May 2012 – ELLE India
Early on a Wednesday morning, traffic out of Neb Sarai on the fringes of South Delhi had come to a typical halt. Horns blared, drivers shouted, hawkers touted their wares, and the high whirr of a single engine sounded from behind as a motorbike zipped through the fray. Emblazoned in yellow and white across the driver’s blue messenger bag was the insignia of Flipkart.com.
Until 2007, that logo did not even exist. Today, the oft-cited pioneer of India’s online retail industry has more than 2.6 million registered users distributed across the country, and roughly half of all revenue coming from outside the major metros. Common wisdom traces the industry’s growth to increased demand for luxury goods in tier-2 cities, but that – as Flipkart’s presence in an upper middle-class Delhi suburb attests – is only part of the story.
So who or what is driving the e-tail boom? “The simple answer, though not necessarily the most accurate, is that growth is being driven by the tier-two and -three cities,” says Anirudh Suri, a founding member of the India Internet Group, a venture capital firm focused on internet and mobile technology startups in India. That story goes something like this:
International luxury brands began opening retail locations in India just a few years ago, but with the high cost of retail space, and an untested luxury market, most preferred to limit themselves to Delhi, Mumbai and occasionally Bengaluru. With more and more Indians travelling and living abroad, and more foreign influence entering through business and media, Indians throughout the country had become suddenly aware of international brands, but access for those aspirational classes living outside major retail centers was severely limited. Wealthy Indians around the country began using online retail to access these new symbols of their success, delivered, with just a few clicks, to their doorsteps.
The numbers basically support this version of events. Chennai-based online jeweler Caratlane, and the new Bengaluru-based jeweler Bluestone, both report 30-35% of total sales coming from outside the major metros, while as much as 50% of total sales for Myntra, India’s largest online lifestyle and fashion retailer, come from outside India’s top-10 cities. Within two months of its December 2011 launch, Delhi-based online fashion label FREECULTR had received orders from all 28 Indian states.
Of course, all these numbers have an obvious flipside: the three biggest luxury markets (Delhi, Mumbai, Bengaluru) still lead in purchasing, despite having comparatively easy access to luxury brands in mainstream retail venues. Clearly, accessibility is not the sole force driving India’s ecommerce.
“When I started shopping online, there just wasn’t much variety here in India,” says Aanchal Khosla, a freelance production coordinator in Mumbai who has shopped online for the last three years. Since then, though, convenience seems to have supplanted the need for variety. “My working hours are crazy,” says celebrity manager Sharana Jhangiani, also based in Mumbai. “I barely have weekends. That’s why I go [online to] look – because I don’t have time to go shop.”
Both Khosla and Jhangiani said they have typically preferred foreign online retailers for apparel, and have only recently begun checking websites for companies based here in India; consumer confidence in India, though growing, is still relatively new. Mukesh Bansal, founder and CEO of Myntra, says that online shopping began with travel products like plane tickets – still the largest segment of the market by far – somewhere around 2006. Then in 2007, Flipkart entered the scene.
By establishing its own logistics wing on the model of groups like Amazon, and offering services like cash-on-delivery, Flipkart proved that online retailers could be trusted to deliver quality goods efficiently. Visibility for online retailers in print and on television also added to consumer confidence in online shopping. “When you see an ad for Myntra,” Bansal said, “it’s also an ad for something called ‘online shopping.’ ”
The next generation of online retailers are now setting their sights on more sophisticated and nuanced relationships with their consumers. Suri, for example, now works with Gaargi Ramakrishnan on a startup called ekSMS, a personalised recommendation service for Mumbai dining. The system generates a list of recommendations according to a user’s requests, then over time records previously selected locations in order to continually refine searches according to the subscriber’s taste. “What we’re trying to capture,” Ramakrishnan says, “is the same credibility as if your friend were recommending things.”
Many online retailers now aim to capture this sort of human connection otherwise lost in the ether. Myntra, according to Bansal, aims “to come across as [a] fashion consultant,” while Sujal Shah, Co-Founder and CEO of FREECULTR, whose marketing model involves interacting with consumers via social media and a ‘Behind the seams’ feature on the website, says, “We want people to understand we’re real human beings.” Human beings, incidentally, who have some great ideas about what you might want to wear.
For some, the online shopping experience remains impersonal. Delhi-based designer, and sometime-online shopper Rimzim Dadu, says that for more personalized clothing like hers, the online model isn’t feasible. “Clients still want to come in, to get advice, style the whole thing,” she says.
Several new brands avoid this problem by focusing less on individual items and more on developing an overall sensibility. Sonny Caberwal, founder of online fashion retailer Sher Singh, sees the online market as “a real opportunity to redefine the way people think about brands.” Because the space for exploring looks, trends and products is online, Caberwal says, online retail allows brands “to engage with customers without them having to purchase.” Khosla, for example, has yet to purchase any item from an India-based online retailer, but, she says, “I’ve definitely started checking websites within India.”
For a shopper with international experience like Khosla, the ease of online shopping builds brand consciousness, but for young shoppers with less exposure, the effect is different. The Indian market, Caberwal says, “is not just globally-minded consumers or well-travelled people, but also people who identify with that.” For some shoppers, the internet provides a space to build a relationship with a brand, a lifestyle, an identity.
And now that identity can be Indian and international. Both Shah and Caberwal saw quality production chains already in place within India and felt, as Caberwal put it, that “the time is right for a global brand to emerge out of India.” Shah aimed to create a brand of basics that would be “ubiquitous, leveraging the production capability of South Asia, but developing product that was relevant anywhere in the world.” Both Caratlane and Bluestone use a similar model, with in-house designers using international and local styles. Caberwal phrased the driving question for his company thus: “Can we produce a brand to help positively change how people think about India?”
First, though, Indians will have to think even more positively about online retail. According to analysts at Technopak, only 120 million Indians are active internet users, and just 10 million of those shop online. But with internet penetration and consumer trust growing, that market could be worth some $200 billion by 2020. Now it’s a veritable gold rush, with a whole host of new retailers, each angling for its share.
Brands like Sher Singh and FREECULTR aim for a middle ground between the impersonal sites that generated the online shopping trend, and the kind of experience offered in person. Caratlane even plans to bridge the gap between on- and offline retail entirely by opening ‘experience centers,’ which Senior VP Kalaivani Sadagopan explains as “physical premises for a customer to make an online buy.”
The second generation of online retail, Caberwal says, is “engaging with the discovery of who you are and what you wear.” Consumers in India don’t just want options anymore. They want to shop for an idea about themselves, and maybe also about India. Fortunately for them, you can get that online, too.