Finance Slowdown Spiking E-Tailing?

By Radhika Sachdev
Tuesday March 10 2009

Guess what is clearing off faster on eBay India than the proverbial fresh baked cakes? Jewellery, pen drives, flash memory cards, hard discs and anti-virus software.

Had Sigmund Freud been alive and kicking today, the father of psychology would have read "recession anxiety" in this trend. For despite the low internet penetration in the country (4.9%, according to the Manufacturer’s Association for Information Technology) certain commodities are flying off faster on the net than offline.

Statistics gathered from eBay India (formally reveal that one of the top-sellling category is jewellery and watches (Rs 8,000 crore). Every sixth minute, a piece of jewellery is sold on the auction site. Other hot categories are clothing and accessories (Rs 18,000 crore), sporting goods (Rs 106 crore), collectibles, home furnishings and musical instruments.

"Lately data portability devices are doing extremely well," says Deepa Thomas, senior manager, Pop Culture at eBay India.

These online shopping trends throw two big myths out of the window. One that the lack of the "touch and feel" factor is the biggest constraint in the path of e-commerce growth in India. And second, that only low value items peddle on the net, namely old books, cassettes, CDs etc.

"During a slowdown people look at buying or disposing off assets in the most cost-effective manner. They want to pay commissions that are a norm in offline transactions," reasons Satya Prabhakar, CEO,, that projects itself as the online yellow directory of India.

"Shoppers these days are also looking for great offers," says eBay’s Thomas. "Our deals are at least 20-30% cheaper than the store price," she adds. Add to this the missing hassle of finding parking place, running up fuel costs, food and beverage costs etc, and you end up saving quite a bundle. eBay’s ‘price challenge’ and ‘deal of the week’ initiatives kicked off early this year and already, Thomas claims, the site is doing better than the industry rate of growth of 30%, year-on-year.

"Thirty per cent growth rate for the e-commerce industry is not unbelievable," concedes Devangshu Dutta, chief executive of Third Eyesight, a specialist firm in the retail and consumer products space. "Travel has been the biggest driver of e-commerce in the past three-four years. Other drivers are the number of offers, improving connectivity, and growing numbers of consumers who are now comfortable with making online transactions."

According to statistics available with the Internet and Mobile Association of India (IAMAI) based on a study conducted by IMRB, formerly known as the Indian Market Research Bureau (see box below), the e-consumer market (B2C and C2C) in 2007-08 was Rs 9,210 crore. The main driver for the industry, points out Dutta, was online travel (Rs 7,000 crore) followed by e-tailing (Rs 1,105 crore that clubs revenues of online retailers and auctioneers) that now contributes around 12% to the sector. Top players, according to Dutta are Yahoo!’s shopping website, Rediff, Indiatimes, Futurebazaar and TV18’s

Defining e-commerce as "buying and selling of products and services on the internet or on any other application that relies on the internet," the IAMAI study crumbles the cookie into online travel, e-tailing, classifieds (job portals, matrimony, property and automotive sites), sites dealing with paid content subscription as well as the market for digital downloads, from the internet and mobiles.

On surface, these numbers may appear small compared to the offline organised retail (around Rs 78,400 crore, according to India Retail Report 2009). Says Sankarson Banerjee, CEO,, the e-tailing outfit of Future Group, "Numbers are no indication when organised retail is also just 6% of all retail in India." Banerjee concedes some impact of the slowdown, especially, in high spending categories such as consumer durables, but he hurries to point out that apparel and books have the potential to move even in a downturn. Agreeing with him, eBay’s Thomas says that response to certain categories on the site is so encouraging that overall, these categories are doing better than the industry average of 30%.

"On the classified side," reveals Vivek Pahwa, CEO of Accentium Web, the company that runs and, "Jobs have the biggest share (Rs 200 crore), followed by matrimony (Rs 100 crore) real estate (Rs 50 crore) and automobiles (Rs 10-20 crore). "Our auto business is hit but matrimony is recession proof," he chuckles.

Again, export-oriented categories continue to do well on eBay, perhaps with access to a wider global berth through the internet. Top on this list is horse saddlery from Kanpur, maritime collectibles from Bhavnagar, sporting goods from Jalandhar, brass trumpets from Meerut and ethnic wooden furniture from Jodhpur. Lately, movie and cricket memorabilia have also begun to do well on the site.

In 2008, eBay set up a separate division by the name of Pop Culture that creates campaigns, autographed merchandise etc for movies and sports companies.

"We did it for Slumdog Millionaire, Sarkar Raj, Jodhaa Akbar, Drona, Contract etc and the response was good," says Thomas. The commission that eBay charges is different for different categories. It’s lower for fast-moving goods, such as technology products and electronics (1%), higher for lifestyle and collectibles (5%) and the highest for books (6%), where there is no listing fee as the category demands bigger display and variety.

As for demographics, 85% of eBay subscribers are male in the age bracket of 18 to 40, mainly from top metros. In addition, Futurebazaar targets housewives. "Over 40% of our deliveries are made outside the top 10 cities," says Banerjee.

Summing up, Dutta says, "Convenience, including the ability to compare prices and products, is possibly the biggest driver for this industry. This is what makes them recession-friendly businesses."