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Indian online retailers struggle

India's retail industry may be booming, but its shops in the virtual world are being hit.

With a population of 1 billion, India is a huge revenue source for online retailers only if they can solve delivery problems.
With a population of 1 billion, India is a huge revenue source for online retailers only if they can solve delivery problems.

MUMBAI // India's retail industry may be booming, but its shops in the virtual world are being hit because vendors cannot reliably get their goods to certain cities, industry insiders say.

Rahul Narvekar, the co-founder of the online shopping club fashionandyou.com, said his biggest problem was not lack of demand, as in many parts of the world, but being unable to reach his potential consumers.

"We say about 14 days for delivery. But certain parts of India I cannot physically get to in 14 days," he said on the sidelines of the India Retail Forum, an industry conference in Mumbai. "That's the biggest challenge right now."

Many retailers' eyes are on India at the moment, with its population of more than 1 billion people and a growing middle class whose disposable incomes are ballooning.

Per capita GDP is expected to grow from about US$1,030 (Dh3,783) last year to $1,450 by 2013, according to McKinsey, a management consultancy. By 2030, the cities of Mumbai and Delhi will each have a GDP greater than that of Malaysia, McKinsey said.

India's technology savvy young population presents a huge opportunity, said Ireena Vittal, a principal at McKinsey India. By 2013, the number of Indians under 18 will be more than 240 million, she said.

"Online buying is something to watch out for," Ms Vittal told the forum.

Mr Narvekar expects his company to reach $1 billion in revenue within the next two years.

"In India, I think it's the right time," he said. "We went from 5,000 members about a year back to more than a million members now, and growing."

Still, about 23 per cent of Indians who use the internet say they have never shopped online, according to the research firm Nielsen's 2010 Global Online Shopping Report, more than the global average of 16 per cent and the Asia-Pacific average of 13 per cent.

"Low internet penetration and lack of confidence in using credit card credentials are the biggest challenges for online shopping in India, although high adoption for online travel sites is changing this," said Karthik Nagarajan, Nielsen's director of the online division.

Some of the big Indian retailers have taken their wares online, including Futurebazaar.com and Shoppersstop.com, while Globus Stores is working on launching a portal.

But Shreyas Joshi, the president of Raymond Apparel, said his company planned to enter the market slowly. He intends to launch a portal only to sell accessories, so customers will not have to worry about getting the wrong size, he said.

"But for apparel, we don't see that the market has taken off for e-shopping," he said on the sidelines of the forum. "It is still very much touch and feel. People want to see, try it out, then buy the product, unless it is some standard product."

 

aligaya@thenational.ae