A Report onEcommerce in India-Apparel Sector

Prepared byNirmit Kumta(PG-14-29)Prakash Radhakrishnan(PG-14-44)Karan Shah(PG-14-48)Malav Shah(PG-14-49)Sanket Shinde(PG-14-54)

ACKNOWLEDGEMENT:

We take this opportunity to express our profound gratitude and deep regards to our guide, Dr. Beena Narayan Tripathy for her exemplary guidance, monitoring and constant encouragement throughout the course of this project. The help, knowledge and guidance given by her, was immensely helpful for completing the project on time.

CONTENTS

Sr noParticularsPage no.

1.Executive Summary4

2.Objective of the study5

3.Introduction & History6

4.Reasons behind growth of Ecommerce7

5.Target market8

6.Quality of service10

7.Major Challenges11

8.Survey Analysis(Findings)14

7.Scope & growth 19

9.Conclusion20

10.Biblopraphy21

EXECUTIVE SUMMARYWith the changing market scenario and economical growth, the demand for online shopping has increased. Consumers were most interested in apparels & accessories (30%) and consumer electronics (34%). Other categories that Indians searched for online were Books (15%), Beauty &Personal care (10%), Home & furnishing (6%), Baby products (2%) and healthcare (3%). The present report is an attempt to study the recent trends, influences, preferences of customers towards e-commerce and online shopping and to give the suggestions for the improvement in online shopping websites.To understand and analyze the growth of the business, one needs to have a profound knowledge of that industry. That knowledge can be gained through proper research from authentic sources.Keeping the above purpose in mind, this project gives an insight on the ecommerce apparel industry. It covers the evolution of online shopping over the years and also the current and future scenario of the industry in India.The report also includes a questionnaire which was filled by a group of people , in order to study peoples outlook towards online shopping.

Objective of the studyTo analyze the growth of e-commerce and online shopping(Apparel).

Sub-objectivesTo study the changing buying patterns.To recognize the factors to decide the success of online shopping.

INTRODUCTION & HISTORYInternet penetration in India has been increasing exponentially in 2006 there were only 21 million active internet users, which rose to 243 million users by June 2014. Simultaneously, the number of active mobile internet users grew to 185 million. The significant rise not only brought heavy data usage in the form of social networking, but it also gave a thrust to the e-commerce in India. Indias ecommerce market is estimated to have reached about $10-16 billion last year, with an annual increase of 88% and analysts project that by 2020 it could be worth a whopping $60-80 billion. In a way, e-Commerce in India was kick-started in 2004 when eBay started its operations in India by acquiring Avnish Bajajs Baazee.com, which was Indias largest online auction portal. This was followed by two IIT-Delhi and ex-Amazon employees Sachin Bansal and Binny Bansal starting Flipkart in 2007 by investing 2 lakh rupees each as an online book retailer. In the same year, Mukesh Bansal, Ashutosh Lawania and Vineet Saxena started an online portal to customize goodies called Myntra. These pioneering companies had to undergo many a hurdle and pivot countless times to arrive at the optimal model for reaching out to the Indian market, with its own unique user behavior. With perseverance, these e-commerce portals started winning the trust and confidence of Indian population and people gradually started shopping online. But the game changer that provided the much needed growth steroid was Cash on Delivery, which made online shopping very accessible in a country like India where the credit and debit card penetration is extremely low. This unique payment collection model even gave birth to startups like Gharpay. In 2010, Snapdeal an online platform started providing daily deals but pivoted into an e-commerce company via the marketplace model. Snapdeal is one of the first online marketplaces in India. With the changing market scenario and economical growth, the demand for online shopping has increased. Consumers were most interested in apparels & accessories (30%) and consumer electronics (34%). Other categories that Indians searched for online were Books (15%), Beauty &Personal care (10%), Home & furnishing (6%), Baby products (2%) and healthcare (3%). The present report is an attempt to study the recent trends, influences, preferences of customers towards e-commerce and online shopping and to give the suggestions for the improvement in online shopping websites.

REASONS BEHIND THE GROWTH1. Busy LifestyleThe lifestyle of people is so busy that they are unable to go to the crowded markets every time for shopping. The customers prefer to shop in a relaxed environment at their own convenience.

2. High Disposable IncomeWith growing job opportunities the income sources have also increased. Because of high spending power, customers are willingly able to pay for the products online.

3. Awareness of ProductsPeople aremuch more awarenowadays regarding the products available in the markets. They are quite aware about new products, product features, availability, price etc. through the help of media like television, radio, newspaper etc. Because of these reasonsthey feel confident while shopping online.

4. Rising Computer Education LevelDue to the efforts of Government and Private Educational Institutions in India, computer education is getting new horizons. People are much more aware regarding the tools and techniques of computers. Not only students of urban areas, students of rural areas, housewives and business persons are also attracted towards the advance technologies of computer like e commerce and e business. With the development of educational standards there is automatically a great demand to buy and usenew products.

5. Increased Usage of InternetMore than 100 million Internet users, the country is beginning to achieve a critical mass of users who are familiar with web services.In addition, over the past few years, relativelysophisticated online travel agents (OTAs), such as MakeMyTrip which started turning these initial Web users into Web consumers have dominated Indian e-commerce.

6. Saves MoneyOne another reason for adapting e - Commerce and online shopping technology is that the unwanted expenditure of petrol, parking and toll etc. is considerably reduced.

7. Easy to find the review of the productsIt is quite easy to find the review of products by the help of online shopping. Ecommerce has made it simpler to get information regarding the product and the customers can purchase the products after getting reviews and feedback of the product.

TARGET MARKETGiven the high impact on the bottom line by this category, top Indian online retailers are now vying to increase and retain their customers, in addition to thetraditional loyalty programs. Apart from the standard loyalty programs, excellent, special discounts, targeted marketing & newsletters, free delivery, scheduled delivery and subscription based services, these portals are pulling out all stops to create very innovative marketing strategies to engage with customers at a non-transactional level to get them to spend more and spend often.

Some of the innovative strategies that had been used in the past are. Flipkart-Myntrahad launched afashion incubatorfor young budding entrepreneurs in the fashion field. The first batch of 20 entrepreneurs had started off in July with 3-4 online brands amongst them getting incubated and retailed through their own online e-commerce store. Currently, Flipkart-Myntra together account for nearly half the fashion market share. Myntra is expecting nearly a tenth of the revenue with its forthcoming launch of private labels along with the associated higher margins. Live for Likes Campaign: Huge billboards were created in major cities to target the digital generation those that spend a significant amount of time online in a day. It encouraged users to be their stylish best and put up their selfies. This online fashion trend game had Lisa Haydon as the brand ambassador, and also had a targeted microsite for users. Jabong had recently started hosting fashion events for displaying their selection. For example, there was a Jabong stage at the Lakme Fashion Week this year. They are soon going to launch Indias first online Fashion Week by July end and have also recently associated with Bollywood movies Main Tera Hero and Humpty Sharma Ki Dulhania for showcasing their apparel collection. Myntra has made a name fromselling looks and not just products.They have their own style blog(Look Good Blog)which educates customers about the latest trendy looks through its catalogues. Fashion and Bollywood are two inseparable entities. Fashion specific e-commerce companies have also started adding star power to their brands through endorsements. Myntra started aStar and Style Campaign starring Abhay Deol in its recent June edition. Last month Chitrangada Singh was the star featured on this blog sharing her style secrets and tips with her fashion lovers. Earlier this year it has also roped in Ranveer Singh as the brand ambassador of its in-house private label Roadster along with signing up Kangna Ranaut as their brand ambassador.

TARGET GROUP CLASS

1. Women2. Men3. Kids

Consumer Trends Influencing Target Market1) Increasing Consumerism Increasing Income Level Increasing discretionary spend Increasing Urbanization

2) Preference for readymade Convenience Exquisite designs & wide variety

3) Preference for Branded Products Growth in organized retail Increasing Online retail Increasing preference of international brands

SERVICE QUALITYWith the rapid global growth in electronic commerce, businesses are attempting to gain a competitive advantage by using ecommerce to interact with customers. Business with the most experience & success in ecommerce are beginning to realize that they key determinants of success or failure are not merely web site presence & low price but also include electronic service quality. Understanding the determinants of service quality, customer satisfaction, & purchase intentions for online shopping is equally important.

Website Design

Overall service quality

Reliability

PurchaseIntentions

Customer SatisfactionResponsiveness

Trust

MAJOR CHALLENGESThe ecommerce industry in India is growing at a remarkable pace due to high penetration of internet and sophisticated electronic devices. However, the recent growth rate ofecommerce in Indiais far lagging behind than other developed countries. There are many big problems and challenged on the way of an online merchant. Factors like safety and security of online money transaction being the biggest problem along with others have curbed the smooth expansion of the online industry in the country.

Although, major portion of e-business sectors have affected by the below mentioned challenges but still there are few online giants like Makemytrip.com, flipkart.com, Snapdeal.com who have overcome the challenges and represents the perfect growth trends of ecommerce in India.

Poor Knowledge and Awareness:When it comes to ratio of internet consumers, scenario is not so admirable one. Majority of Indian rural population are unaware of internet and it uses. Surprisingly, most of internet savvies or urban population are also suffering from poor knowledge on online business and its functionalities. Very few are aware of the online corruption and fraud and thus darkness still exists. A reliable survey reveals that 50% of Indian online users are unaware of the solution of online security. Online Transaction:Most of Indian customers do not possess plastic money, credit card, debit card and net banking system, which is one of the prime reasons to curtail the growth of ecommerce. Nevertheless, in recent years, some of the nationalized banks have started to issue debit cards to all its account holders. This is undoubtedly a positive sign for Indian online entrepreneurs.

Cash on Delivery: Cash on Delivery (COD) has evolved out of less penetration of credit card in India. Most of Indian E-commerce companies are offering COD as one of mode of payment for the buyers. 30%-50% of buyers are also taking advantage of this mode of payment while making purchase of any product and service over internet. COD has been introduced to counter the payment security issues of online transaction, but this mode has been proving to be loss and expensive to the companies. It is seen that majority of the customers denied to make the payment at the time of delivery of the product. Hence, companies tend to lose the sale along with product transit fees. In order to curb the problem of COD, online companies should take some judicial steps; otherwise basic logic behind the ecommerce business will be at risk.

Online Security:In case of startup and small business, Business owners are ignoring the importance of authentic software due to budget constraints. They are even failing to take the initial steps to secure and protect their online business through installation of authentic protection services like antivirus and firewall protection, which indeed a crucial step for successful online business players. In India, maximum number of business entrepreneurs used unauthorized software in their server, which usually does not come with upgraded online security. Such pirated software leaves room for virus, malwares and Trojan attacks and it is highly risky task to make online transactions in the systems, which may disclose or leak sensitive details of credit cards and online banking of the users. These kinds of droopiness should be banned in Indian ecommerce sectors. Affiliation to SSL certificate should be imposed as a mandatory action for every owner.

Logistics and Shipment Services:In India, logistics and courier services required lots of improvement. While, perfect and strong logistics service is one of the key reasons behind the success of any online company, India is lagging far behind in this sector as most of the town and small villages are still not covered under serviceable area of many of the courier and logistic companies. Ecommerce is hampered in a big way owing to the limited services offered by the courier service companies.

Tax Structure:Tax rate system of Indian market is another factor for lesser growth rate of ecommerce in India in comparison to other developed countries like USA and UK. In those countries, tax rate is uniform for all sectors whereas tax structure of India varies from sector to sector. This factor creates accounting problems for the Indian online business companies. Fear factor:Fear of making online payment is a universal psychological factor of Indian customers. With the spread of knowledge on online transactions and its reliability, some percentages of customers have overlooked this fear and they are fearlessly engaging themselves in online shopping. But still, majority of customers are not aware of online transactions and its security. They often reluctant to disclose their credit card and bank details and preferred to stay away from online world of shopping.

Touch and Feel factors:Indian customers are more comfortable in buying products physically. They tend to choose the product by touching the product directly. Thereby, Indian buyers are more inclined to do ticketing and booking online in Travel sectors, books and electronics. Companies dealing with products like apparel, handicrafts, jewelry have to face challenges to sell their products as the buyers want to see and touch before they buy these stuffs.

SURVEY FINDINGS

Q1) Do you prefer online buying?

Age groupReviewedOnline buying

Below 152011

16-252018

26-352016

36-452013

46 and above2011

Total10069

So we conclude that 69% percent of the people go for online shopping while only 31% dont opt for it. The highest number of people opting for online shopping is between the age group 15-25 yrs and the second highest were between 25-35 yrs.

Q2) How often do you purchase apparel on the Internet?

So we conclude that maximum people are buying occasionally now compared to some years back where people never recommended for online shopping.

Q3) Why do you choose to shop apparel on the Internet as opposed to shopping in a store?

People are opting for online shopping because of less expensive branded clothes as these websites are offering wide range of clothes with heavy discounts. These websites have wide variety of options and saves time for people. One can easily compare among the wide variety.

Q4) Why dont you purchase apparel online?

Why dont you purchase online?Count

No internet connection4

risk of being cheated8

payment security6

not confident of receiving product10

other3

Total31

People are still not confident that the product they receive would reach them or no. People still fear of getting cheated.

Q5) Preferred Website for shopping?

Myntra leads in the race because of its high advertising and Jabong is second in the race.

Q6) Whats your view on the security part in the online shopping?Security partCount

Positive81

Negative19

Total100

People have a positive response on the security part.

Q7) Preference of payment

A large amount of people prefer CASH ON DELIVERY (COD) but percentage of people using cards have also increased.

Q8) While shopping apparel online, what device does you use?

People majorly use laptops for online shopping, but as mobile devices are increasing tremendously, people shopping online from mobile devices has also increased.

Q9) How satisfied you are of the online shopping?

People are very much satisfied with online shopping. Online shopping sites are getting trust worthy nowadays.SCOPE & GROWTHIndian e-commerce industry has evolved over a period of time with innovations that have changed the rules of the game globally. Cash on delivery (COD) is one such example. At present, COD is the preferred payment mode for close to 55-60% of all online transactions in the fashion and lifestyle segment in India.Growing OpportunitiesThe e-commerce industry is growing at a rapid pace and changing the dynamics of the retail industry. In the coming years, e-commerce is expected to contribute close to 8-10% of the total retail segment in India. This growth is bound to continue provided e-commerce companies focus on innovating, building strong technology infrastructure and delivering the best customer experience. The online clothing industry is still in its infant stage. 2006 was marked as the year where many retailors chose to start selling their whole range online.

Online shopping has also been helped by the number of internet users climbing to 13.7 crores in June, 2012.

The scope for growth in this sector has already attracted a lot of interest from venture capital investors.

Jabong.com raised around $100 million from CDC Group PLC, a U.K. government-backed private-equity fund-of-funds that invests in some emerging markets, according to The Economic Times.

Clothing and accessories-sellerMyntra.com also raised $50 million, this month.

Despite the substantial growth of online clothes shopping, it remains a relatively modest proportion of the overall market. It is calculated that the online fashion market represented just 10.2 percent of the total clothing retail market.

CONCLUSION

E-Commerce in India is a sunrise sector and companies that would want to reap the benefits of this growing industry would need to jump into the bandwagon soon. The rapid growth of this sector is propelled by dynamic demographics, rising income levels and changing lifestyles, increasing internet penetration and banking and other payment options like e wallets etc. There are many challenges faced by ecommerce sector and despite of all this challenges, the ecommerce industry in India offers a great scope due to huge potential market size and increasing discretionary spend of the people.

BIBLOGRAPHY1. eMavens2. Indian e-commerce ecosystem3. Academia.edu4. Economic times5. Business standard

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