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"Almost 50 per cent of our consumers are already coming from Tier II & III cities"

Mr Praveen Sinha, Co-founder and Managing Director, Jabong

Jul 23, 2014 11:30 AM

The ecommerce industry in India is growing at a rapid pace. Mr Praveen Sinha, Co-founder and Managing Director, Jabong shares his views on the potential of the ecommerce industry in India and major trends in the market in an exclusive interaction with IBEF. Edited excerpts:

What are your views on the potential of the ecommerce industry in India?

The Indian market is big enough for many players and if not today, the market potential shows that many players can coexist at the same time. According to estimates, the Indian market currently has a market size of US$ 3 billion and is expected to touch US$ 18 billion in the next four-five years. What may not look sizable today may become very significant tomorrow and there is scope for many players to coexist at the same time. What happened in the online travel industry in India which started with 10-12 players and then came down to 3-4 players and you still see new players entering the market, something similar will happen in our industry as well. I do not see a significant change in direction.

What are the major trends do you foresee in the ecommerce consumer space?

The consumer is very positive today. Ecommerce industry in India is very old. What has changed drastically over the past few years is the trust of consumers towards the marketplace model. While loyalty to one ecommerce portal may still be low but loyalty to the channel has been achieved. The good part is that the movement of consumers to online content consumption to product consumption is on track. More important, the ratio of conversion of first time consumers on ecommerce in India to repeat consumers is very high. The major bottleneck in the growth of ecommerce industry in India is the growth in the internet penetration in India. We need to address this challenge to figure out as one of the major forces in the global market.

Discounting or no discounting: Which is the best approach to follow?

The mindset cannot be binary. There should be a sustainable discounting model. Price advantage is considered as one of the major factors for sale globally and we cannot deny that but it has to happen at a rational level. Both schools of thoughts are required at the same time. If you keep giving high discounts, the business will not be profitable but at the same, a sustainable level of discounting in attracting buyers to the portal. Jabong will go with a view that you have to become healthy.

Can you throw some light on the future plans for Jabong?

We will continue to keep scaling. We were operationally profitable even a year back and after that there are two major costs, overheads and marketing. We believe that with scale we will be able to become profitable. Second, we did excellently well in terms of ensuring the largest assortment of products with 1.25 lakh products backed by customer service. The other thing that we want to do is that making fashion accessible to all. We want to solve the situation where people living in Indian metros are going to Dubai or Thailand for shopping because certain brands are not available here and where people from Tier II & III cities are coming to metros for shopping. Almost 50 per cent of our consumers are already coming from Tier II & III cities and it should grow further. Infrastructure is the major bottleneck and if that is solved, the ratio will move up to 70 per cent tomorrow.

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