Scope of Eretailing in India

E- Retailing an overview
Electronic retailing (also called e-tailing and Internet retailing) is a retail format in which the retailer and customer communicate with each other through an interactive electronic network. After an electronic dialogue between the retailer and customer, the customer can order merchandise directly through the interactive network or by telephone. The merchandise is then delivered to the customers address.

The World Wide Web can serve one or more of these roles for a retailer Project a retail presence. Generate sales as the major source of revenue for an online retailer or as a Complementary source of revenue for a store-based retailer. Enhance the retailers image. Reach geographically dispersed consumers including foreign ones. Provide information to consumers about the products carried, store locations, usage Information, answers to common questions, customer loyalty programmes and so on. Promote new products and fully explain and demonstrate their features. Furnish customer service in the form of E-mail, hot links, and other communications. Be more personal with consumers by letting them point and click on topics they choose. Conduct a retail business in a cost efficient manner. Obtain customer feedback. Give special offers and send coupons to web customers. Describe employment opportunities. Present information to potential investors, potential franchisees and the media.

E-retailing Myths:
The common myths earlier were that online selling required low investment and low cost and hence had no entry barriers and it was easy to succeed. There are four B2C myths that can be misleading while managing e-commerce operations.

1. Stickiness is good: Many sites aspire to keep customers on the site as long as possible by adding features and design navigation. They have too many sequential clicks through pages and save the best page for the last. On the contrary it is observed that when it comes to e-commerce sites, the customers would rather complete their purpose than unnecessarily waste a lot of time on a site when looking for a particular product. Therefore, a site should have an introductory home page, offer speed navigation, vividly describe product benefits, update displays regularly, provide expert information and price competitively.

2. More is better: Some sites try to attract customers with flashy technology by bombarding them with fancy graphics, animation and sound effects. But fancy visual and sound effects slow sites to a crawl. A recent survey from Jupiter Media Metrix found that visitors were twice as likely to return to a site with faster loading pages as they were to sites that provide rich media. The Jupiter survey also found that 59 percent of those surveyed would be more likely to return to a site that offered more product information.

3. Personalization drives profitability: Personalization was supposed to be the killer application of B2C. But personalization is just one of the merchandising techniques that e- commerce sites should consider for incremental sales improvement but per se it does not help to complete sales. This is because customer actions dont always reflect their interests. For example, a customer may have bought a book on baseball as a gift for his brother-in-law, a sports fan.

But the customer dislikes sports himself. However, that does not stop the site from continually calling the customers attention to books on baseball, football, basketball and the like. It is recommended that instead of investing in expensive personalization technology sites they would be better off devoting their energies to proper merchandising by answering questions and having items logically arranged.

4. You can sell anything on the web: One can sell many products like CDs, books, gifts, online. But certain products arent a good fit for e-commerce sales, either due to legal restrictions like in the case of alcohol, or the customers need to touch and feel the product or try an expensive piece of apparel to make sure it fits. Sometimes the discounted price shoppers find on the Web may not offset the hefty shipping charges for large, heavy items such as an oven or Jacuzzi. Although, in the case of such products one may not be able to complete the transaction on the Web but it can assist the sale. The web-site can be used to inform customers about these items and direct them to an appropriate sales channel, like its stores or distribution network.

5. Some common myths now are that e-commerce entails high cost and hence is not viable. E-commerce is undoubtedly a high investment business requiring substantial investment to set up the web site, the software for data capture, records and interactive systems for customer dialogue. These are sometimes underestimated and often cause downfalls. But they are investments like any bricks and mortar business; only the heads under which they are made are different.

6. Another myth is that e-commerce cannot make money. But e-commerce can be made profitable by generating volumes to make money and given time to mature and taking up the challenge to change customer behavior. However, it cannot be a gold mine.

7. According to the Ernst & Young Global Online Retailing report, the main reasons that non buyers dont buy online are: they are uncomfortable sending credit card information, preference for seeing the product before purchasing, no existence of credit card, and insufficient information about products to make decisions, lack of confidence with online merchants and limitation of talking to the sale person. In addition, the main concerns of online buyers are overly high shipping costs; need to try for fit in the case of apparel, high prices, inappropriate for large, perishable and luxury items, need to feel and see and concern of privacy. The report also charted that 3 biggest barriers consumers feel hinder their online shopping experience is price, security and ease of navigation.

8. The e-tailers have high fulfillment of costs (which can be as high as US$16 an order for most dotcom e-tailers) and lack of scale makes the business unprofitable.

9. Poor inventory management also causes major losses for many dotcoms. This fact along with inexperienced merchandising teams, brutal price competition, inefficient product return systems, result in poor gross margins for online only players.

10. High marketing costs: Experienced offline brands spend about 18% less than startups on establishing retail websites. E tailer-marketing costs are high. Online rent, a term for the price of time and space on media channels for onand offline brand marketing, has inflated hugely over the last decade of the twentieth century. According to Thomas Weitzel Partners (August 1999) where a superstore spends an average of US$2.50 promoting a product, e-retailers spend US $17.29 per product.

11. Online customer acquisition costs: Most consumers still need to be persuaded to go online and at the same time almost all e-retailers lose money on every customer. Their customers generate too few orders and too little profit per

order to cover the costs of winning them, which can be as high as 65% per order. According to a study by The McKinsey Quarterly in July 2000, for e-tailers to achieve comfortable contributions on each transaction, they would need efficient order fulfillment processes, average orders of at least US$100 and gross margins of at least 25%.

Factors Affecting the Growth of Electronic Retailing

Three critical factors affecting the adoption of a new innovation such as shopping electronically are (1) the ease with which customers can try the innovation, (2) the perceived risks in adopting the innovation, and (3) the benefits offered by the innovation compared to the present alternatives.

Trying Out Electronic Shopping:

In September 2002 about 605.60 million around the world had access to the Internet. Majority of these web surfers were living in Europe, followed by Asia/Pacific, Canada & USA, Latin America, Africa and the Middle East. According to the United Nations Conference on Trade and Development (UNCTAD report) Internet usage is seeing an annual rise of about 30-percent which is equivalent to about 2.5 percent of the global population. A growing share of new internet users is in developing countries, which accounted for nearly a third of all new Internet users worldwide in 2001. Already Asia, excluding Japan and the Republic of Korea, added almost 21 million new users to the Internet in 2001, more than North America. With 77 million people under 18 expected to be online globally by 2007, teenagers and children constitute one of the fastest growing Internet populations, Surfing the net is a highly regarded activity by this age group. However, adults over 50 years old are one of the fastest growing markets on-line. A large number of this age group has home access to the Internet. Studies have revealed that older people are receptive to new technology and have time, money and enthusiasm to surf the web regularly. Apart from 6

staying in touch with far-flung family and friends, the older people tend to purchase merchandise and services online because shopping in stores can be difficult for them.

Perceived Risks in Electronic Shopping

Technological developments are reducing the risk of electronic shopping by enabling secure transactions and increasing the amount and quality of information available to electronic shopper. However, security of the credit card transactions remains one of the major concerns, especially in developing economies. Entertainment and Social Experience: All non-store retail formats are limited in the degree to which they can satisfy these entertainment and social needs. In-store retail formats score high on this account. They provide more benefits to consumers in terms of entertainment and social experience than simply having merchandise readily available and helping them to buy it. Even the most attractive and inventive web pages and video clips will not be as exciting as the displays and activities in a Disney or Toys R Us store due to their interactivity. In the case of store-based retail formats the delivery time of getting merchandise is immediate. But in the case of non-store retail formats consumers usually have to wait several days to get merchandise, especially when the goods are of a perishable nature and bought prior to an occasion. Number of alternatives:

The biggest benefit of electronic retailing compared to other retail formats is the vast number of alternatives that become available to consumers. For example, a person living in India can shop electronically at Harrodss in London in less time than it takes to visit the local supermarket. However, it does have limitations. Shoppers may visit all the sites selling the product. This may be a time consuming exercise unless the consumer is focused and finds a few items that they might like to study in detail. A more significant potential benefit of electronic retailing is the ability to have an electronic agent to select a small set for the

customer to look at in detail. Service oriented retailers score higher on this account as their salespeople know what their preferred customers want and help indecision making by limiting the choice.

Cost of Merchandise:
Since electronic retailers do not have to spend money building and operating stores at convenient locations, they have much lower costs, as much as 25 percent lower than in-store retailers. But the electronic retailers or the customers will have higher costs to get the merchandise to homes, deal with the high level of returns and attract customers to their website. It is quite costly to deliver merchandise in small quantities to customers homes. Customers presently incur these costs when they spend their time and money going to stores to pick out and take home merchandise and then going back to the stores to return the merchandise they dont want.

E-TAILING CHALLENGES
1. Zero error operations A study by Boston Consulting Group in the United States and Canada in 1999 showed that 57% of Internet users have shopped online and 51% actually purchased goods or services online. The typical online purchaser completed ten transactions and spent $460 online over the previous twelve months. Yet 28% of all attempted online purchases failed, and four out of five consumers

who made purchases online experienced at least one failed attempt over the same period. These failures resulted from technical problems consumers encountered with the sites, difficulties in finding products and logistical and delivery problems after the sale. Twenty eight percent of consumers who suffered a failed purchase attempt stopped shopping online and 23 % stopped purchasing at the site in question. 8

However, the study also showed that consumers who enjoyed a satisfying first purchase experience online were likely to spend more time and money on the Net. The satisfied first-time purchaser typically engaged in twelve online transactions and spent $500 during the previous twelve months. The dissatisfied first time purchaser spent only $140 on four online transactions. About 5% of users who had bad online shopping experiences also stopped patronizing the retailers physical store. There are a number of things in the e-business environment that can impact the consumers shopping experience negatively. Primarily the e-tailers need to think about providing support for customers on two subjects: problems with the website usage and questions or problems with the product. Appropriate use of technology and people solutions will have to be defined in order to support e-business initiatives by understanding, tracking and monitoring the online behavior of customers. Normally, people have to spend a lot of time describing the problem. The customer support team can see where the customer was at the time of reporting the problem or what task was abandoned. Based on which they can efficiently resolve this issue. This type of service will not only enhance a customers experience on the e-tailers website but also provide the organization with an opportunity to reduce costs. E-tailers have several customers survive options ranging from realtime consumer interactions to self-service options:

Frequently Asked Questions (FAQs): This is a self-service option that relies on information stored in a database to assist customer transactions and provide answers to common questions that are asked by customers. This database is continually built over time and new customers and answers are added, based on knowledge gathered from earlier customer interactions. Call Us Buttons: Call-us buttons appear on the website pages, allowing the customer to call the customer support representative on a regular phone via the web. PCs that are equipped with speakers and a microphone may take advantage of voice-activated websites that send voice over Internet using VoIP technology. Another variation to the

same option is call-me buttons, where the customer can request the customer representative to call back, though this may force the customer to go offline.

Text Chat: Text chat over the net allows a client to send a question and receive a real time written response. This allows almost instantaneous communication with more than one customer at a time or in a group. Depending on how it is implemented, it may appear to be slow to some users. Collaboration/Cobrowsing: Web collaboration technology allows a customer support

representative and the customer to share the same screen so that the representative can see exactly what the customer is doing. This type of interaction will help the support representative solve a problem if the customer is stuck at a certain place on the website. On the other hand co-browsing offers the capability where more than one person can browse a site together, with one of the users doing the driving while the other has secondary control. This type of interaction will provide the representative with capability to handle a customer who seems lost on the website.

E-Mail Management: email systems should be fully automated using artificial intelligence (AI) or other new technologies that help the e-tailer to deliver an instant automatic reply based on key words or FAQs. E-mail systems can automatically route e-mails to a call centre, where a customer support representative can review the suggested computer-generated response or can prepare a new response before it is sent to the customer.

Call Centers: Plain old call centers should be enhanced to support calls from online customers as well as catalogue shoppers. Earlier, the call centers had to be confined to a geographic area or country to provide the best support, with the Internet, the call centers can be spread across multiple countries to provide the same, or better, quality of support and reduce the cost of providing the support.

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E-businesses are realizing that it is imperative to communicate with their customers through a range of media options and that these technologies must work together seamlessly for the customer. This places huge pressure on the customer service divisions of the company. The online e-tailer will use multiple forms of customer service including live interaction by telephone and chat, asynchronous communications using e-mail and fax and computerized service using natural language-based help systems.

2. Increased Gross Margin:

Every retailer ideally wants to have high value, high margin and fast moving products. But that is often not possible. The products that fetch the most money may not be the products that the customer wants to buy. Therefore retailing is ultimately about being able to find a balance. E-tailers need to pay attention to gross margin return on investment. For example, if a 25 percent margin category sells six times a year and a 15 percent one sells 12 times a year, it is better to go with the latter. Therefore getting the right product mix is critical to retailing. An etailer should also try to cut down the direct costs by achieving distribution efficiencies. There are many factors like the products retail price, the physical requirements of the product to be shipped, and delivery speed required for the product category that would influence the e-tailers, distribution considerations. Price point is a crucial determinant in distribution and business viability decisions. The fulfillment costs associated with FMCG products are so high that merchandise with low price points fail to achieve break even. For almost all products, packaging and/or shipment and same day fulfillment can be vital. In these cases the best distribution centre is the retail outlet closest to the consumer, making personal collection or speedy individual delivery possible. Etailers should be, wherever possible, to adopt the vendor shipping option that would enable it to cut down direct costs and hence increase the realizable gross margin

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3. Customer Acquisition:

Gaining information about customers and potential customers and converting such needs into demand is more feasible in electronic commerce than any other marketing channel. The Internet allows e-tailers to gather huge amounts of information about their customers easily. They can use this information for personal pricing and customer specific targeted promotions. It might also be used to directly offer customers related products, either in real time during the on-line shopping process or by e-mailing them with special offers. This possibility offers benefits for customers. It is a convenient opportunity to get to know new products they would like to buy without having to look for information in many places. One way e-merchants attempt to lure new customers is through online coupons especially in the case of grocery shoppers. Other categories such as toys, books and music are also popular in terms of redemption of e-coupons. Majority of grocery shoppers use online coupons and nearly half as many redeem online coupons. Toy e coupons witness the highest online redemption rate at 87% followed by books at 83%. While the potential for e-tailing seems boundless, challenges do exist to altering customers expectations and behavior. Changing customer behavior is the most complex task. The e-tailer can change customer behaviour and increase their clientele by managing four key elements:

Educate: As a rule, the more potential customers know about the product or services the e-tailer is selling, the more theyre likely to buy. Education does not only have to be about the product but also of the e-tailers business, quality assurance and processes.

Guarantee: Any purchase represents a risk to the buyer. The risk may be of paying much more than what its worth or the item may not look as good at home as it does on the web site. The e-tailer should not only eliminate the risk but also reduce the customers perception of risk by having risk-free return or exchange policies.

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Manage

Expectations:

The

e-tailer

will

need

to

manage

customers

expectations so that they are not disappointed or frustrated by the shopping experience. The expectations may be as simple as those about availability of the item or shipping time or the total cost.

Satisfaction: The e-tailer, after having educated its customers, hedged their risk and set their expectations, needs to follow through with online customer service. A study in found that U.S. businesses lost more than $6.1 billion in potential Internet sales in 1999 because of poor online customer service and estimated that an industry wide failure to resolve the problem could lead to at least $ 173 billion in lost revenues through 2004. Additionally, 7.8 percent of online transactions initiated by customers are abandoned because of poor customer service. Thus, customer service must integrate seamlessly not only with the companys existing Web site, but the companys entire operations Online and offline.

4. Generating customer traffic:

E-tailers adopt one of two approaches to generate traffic: Impulse Driven and Serious Shopper Approach. Impulse purchases are defined as purchases that signify with high emotional activation, low cognitive control and largely reactive behavior. This occurs when consumers experience a sudden and often powerful and persistent urge to buy something immediately even though they she had no prior intention of doing so. Under this approach the e-tailer generates high traffic. The more often a customer visits a site, the more likely they are to spend an increasing amount of money and thus generate profits for the e-tailer. For instance, in apparel, the average repeat customer spends 67% more overall in the third year of shopping relationship with an online vendor than in the first six months. And over three years, customers referred by online grocery shoppers

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spent an extra 75% above what the original shopper spent. Products that are generally bought on impulse purchases usually have several of the following characteristics: Their price is considered average or acceptably low enough by the consumers; They are low involvement goods; They are related to entertainment activities and hobbies; They are used as gifts to friends and relatives; They are considered trendy or popular items; They are personalized versions of common products; They are related to holidays or important festivals or occasions

In order to take advantage of such shopping online retailers should offer products that can be bought on impulse. They also need to emphasis product presentation and placement to reinforce the emotions that motivate consumer purchase decisions. They could choose some of the following to generate higher traffic: Ease of access: Impulse purchases can be made without requiring the customer to leave their home in order to see the product on display.

Low touch: Most products likely to be bought on an impulse do not require touching or tying on which makes them appropriate for on-line retailing. Dynamic displays: customers can be presented with such products while navigating through the online shop; different items can be shown on each page to maximize the likelihood of purchase; items which are related or complimentary to those in the section of the catalogue currently viewed can be displayed.

Personalized displays: on line technology allows personalizing the items advertised to

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The customer during navigation which can be done based on the customer preferences or demographic information (if membership is an option) or purchase history. Personalized reminders: members or previous customers can be sent or presented reminders about coming holidays or popular items (best sellers) in categories they have expressed interest or made purchases in, in the past. Personalization opportunities: customers can easily be presented with

opportunities to personalize common products (e.g. print a name on a cup) that can initiate impulse purchases. Advanced visualization techniques: graphics technology (animation, sound / image effects) gives many opportunities to present a product in a way that will impress the consumer and motivate them to buy it. Purchase expediting: on line retailing allows onclick purchasing (for registered customers or members) which leaves virtually no time for second thoughts or reasoning about the purchase of product. In case of the Serious Shopper Approach, the e-tailer builds a relationship based on service levels and quality of products. The e-tailers have to proactively anticipate and handle consumer expectations and ensure that whats being delivered is better than what users expect. So retailers constantly need to analyze their product/service categorys relationship with consumers and ensure that their own business isnt becoming disconnected from general expectations.

5. Customer Retention

E-business is redefining the way the e-tailers manage customer relationships and place new demands for customer support throughout the sales cycle and thereafter. This task has been made more complex by individualization of customers. The e-tailers cannot afford to ignore even an individual customer because word -of- mouth spreads very fast on the Internet. User groups, communities, web chat and e-mail each have enough individual power to drain away revenues or create bad publicity. Only personalize support and sophisticated customer interaction can help the e-tailer convert more browsers

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into buyers, resulting in higher revenues per customer. Also, it costs about five to eight times more to acquire a new customer than to keep an existing one. Therefore, it is essential for the e-tailers to build loyalty, aim to achieve zero error operation, to create continuing excitement at the stores and have a mix of impulse and need based products to induce customers to visit the site often. Some notable consumer-driven e-commerce site content already in use: I. Testimonial pages: Testimonials are a powerful tool to establish credibility, which is especially important for a website in the early stages of existence and/or in the early stages of developing any individual consumer relationship. A web site can also request feedback for testimonials from happy customers and opinion leaders. ii. Awards: This is another credibility tool as well as a tactic to increase traffic. Iii. Extensive and useful links or resource pages. iv. Contests, sweepstakes, sign-ups to get visitors to voluntarily opt for future marketing Efforts targeting their specific consumer interests. v. Information: according to an MSN Sidewalk survey, 74% of Internet users seek Information vi. Reviews/ Opinions, especially product related. Vii. Learning networks/communities: through forums, chats, interactive software mailing Lists and newsletters. This is particularly relevant to complex and/or non Commoditized products. viii. A niche network of related sites: reciprocal links, banner ads, sponsorships. New Releases and articles can be sent to publications focused on various products or Productuser niches.

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6. Earning Customer E-loyalty

Customer loyalty is a key driver of profitability for on line companies. Consumers are motivated to buy more goods online when security features were enhanced and personal information kept private. Increased loyalty can bring cost savings to a company in many ways: lower marketing costs, lower transaction costs (such as contract negotiation and order processing), customer turnover expenses and lower failure costs such as warranty claims and so on. During the past decade, customer loyalty in general has been decreasing. The introduction of electronic commerce accelerated this trend because customers ability to shop, compare and switch is extremely fast and inexpensive, given the aid of search engines, mall directories and intelligent agents. A study found that 75% of online customers who participated in loyalty programmes say that it is not the loyalty factor that motivates them to make online purchases. Instead, e-commerce providers should fill functionality gaps or face losing customers to competitors. Only 22% of 1,200 online consumers said loyalty programmes served as an incentive to buy online. The survey highlighted that loyalty programmes must go beyond giving out points and should reward loyalty with improved service such as priority service, personalized offers and e-mail updates. 72% of the respondents said that customer service is a critical factor in shopping satisfaction and only 41% indicated they were satisfied with the service they had experienced. Managing privacy is an important issue in building loyalty. It is becoming a major concern as technology gets better and companies collect large customer data and start trading it in the market. As a business, e-tailers would need to clearly communicate their privacy policies to build trust with customers.

7. Managing Technology

In e-tailing business, size is no longer a determining factor for success. The critical metric is the speed of decision-making, customer service, response time, etc which are all shortening, owing to the technological revolution. Up-to-date,

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intelligent and user-friendly technology also communicates professionalism, a vital quality in building trust. Indian retailers are gradually but steadily upgrading their IT infrastructure. Companies are willing to increase their IT spending from 1 percent of sales at present to 5 percent and expect clear benefits in vital areas like inventory management and customer interfaces. In India, Shoppers Stop has one of the most advanced IT systems in place. In a recent Economic Times survey the company was recognized as among the most IT-savvy companies in India. It has already pumped in over 10 crores in to IT systems - merchandise management systems, inventory management, CRM package etc, and have futuristic plans to continue its spate of investments. The main aim of the company is to see that the time spent by their merchandisers on mundane functions is minimized and they can spend more time on strategy related issues. However, e-tailers should not fall prey to becoming a slave to technology. In the aftermath of the dotcom blowout and the downturn in the economy e-tailers are reviewing strategies, processes and questioning IT spending as they strive to improve performance and boost profits in a difficult economic climate. It is more critical to have a robust, reliable and scalable software platform than have bells and whistles. Therefore e-tailers should not try to attract customers with flashy technology with fancy graphics, animations and sound effects but should offer more product information. A recent survey found that visitors were twice as likely to return to a site with faster loading pages as they were to sites that provided rich media. It also found that percent of those surveyed would be more likely to return to a site that offered more product information .

E-Retail - Traditional Retail Operations

Sites like macys.com and gap.com, as well as relative late comers walmart.com and jcpenney.com, are evolving into online branches of brick-and-mortar operations. This kind of site is not limited to the rich, famous, and nationally wellbranded. Many smaller stores have used the Web to broaden their market by

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opening online branches, which make available to Web shoppers goods that were once accessible only to people near the store. The inverse image of this model is also evident: businesses that started out as Web e-retailers but have since added brick-and-mortar operations to their sales channels. Gazoontite.com launched its Web site selling hypoallergenic products before opening its flagship store in San Francisco. Additional stores have opened on both coasts and in the Chicago area. Originally intended to reinforce the site's branding and credibility, the brick-and-mortar operations have proven to be a huge success, even as the e-retail site has stopped selling. The concepts outlined in this book apply to traditional retail stores and e-retail sites. If your site would benefit from a storefront, the same skills and metrics should guide your decisions. For the purposes of this book, however, we focus on the e-retail component of the business.

E-Retail - Web Site Content

Selling goods is a complementary component of business for these sites, which may rely on other sources of revenue for some portion of their business. Other components may include community building, editorial and informational content, product reviews, and recommendations or other features to draw users to the site. The combination of targeted information and retail is a powerful one that cannot be easily replicated offline. To be sure, many traditional retailers of all kinds offer their customers print newsletters, loyalty programs, educational opportunities, and more. However, the Web uniquely enables customization of that content, allowing customers to pull from the site exactly the content they want and need, when they want it, and, many times, in the form they want it. From the e-retailer's perspective, this customization is automated; the company need not employ envelope stuffers to select and mail the appropriate materials to a customer on a

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regular basis. From the customer's perspective, this feature creates the experience of becoming a "market of one," with a direct relationship to the retailer. Content and e-retail sites may mix their revenue streams in a variety of ways with any number of tools such as membership programs, advertising, sponsorships, retail, subscriptions, and syndication of content. Affiliate programs, which credit a referring Web site for sales made through the site, can make almost any site a de facto e-commerce site. For the purposes of this book, we considered sites that rely on product sales of 50 percent or more of their revenues. FashionDish.com and Baby Center are both content-driven e-retail sites. Both sites rely on targeted content (celebrity gossip, parenting information) to bring customers to the site and keep them coming back. What format best suits your business? What sales channels will prove successful for you? The balance between Web sites, brick-and-mortar stores, and catalogs depends on your retail strategy, goals, and budget. Although our focus throughout the book will be on the Web-based retail operation, take some time to consider whether additional sales channels make sense for your product, market, and unique selling proposition.

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Electronic Retailing

Electronic retailing (also called e-tailing and Internet retailing) is a retail format in which the retailer and customer communicate which each other through an interactive electronic network. After an electronic dialogue between the retailer and customer, the customer can order merchandise directly through the interactive network or by telephone. The merchandise is then delivered to the customers address. The World Wide Web can serve one or more of these roles for a retailer: Project a retail presence. Generate sales as the major source of revenue for an online retailer or as a Complementary source of revenue for a store-based retailer. Enhance the retailers image. Reach geographically dispersed consumers including foreign ones. Provide information to consumers about the products carried, store locations usage Information, answers to common questions, customer loyalty programmes and so on. Promote new products and fully explain and demonstrate their features. Furnish customer service in the form of E-mail, hot links, and other communications. Be more personal with consumers by letting them point and click on topics they choose. Conduct a retail business in a cost efficient manner. Obtain customer feedback. Give special offers and send coupons to web customers. Describe employment opportunities. Present information to potential investors, potential franchisees and the media.

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The role assigned to the web by a given retailer depends on whether it is predominantly a traditional retailer that wants to have a web presence or a newer firm that wants to derive most or all its revenues from web transactions. In addition, Forrester Research has forecast that 13% of U.S. retailing will be conducted via the Internet by 2004. Non U.S. markets account for about 30 percent of the ecommerce industry. In India Non-Store retailing represented by direct selling and e-tailing is estimated at Rs 1,100 crores. Only 19 percent of all retailers have an e-retailing initiative. The number of retailers with plans to e-tail within one year and those with no plans are almost equal. Significantly, 10 percent of the retailers have discontinued their e-retail initiatives. The main reasons for retailers to stay away from e-tailing are predominantly non-viability of business and resource constraints. It is estimated that 5 percent or more of retail sales of goods and services such as apparel, banking, books, computer hardware and software, consumer electronics, gifts, greeting cards, insurance, music, newspapers/magazines, sporting goods, toys, travel and videos will be made online. In the case of products where it is difficult to provide touch and feel information electronically, such as clothing, perfumes, flowers and food electronic retailers may not be successful. Branding may help overcome many of the uncertainties in purchasing merchandise without touching and feeling it. For example, if customers purchase a size 30inch waist / 32-inch inseam pair of jeans, they know they will fit when bought from an electronic retailer. In some products and services, such as traveling or hotels, electronic retailers might even be able to provide superior information compared to store retailers. The critical issue related to selling successfully for electronic retailers is whether they can provide enough information prior to the purchase and make sure the customers will be satisfied with the merchandise once they get it. There are many buying situations in which electronic retailers can provide sufficient information, even though the merchandise has important touch and feel attributes. Started on venture capitalist (VC) or initial public offering (IPO) money, by 1999 there was hype around e-tailing. Consumers were thought to be ready to make a deliberate choice of buying from e-tailers rather than retailers. They seemed to

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fulfill the consumer dream of no queues, no geographic barriers, low prices and unlimited selection - what retail had failed to deliver. But e-tailing ended up disappointing and found that traditional shopping was easier. Ernst & Young statistics for the 1999 Christmas season revealed that US online buyers spent only 26% of their holiday spending (averaging $1,080 per capita) online, while they devoted 67% of their total holiday expenditure to in-store purchases, the remaining 7% they spent on catalogue products. By the end of the 2000 holiday season more than 90% of e-tailers closed down in the period to January 2001. Ecommerce witnessed the collapse of several online grocers, drug stores, auto dealerships, pet supply stores and other budding ecommerce ventures and hundreds of dotcom investors abandoning their dreams of getting rich quick with e-commerce. However, Retail e-commerce sales grew to $7.5 billion, up 24.7 percent in the second quarter of 2001 compared with just under $6 billion in the second quarter of 2000, according to an August report from the U.S. Commerce Department. Leading market researchers suggest that U.S. markets for online retailers will cross $27 billion by 2005. European Web shoppers are expected to spend more money online for groceries than their American counterparts, according to Forrester Research. The report predicts that Web grocery shopping in Europe will be $51 million or five percent of Europes total grocery sales by 2005. Seven percent of the United Kingdoms grocery sales will go online by 2005. The Nordic countries are expected to follow closely with six percent of grocery sales taking place online. France and Germany will account for more than three percent of sales online in 2005. The present players in the market are trying to learn the lessons from the failures and success of extinct and surviving e-commerce pioneers.

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