It would be difficult to compete at the price point that China has...
Praveen Sinha talks about his view of the Make in India campaign and its impact on the e-commerce industry with Mary Christine Joy.
Synopsis:
Jabong is one of the most reputed online retailers in India specializing in fashion and lifestyle products. It has remained successful in giving a tough competition to the big names of the industry in a short span of time. The site held an Alexa traffic ranking of 37 in the country, and a ComScore report stated that it held a ranking of 2nd in terms of traffic among the Indian e-commerce sites.
Pravaeen Sinha is one of the co-founders of Jabong and a well known name in the Indian e-commerce circle. He is a media friendly person, and well versed with the industry. He has completed his graduation from IIM Kolkatta and is popular for his innovative ideas.
Excerpts:
Now, when more and more people are moving online for variety and novelty, how do you see the future of Indian e-commerce market?
The biggest advantage that e-commerce entails today is that it has a lot of variety to offer to the consumer as compared to a physical store, since it does not have the constraints of physical space. It is a configuration of many brands at affordable rates which helps youth aspiration. For example, Mango stores cannot be found everywhere, but it is easy to purchase its products online through the online retailers. So, more and more people are adopting the online option for shopping. Other than this, e-commerce has many advantages at places where the offline stores lack though it does not help with the touch and feel factor. But many innovations are taking place to eliminate these limitations.
Being an IIM Calcutta pass out, why did you opt to start up with a venture such as Jabong when you had ample of other opportunities on hand? Why did you find this area attractive?
I always had aspirations to start something of my own, and I realized that this is something that I want to do full time. I realized the opportunities in e-commerce, and its scope in multiple countries and across multiple products. Being in IIM Calcutta, I realized that online businesses are growing. When we started in 2011, the industry was at a starting stage, even in terms of fashion merchandising. Not all the brands were available online, and there was a huge potential for development in this sector.
What do you think about the Make in India campaign launched by PM Modi? Will it succeed?
It depends on the implementation of the campaign. The way the momentum has been built, I think the probability of success is higher. I am an optimistic and believe that yes it will be a success, but there are many factors to which it should not fall prey to, as in the past many plans were announced but were not concluded. This time we have a different view that this plan would be taken care of and will be implemented with the right spirit. So, if you ask me I will always hope that it becomes a grand success as there is a lot of action in that direction.
Despite the growing craze for internet shopping in India, not many e-commerce companies are profit making. What do you suppose is the reason? And what is the solution to this?
As a model, e-commerce is not new to the world. You might have seen the e-commerce companies in USA or China becoming profitable. But in India, it might take a few more years for the e-commerce companies to turn profitable. This process can become faster if the industry concentrates on discounts and brand building. There is no right or wrong strategy for profitability as such, but this might increase the overall returns.
Small towns are the biggest customers of online retailers, may be, because they don't have a lot of access to big shopping malls and exclusive brand stores. What have you got to say in this regards?
I don't completely agree, though almost 50 percent of the demand for our products comes from such small towns and cities. This is because small towns and cities face internet connection problems very often. Besides, logistic partners do not provide good service level, and even if they do, it won't be for fashion products. All such factors make an e-commerce product more expensive as compared to the physical stores. If you see from an analytics point of view, accessibility is limiting the growth of e-commerce in such regions.
What are the strengths of the Indian manufacturing sector?
First of all, India is full of natural resources. Two would be that we are a country of the youth. India is filled with a population that can work and earn at this point of time. Of course, there are challenges in terms of potentials and opportunities, but we have a large working population that can fit with the productive cycle in the manufacturing industry. Third, I would say is the demand that already exists in the country, especially in the women's fashion sector. Lastly, the government willingness to support the manufacturing sector today is also the strength of the country.
Can you talk a bit about mobile users?
Today, when smart phones can be availed at a price point of Rs. 4000 or Rs. 6000, mobile phones are becoming very relevant in the e-commerce industry. A few years back only five percent of the total online buyers used to purchase through mobile phones. But today, this figure has crossed 30 percent. On the basis of such a growth, we can say that the use of mobile phones for online shopping is being validated by the market. The only challenges that a mobile user faces compared to a computer user is the screen size and the speed of connectivity. For the same, there are specialized mobile apps that serve as customized websites for mobile users which enable them to access the site better through a mobile phone across various platforms like android, etc.
Can India afford to go the China way?
I think there have been many instances where India has proved that if the right mind and right intentions come together, implementation has been easy and success has been achieved. For example, a campaign was launched to encourage the production of milk in India, and India was successful in achieving self sufficiency in milk production. Of course, it would be difficult to compete at the price point that China has and I am not sure if it would be doable or not, but there are a lot of other competitive advantages that India enjoys. India does not need to replicate China at all the places. The concentration should be on the manufacture of world class products of a global standard with some emphasis on the demand from the domestic market. If this happens, the products would be accepted all over the world without compromising a lot on the Indian market. At present, in order to reach up to the price expectations of the Indian market, we compromise on the global standards and quality, which should not be the case.
Since the Make in India campaign is largely concentrated on the manufacturing sector, do you suppose that it holds something attractive for the e-tailing sector in the country as well?
The e-tailing industry would be directly or indirectly benefitted by this campaign if it is a success, because if the manufacturing sector develops, it generates a need for platforms to make the manufactured product accessible to the market. I suppose e-commerce can be that platform. So if we have more products and on the supply side, we have created more sources, then the demand can be met easily.
When shopping is online, the time spent is much less than that spent in a shop where touch and feel factor is counted. Do you agree? Can you explain a bit on this line?
I have a mixed view there. In case of online shopping, one is bound to get carried away with the number of choices. They have more options, and so start spending more time on just one platform. They don't have to walk to another store to look for more brands. People spend time on e-commerce stores whenever they are free and even if are not very keen on purchasing an item. So, the overall time spent on e-shops is more. But in a specific context, it is true that it takes more time to try out a piece of clothing, and so it takes more time to purchase a product offline as compared to online.
More investments mean more profit. Do you agree?
That is a tricky question, I would say. Investments are done with a specific purpose, for example brand building. Investments are done with the intention that it will later on bear fruits, though it may not immediately result in profit. Today, investments are not done to increase profit, but to increase the acceptance of e-commerce in the country. E-commerce offer more discounts to the consumers with the aim that they may later on buy products from the company.
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