Friday, June 29, 2012: Amidst much debate about its future in India, online retail is becoming a popular business proposition. Even the market is gradually maturing and embracing this new medium of shopping. Indiaplaza.com, which can be viewed as a pioneer in the field, started at a time when online retail was a less known phenomena in the country. Admittedly, they made mistakes and learnt from them. EFYTimes spoke to K Vaitheeswaran, founder and CEO, Indiaplaza.com about the practicalities of this business. You have been around for maybe the longest time in the online retail segment. What are the changes that you have witnessed over time? The first key difference when we started was that, it was a pioneering venture. We didn’t have anybody to look up to and learn from. So everything that we did, we did on our own. Most of them were mistakes but we learned from them. The first big mistake we made was an error of judgment. We thought that this is going to be a huge business in a short period of time. It took us a year and half to realise that this is going to be a huge business, but it turned out to be a marathon. It is not a 100 meter run, and so we needed to conserve energy and plan for the long run. We continue to believe even today that e-commerce is a massive industry, and will always be. So, when we went through very difficult periods, we kept on staying with the idea that we must continue to invest, but we realised that it is something that is going to work only in the long run. The reason is that the number of people on the Internet in India those days was 3 million, those shopping online 20,000. You can’t build businesses with those numbers. What has significantly changed today is that the 3 million has now become 100 million, and the 20,000 has become 7 million and that is one big change. The second big change is that, in those days there was a massive discomfort in transacting online. I think to a large extent those inhibitions have now been removed, and there are many things that have driven this change such as comfort with online bill payments, withdrawing cash from ATM, buying travel tickets and air tickets online.
How important are special discounts/ offers in an online retail website model?

Very important. Customers are used to shopping offline. To get them to shop online requires change in their habits and this can happen only through a string incentive. Price plays a big role here because the clear savings drives customers to try shopping online. Since most customers are still early or first time shoppers, I feel discounts will continue to be the key reason to shop online for the next few years.

Who are your most regular buyers- women, men... Do you have any profile insights-- like a housewife, working woman etc?

Metro customers constitute 60 per cent of our customer base and the balance is from Tier II and Tier III towns. Almost 70 per cent of our customers are males. Most of our customers are in the 27-50 years of age and they belong to Bengaluru, Mumbai and Chennai.

Any strategy that cannot go wrong in an online retail segment?

The strategy of selection, pricing and convenience cannot go wrong in online retail. These are the primary things online shoppers look for and as long as an online retailer can offer them, good momentum can be built.

Since your site has a whale of options, do you see any striking difference in taste and preference across geographies? For example, North, South India

Not really. Consumers everywhere look for the same things online – selection, pricing and convenience. Hence, the broad behavior across India is similar.
We do notice seasonal and festival linked variations though. For example – Rakhi sees a surge of orders from the North and West of India as compared to South. Again, we see growth in sales of winter clothing between October – December from (say) Delhi and Chandigarh but not much from Chennai.

Recently, many online retail sites who had entered the market with a single focus are venturing into multiple utilities. What do you think is the possible reason?

The reason is simple. The cost of acquiring customers online is huge and it is hard to build profitable scale. Initially, websites start off with “focus” and quickly dilute the same “focus” when they realise this.
At Indiaplaza, we learnt this lesson in 2000 and based on this lesson we crafted our business strategy 13 years back and it has not changed at all. We will offer our customers humungous choice and selection across all categories backed by low prices. We want to be the mass internet retailer and by definition mass retailers cannot offer anything unique from a product stand point. Our positioning is simple – we offer whatever a customer needs to shop or gift.

Any pain point for online retail websites that you would like to highlight?

There are several key challenges: for starters, India has a myriad of regulations for movement of physical goods from one state to another like entry tax, central and local sales tax, octroi, and specific permits, etc. Overcoming these and transporting items across the country is a challenge.
Another challenge is profitability. Given that newly launched e-commerce companies are primarily focusing on acquiring customers at any cost, they tend to sell items below cost. In such a competitive scenario, it is hard to make money.

What is your website back-end running on? How do you ensure that the site stays up and running despite varying traffic?

The entire site has been developed and maintained by our in-house engineering team. The site is built on Microsoft technologies. Recently, we upgraded the site to run on Microsoft Azure Cloud Computing Platform. We are probably the only Internet retailer to be on the Microsoft Cloud platform in India.