The Indian customer might be an alien territory for large FMCG companies. She stresses on quality that doesn’t interfere with her budget and yet stands out as an intelligent shopper. You may find her bargaining with the green grocer about the selling price but even she knows what value-for-money means.
We all have seen the spurt in services available to us in the form of an IT revolution, as the world becomes one market for the trade of goods and services. Online shopping has been one such innovation that has taken the consumer’s idea of shopping by storm. The Internet user base in India has been growing owing to attractive schemes being provided by network providers and the very necessity in today’s inter connected world to possess a virtual identity as well as to find prospective consumers for the sea of products now available.
I, too, turned to online shopping last year through the online selling portal Flipkart.com. I was lured to the aspect of online shopping for a hassle free experience as physical movement of the consumer is not required. All I needed was an internet connection. And there were incentives like free shipping, cash on delivery among others. To the seller, I am a customer of the low end bracket as I never made a purchase of more than Rs. 400. Considering the number of Internet users in India at 150 million today is next to only USA and China, and is likely to double in the next five years, any smart business enterprise making its foray into on-line services should have an eye on this targeted base. It is not rocket science to apply one’s logic and say that a large chunk of this group would be comprised of the salaried or self employed young men and women. As technology reaches us at the very doorstep in far flung and rural areas, won’t a considerable portion of this group would initially start from being categorised into the low end group?
When I begun buying through the portal, the shipping charges were fixed at Rs. 30 if the total cost of the products did not exceed Rs. 300. And today, when I found out that it had been hiked to Rs. 50 if the total cost of all the products bought did not exceed Rs. 500!
I was disappointed of course, I started browsing other portals with a *conditions apply on free shipping less costly than this. Now that should ring alarm bells for the portal because if I, as a consumer belonging to the low end group trying to economize on how much I spend as well as owing to my ficklemindedness can switch from one portal to another in a click of the mouse, it would soon loose the loyalty of this bracket owing to more than competitve offer provided by rival groups like Homeshop18 which for the time being is still offering the Rs.30/300 condition.
Numbers business can be mind boggling. Let us take a simple hypothetical situation. Let us say that 10 people were making purchases through an online portal when Rs. 30 was being charged as shipping cost on a total cost price of less than Rs 300. to avoid that, 5 customers made purchases totalling Rs. 350 each. So the total price they pay is Rs. 1750. The rest 5 made purchases of Rs. 250 each and paid shipping cost of Rs. 30 each. Total: Rs. 1400. On shipping charges Rs. 150 was mopped up. We know that the number of customers far exceeds this and so shipping charges would be a considerable part of the company’s revenue as the products are moved around the country not on individual but on a bulk basis. So an increase in the ceiling by Rs. 200 to Rs. 500 would surely bring in a lot of revenue on a level that loss of user sentiment may not hurt much. I think that is what they are banking upon!
(View expressed are personal)