15 December 2005

While the number of online buyers is increasing, many surfers visit online shopping sites without buying anything. How can they be persuaded to purchase online? First of a two-part special on Window Shoppers.

The number of people buying online is increasing exponentially– e-commerce transactions are expected to grow by 300% to touch Rs 2,300 crore in 2006-07 from Rs 570 crores in 2004-05. Ecommerce Transactions are expected to cross Rs 1180 crores in 2005-06. It's a winning proposition for any retailer with online ambitions.

If the number of online buyers is increasing, there are almost an equal number of window shoppers waiting to take the plunge into Internet buying. According to a recent IAMAI-Cross-Tab survey of Internet users and their shopping habits, titled The Cyber Window Shopper, 45% of respondents visited online shopping sites, many of them on a regular basis, but didn't buy anything. Says IAMAI President Preeti Desai: "The extent to which cyber window shopping has become commonplace is clearly revealed by this report, where more than 69% of window shoppers indicated that they would like to shop online. It's also important for the marketers to know that if there product and services are not online than their products & services might not be even considered by netizens who prefer doing online research before buying online or offline."

The challenges for online retailers are: a) Finding out what stopped window shoppers from buying; b) What will convince them to buy online in the future.

The comparison shoppers

Says K Vaitheeswaran, Chief Operating Officer of the Bangalore-based online shopping site Fabmall.com: "Some customers drop out because of some concerns at the payment stage, some are merely testing the process and some may be browsing for data but may actually transact later online, or pick up the same item offline."

Deepa M Thomas, Manager (Corporate Communications) at eBay India (formerly Baazee.com) agrees: "Many Indians use the net to comparison-shop products between different offline and online options. This is especially true in the case of technology products and jewellery, which tend to have higher price points. Sometimes, eBay users go to an offline retailer with a printout of the listings of a similar product on eBay and ask the retailer to match the price. So it can even act as a bargaining technique. Sometimes, the online buyer comparison-shops for some time before actually buying online."

Pankaj Chandra, Business Head (eCommerce) at Sify Ltd, also makes this point. "Most window shoppers like to compare prices/features etc of a product on the Internet and then go offline and negotiate harder to get the same product at maybe a better price," he says. Chandra feels that potential buyers can also get put off if Internet connections are poor and connections break in the middle of transactions. Another deterrent is poor navigation, which could lead to users get lost in the maze of links.

Vaitheeswaran feels that strong security communication, good, compelling and detailed content and price breaks can persuade these window shoppers to buy online. According to Chandra, it's important for online retailers to manage both pre-purchase and post-purchase uncertainty. "If online sites manage this well, the confidence level of consumers will go up," he says.

eBay India uses a variety of techniques to pique surfers' interest and persuade them to purchase online. One such method is the one-paisa auction, where the bidding for products starts at one paisa. "The thrill of auctions is addictive and ensures that the buyer is hooked as he often gets products at bargain prices," says Thomas. Thomas feels that an increasing number of window shoppers will buy online when they realise the benefit of the concept, begin to trust it and discover the price benefits.

The action shifts

While most of the online buyers – and window shoppers – are from major cities like Mumbai, Delhi and Bangalore, the action in the future may come from rural and semi-urban areas in the vast hinterland (see table below). Chandra agrees that the opportunities there are enormous for online shopping sites. "The purchasing power in these places is quite high. However, many products that are easily available in the metros are out of reach there," he says. Some of the products that could be successful in rural and semi-urban areas, he adds, are books, toys and gadgets like digital cameras.

Nearly 45% of Fabmall's business comes from smaller cities and towns, up from 15% in 2000! Vaitheeswaran explains why: "Physical outlets in semi-urban / rural areas are much smaller and offer a lower range. For example, big bookstores in the metros carry about 100,000 titles, while the largest bookstore in a rural area will probably carry around 25,000 titles. Fabmall.com carries 2 million titles, which means a bigger range for customers in semi-urban places."

eBay India, too, is seeing higher growth in both buyers and sellers from Class B and C towns. Thomas says that the biggest attraction is the wider range of products (especially for lifestyle products and gizmos), not to mention good deals. "For example, there will be only one or two dealers selling an iPod or bean bag in Kottayam or Mathura; there will be hundreds of dealers selling thousands of products online," she says.

Window shopping is generally a prelude to the act of purchase. Eventually, however, the looking will turn into buying. And that is good news for the Indian online retailing industry. In our next newsletter, we'll look at how providing compelling information about products and value-for-money offers can help initiate window shoppers into the pleasures of online shopping.