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Mar, 11 2013

TAKING ONLINE ROUTE TO GREATER PROFITS

With fast developing commerce and trade in the Indian market, various business solutions companies seek new opportunities to get in touch with long distance customers and build a new type of relationship via the Internet. Let us delve into the essence and

THE retail sector is often viewed as the integral part of the marketing mix strategy where a physical space plays the role of the transactional environment. The emerging development in technology and current human approach fuels consumerism. With the growing demand of commerce and trade globally, many  companies manufacturing different goods and into speciality retail are striving via e-commerce industries to come closer to customers for managing their ever-growing needs.

With the emergence and widespread acceptance of e-commerce sites, sectors like beauty and wellness, food and beverage, apparels, groceries, accessories, consumer durables and many others have hit the dotcom market with their products and services. Players like groupon.com, snapdeal.com, myntra.com, fashionandyou.com, yebhi.com,jabong.com, inkfruit.com, zovi.com, yepme.com and other retail websites have changed the shopping scenario in India. Also, various domestic and international brands have sprung up for the e- retail sites to peddle their fare via the franchise route.

Market overview

According to the studies of the Associated Chambers of Commerce and Industry of India, the online retail industry in India is likely to be worth Rs 70 billion by 2015. The buying-selling trends of leading e-retail portals indicate that the online retail market currently stands at Rs 20 billion and is growing at a steady annual rate of 35 per cent. Among the Indian states, Maharashtra has the best IT infrastructure, both from the perspective of the retail industry as well as consumers. Mumbai accounts for a 24 per cent share in India's e-commerce transactions.

However, market reports reveal that India's e-commerce market was worth about $2.5 billion in 2009, which later went up to $6.3 billion in 2011 and to $14 billion in 2012. About 75 per cent of this is travel-related i.e. airline and railway tickets, hotel bookings, online mobile recharge, etc. Online retailing comprises about 12.5 per cent that is $300 million as of 2009. India has close to 10 million online shoppers and is growing at an estimated CAGR of 30 per cent vis-à-vis a global growth rate of 8-10 per cent. Electronics and apparel are the biggest categories in terms of sales.

Talking about the future trends of India's retail market, it was estimated at $470 billion in 2011 and is expected to grow to $675 billion by 2016 and $850 billion by 2020 that brings in the total estimated CAGR of 7 per cent. According to a survey led by Forrester, the e-commerce market in India is set to grow the fastest within the Asia-Pacific region at a CAGR of over 57 per cent between 2012 and 2016. India's e-retailing market in 2011 was about $600 million and is expected to touch $9 billion by 2016 and $70 billion by 2020 with an estimated CAGR of 61 per cent

Opportunity in store

E-retailing has become very popular in the areas of apparel, arts and handicrafts, books, car rentals, computers and electronics, cosmetics, financial services, gifts and novelties. The physical shops have also transformed into e-stores or web portals. Easy availability of internet services is acting as a support to the growth of online retailing.

Among the new players in the e-retail market, OfficeYes.com, an online retailer of office stationery, is supplying to thousands of Indian businesses, from SMEs to large blue chip companies. The brand is of the opinion that the 'Reseller' model is very feasible for its business. The concept of selling stationery took birth about four months ago when Siddharth Nambiar and Arvind Sivdas, Founders, OfficeYes.com, realised that there was a huge offline opportunity for them to address while still leveraging their core technological expertise and world-class customer service levels.

“Our main value proposition is time for both franchisees and customers. The offline market for stationery and supplies is disaggregated, informal and rife with inefficiencies and cost disadvantages for small-medium sized businesses. The business we have typically deals with multiple vendors and wastes no time with multiple rounds of negotiations for their procurement of stationery and supplies,” says Nambiar.

Another player, Badadeal.com, an online store for apparel, accessories and consumer durables started its e-retail business via franchising a few months back due to huge queries. The brand already has more than 12 franchisees in different cities.

After getting a foothold in the metros, the franchise of online retail business is now all set to emerge itself as a potential market even in the tier II and III cities. Also, the latest additions to online retailing via advertising on social media websites like Facebook, Twitter, Google+, etc., has added feathers to the cap of e-retail business.

Snapping a deal

Various e-retail brands along with their consumerism benefits offer low investment cost to entrepreneurs and franchisees. It also enables direct access to target customers and quick return on investment. The re-retail format helps the retailers not only to serve their customer quickly and more efficiently by offering them a detailed portfolio of products and services but also offers lucrative business opportunities to aspiring entrepreneurs to redefine themselves as investors and keep themselves abreast with the changing times.

One of the greatest success stories of online retailing is Badadeal.com. Started in 2011, the portal has evolved with million page views monthly. The pricing of the product on the site is the USP of Badadeal.com and the brand also boasts of offering pick products from the catalogue and the hottest deals on the planet. Niti Agrawal, Director, Badadeal.com, says: “Taking the franchise of an e-retail brand is feasible as there is no shop rent required, no electricity bill, less worry about hiring employees, training, salary and retention. Investment is really low so the RoI is within the first few months from the start of the business. You don't need to be a technology geek to run an online store. Its just like any regular retailing business and there you are having a complete control.”

The web portal of OfficeYes.com boasts of having world-class stocks of 4,000 office products and equally pan-India world-class customer services.

Overcoming hurdles

However, it is not easy for an e-retail website to stand out from the crowd as it requires a partnership with a good e-commerce website designing and development company that has proven domain expertise.

Becoming the franchisee of these web portals is the easiest way to navigate profitable returns and offer a pleasant business experience too. The franchising of an established brand makes hassle-free business for franchisees and investors. A brand ensures that it's online and offline presence is matched perfectly to engage with present and potential partners.

Roll-out plans

The brand Badadeal.com is looking for pan-India expansion and plans to grow in double digits in the next 20 years. One with passion for making money, great marketing skills will be preferred as a franchisee. The brand will provide its franchisees with training and back panel support so that they can do the business with utmost ease. The total investment to seek the franchise of Badadeal.com is Rs one lakh plus Rs two lakh refundable deposit, along with an area of 40 sq ft or could be worked from home. The brand also provides freebies worth Rs 1.90 lakh on becoming its franchisee.

However, OfficeYes.com with its presence across the country is looking for franchisees with no specific experience in office supplies or prior retail experience. The brand will also provide a training pack to resellers. The resellers are free to run the business as they think fit after they undertake training. A franchisee will need to invest Rs 3-4 lakh and an area of 200-300 sq.ft to run this business.

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