E-commerce’s love affair with Bangalore

Some of India’s most successful and exciting online shopping companies are based here.Their founders reveal some not-so-obvious reasons for the city being an ideal home for startups.

 

In 1996, when a Wipro employee first heard about the Internet, he had no idea he would start a new wave in India. T Vaitheeswaran was making some international calls to his clients, when his colleague suggested using the e-mail,which was cheaper. “What is it?” he asked. The colleague then helped him open a Hotmail account. One day as he was checking his mails, he saw an ad which said, ‘Buy Books.’ It was an ad for Amazon.com. “I was fascinated that someone could set up a shop on the Internet, and sell products from across the world,” he reminisces.Two years later in Bangalore,Vaitheeswaran along with four other friends, launched India’s first e-commerce site Fabmart (www.fabmart.com), now known as India Plaza (www.indiaplaza.com).

 

A decade on, a lot has changed.India Plaza is not only a success story but has also inspired many more ecommerce sites in India. Many e-tail sites, as they are called, are based in Bangalore. “When we started, people just didn’t understand what we were doing. They often asked us if we were coding software for foreign e-commerce sites,” says Vaitheeswaran. Worse still, nobody would buy from the site. Slowly, the buyers came in hundreds. Now, they come in millions.

T Vaitheeswaran, founder of Indiaplaza

The number of Internet users has increased manifold. According to the Indian Market Research Bureau (IMRB), net users in India number.over 100 million. “About 10 per cent of the country uses the Internet, and about 10 per cent of this population does transactions online,” says Phanindra Sama, CEO, Red Bus (www.redbus.in). The figures are changing each day with the advent of cheaper broadband, mobile payment mechanisms such as Airtel Money, higher mobile internet penetration and 2G, 3G and now 4G.

 

Vaitheeswaran believes e-tail will soon make inroads in smaller towns. Since small places do not have large organised retail chains like in the metros, e-tail sites will serve them. A meeting with a man from Mysore cemented Vaitheeswaran’s belief. “The largest bookstore in Mysore has 20,000 books, of which 15,000 are academic in nature. The man didn’t get books of his choice there and used to travel to Bangalore to buy them. Now, he can buy them online,” he says.

 

The demand is not just restricted to books. The increasing desire of small town Indians to be as fashionable as their metro counterparts is also fulfilled by the e-tail sites. “The limited reach of offline stores for leading brands has spurred the demand for online sales,” says Ashutosh Lawania,co-founder and Head of Sales, Myntra (www.myntra.com), which started out as a product personalisation and gifting company,but soon became an online fashion and lifestyle store.

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Caption: Myntra founders Ashutosh Lawania and Mukesh Bansal

Koovs (www.koovs.com), which began as a deals site, has also moved into the fashion and lifestyle segment. Rajesh Kamra, co-founder and Managing Director, believes even people in the metros will buy from their site.

 

So what happens to the concept of touching and feeling the fabric? “The apparel we offer are from popular brands.So there is no compromise on quality.Plus, we give close up pictures and describe the stuff and create a virtual reality,”he says. Vaitheeswaran says people do want to touch and feel the products they buy, but they have their own way of doing it. “They go to an offline store to see the product and feel it. Then, they come online, compare prices and buy from a website,” he explains.

 

Despite all the new products being sold online, travel continues to have the largest share in the e-commerce pie. While the e-commerce business in India is estimated at seven billion dollars, reports indicate that six billion of it is towards travel, like online booking of tickets and hotels. “You could say that e-commerce in the country started with IRCTC. It is still the largest transacted site in the country. After that came the LCC (low cost carriers)hase, where consumers flocked to airline booking sites for deals and price discovery,” says Phanindra of Red Bus (www.redbus.in).

 

Consumers are accustomed to researching and booking travel online. The supply side is also standard. “A Spicejet aircraft is not very different from an Indigo. A 2 tier AC compartment of a train is similar to another. So, the consumer doesn’t require research beyond pricing for such products,” he explains.

 

However retail categories like apparel need trial rooms, books need reviews, and gadgets are bought after comparison. The e-tail sites are doing their best by introducing a 30-day replacement guarantee, cash-on-delivery and similar privileges.“Shoppers can also collect opinions from friends and relatives online before making a purchase,” says Ashutosh of Myntra.Better deals are used to attract customers.“We leverage on the discounts given by the brands themselves. In addition, we have the latest styles and trends,” says Rajesh of Koovs.

 

The convenience of buying groceries through the Internet has made life easier for many. Sensing the busy lifestyle of Bangaloreans, Abhinay Choudhari started Big Basket (www.bigbasket.com) along with friends. “Shopping offline is full of inconvenience,” he says. His site, he says, receives about 500 orders each day.

 

Do Bangalore-based companies have an edge over the others?

 

India Plaza was launched in Bangalore because the founders were all based in Bangalore. Now, they do see an advantage. “Bangalore has something that is unique in India—the network effect.Here everybody knows everybody.Software companies have grown and flowered in Bangalore. This advantage is not available in any other city,” says Vaitheeswaran. Since technology is critical in the business, Bangalore definitely scores.

 

Ashutosh simply puts it like this.“Bangalore has the three primary advantages:the availability of qualified talent,strong delivery networks and presence of a large investor community.”With its VC funders and entrepreurial sites, the city is start-up friendly,believes Phanindra. “The eco-system in Bangalore has developed very well. It becomes easier to reach out to people and I guess that’s important during the early stages of venture development,” he says.Abhinay believes consumers here are comfortable with e-commerce.

 

The cost of business in Bangalore is also said to be lower. “Compared to metros like Mumbai and Delhi, real estate costs are lower. If you are an e-commerce company that requires warehouses, this could eat into your budgets,” says Phanindra. Bangalore’s mixed citizen profile also wins praise from entrepreneurs because it helps them deal with a variety of customers and hone their selling skills.

 

Read this story on TALK’s website at http://talkmag.in/cms/news/business-money

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