost. The following figure explains the same.
Farm to fork concept
Here comes an opportunity for the farmers to sell their products directly to the consumer. Here a
group of farmers from different villages can collaborate to open a website. They can also seek
help from other interested companies. In a better way company can have access to different
villages and buy their products. Then company run website shows the details. The farmers will

11. be getting fair price for the same. Their web site gives access to buyers to place order for farm
fresh fruits and vegetables and other crops. Based on the seasonal variation and harvest changes
are made accordingly in the website. Eg: seasonal fruits, seasonal vegetables etc.
The farm products can be stored in hub connected to different cities. By processing the order,
sorting the address of buyer according to details the goods can be dispatched. In this process
customer is getting farm fresh food items and farmers is directly benefitting from the customer.

12. Conclusion
E-tailing has become the next level of shopping experience. In order to survive the players have
to come up with localized strategy to gain more market share. It is clearly evident that e-tailers
have to tap the un-tapped market which is the potential market in developing countries. In
Countries like India, where majority of the population lives in villages, strategies have to be
taken to tap those markets. E-tailing has a steady growth in India and the recent Surveys predict
that it will have a phenomenonal growth by 2020. Survival of business not only depends on
being the fittest, but also being the smartest. E-tailing is simply a smart way to become the fittest
in business, but in order explore the full market potential, e-tailer has to come up with new
innovations to stay ahead of customer expectations and needs.

13. Bibiliography
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Shankar and Detra Y. Montoya, Journal of Management 2012 38: 719 originally
published online 23 June 2010
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