Thursday, September 6, 2007

Future of eCommerce and Retail in India - The Perfect Storm

The online retail environment in India is eerily quiet. The overall online pie is still very small. Broadly speaking, Indian consumers arent shopping online. The distributors or local vendors still look at the online channel as a drop in the bucket. New online retailers are slowly emerging however Indian ecommerce just cant seem to hit its stride. What does this all mean? Is online retailing not for the Indian market? Are the cultural preferences of Indian customers so unique that ecommerce will never achieve a mainstream status? Although the current state paints a very somber image for eCommerce in India, it reminds me of the time when we went on a vacation to Florida, only to find out that the area was about to be hit by a category 3 hurricane. Standing in balcony of the hotel room, I could feel an uneasy quiet. Wind was calm however I could feel something big was about to happen. Two years later, I find myself standing on the verge of another perfect storm a storm that will change the face of online shopping in India.

It is not a mystery anymore that the retail industry is going through a significant organization in India. Some would argue that this opens up more exciting options for consumers to shop in a physical store, which would further impact the adoption of online shopping in a negative way. Fair argument, however, I would like to share some specific reasons why I strongly believe that a reverse phenomenon is inevitable organization in physical retail will fuel an explosive growth of online ecommerce in India.

Why has eCommerce adoption been slow in India?

Before we look at the factors that will drive an explosive growth in eCommerce, it is important to look at why eCommerce hasnt taken off so far in India. Although there have been several debates on this topic, to me the most basic reason is that most Indian consumers still dont see enough value proposition in shopping online. They cant be blamed because over the past few years, they have heard a lot of horror stories about not receiving the right products, not receiving products in time, notwithstanding the issues related to cumbersome returns and cancellation processes when shopping online. On the other hand, we cant fully blame the online retailers because they have to rely on third party vendors, logistics partners who still havent achieved enough scale and the level of technology automation to consistently meet the desired service levels. These issues really point to the lack of a mature eco system across the eCommerce value chain. The organization in retail will give a significant boost to this eco system, which will help build trust with consumers so that they can feel comfortable in shopping online.

Organization in Retail will catalyze eCommerce eco-system

First and foremost, as the retail industry gets organized in India, the overall supply chain infrastructure will see a significant improvement. This will have a direct and positive impact on the online channel. Today, the online supply chain infrastructure is virtually non-existent. Distributors use adhoc means to replenish inventories and fulfill customer orders. This leads to significant out of stock situations, which impacts the overall online customer experience. Having a solid supply chain infrastructure in place, distributors will be able to fulfill online orders in a predictable way.

Second, organized retailers will push for standardization across manufacturers and fulfillment partners. If we look at categories such as apparel, one of the biggest reasons consumers dont like to shop online is that they dont know what they are getting in terms of size, quality and fit. However, as there is standardization in quality as well as the attributes, consumers will feel more confident in purchasing the products online, without needing to touch and feel the physical product.

Another factor that will play a significant role in building this eco system is technology automation across the value chain. For nationwide retailers to maintain a competitive cost structure, they will push the manufacturers as well as suppliers to offer sophisticated technology integration so that they can better manage the flow of merchandise across the value chain. Online retailers will directly benefit from this sophistication in technology because they will be able to fulfill customers orders in a predictable fashion.

Lastly, national retailers will need to pool large amount of inventory in their distribution centers to service their stores across India. Holding inventory comes with an inevitable risk of over-forecasting. In these excess inventory conditions, retailers will need outlets for clearing the merchandise to free up the capital, and to flow fresh season merchandise into the stores. Web is a great channel for the clearance strategy, and retailers will be able to offer deep discounts online to clear up the inventory before they get ready for the next buying season. In US, various online retailers such as are built around the business model of buying overstock merchandise from retailers across US, and offering deep clearance pricing to customers.

Looking beyond Supply Chain & Fulfillment

The factors discussed above will help improve the adoption of eCommerce by making the online channel much more reliable. However, the role of online channel doesnt end here. With organization in retail, new online business models will emerge that will help facilitate online as well as offline sales. In Sears, we used to call these Web Influenced Sales. Over 70% of retail sales across high consideration categories in the United States are influenced by some kind of research on the internet. There are online businesses that provide comparison shopping services (e.g., discussions on hot deals (e.g., product reviews (e.g., Local store promotions ( etc. All these services are part of the online eco-system, that provide information at consumers fingertips so that they dont have to scour through 100s of printed store ads or rely on word of mouth to determine where can they purchase that new XBOX 360 console. As retail organizes in India, we will see the evolution of similar online aggregation and retail focused services that will not only help customers make informed purchase decisions, but will also put the online channel in the center stage of online and offline retail.

The confluence of above factors will set the stage for a perfect storm that will redefine the role of online channel in the minds of Indian shoppers.

Darpan Munjal has over 13 years of leadership experience with Fortune 100 companies in the retail and eCommerce industries. Currently, he is the Chief Technology Officer at Indiatimes. Prior to joining Indiatimes, Darpan was the Divisional Vice President of eCommerce at Sears Holdings (A $55 Billion retailer) which ranks #3 in US. Darpan holds an MBA from Kellogg School of Management and writes a blog on eCommerce and Retail opportunities in India at

Forex Trading: The Fundamentals and the Technical

Foreign Exchange Market, FOREX, is an international exchange market where currencies from all around the world are traded. FOREX trades are always done in pairs, for example, USD/Euro, USD/JPY, Euro/JPY, GBP/CHF, and CAD/USD. United States dollars, Australian Dollars, Japanese Yens, British Pounds, Swiss Francs, Canadian Dollars, and the Euro Dollars are the seven major currencies traded nowadays. With an average of $1.9 trillion daily turnover, FOREX stand as the largest trading market in the world.

Regardless of its bulky volume of trades done daily, FOREX is relative new to the world where the market begins at 1971 and its only made available to the publics since 1998. Currencies like USD and Swiss Francs were backed up by gold previously. Unlike in the early days when it required huge investment to start FOREX trading, it is now an easy trading business that trades can be done with just a computer with Internet access and an active FOREX account. With the rise of Internet technology, FOREX trading had become an alternative for those who are seeking financial freedom without the hassles of a conventional job.

More than 70% of FOREX traders lose money in FOREX market as they traded blindly. FOREX trading involves a lot of risks thus a well-designed analysis method is a must. To reduce these risks to the minimum, FOREX traders, like traders in any other market, implement Technical analysis and Fundamental analysis in their trades.

The Fundamentals

Fundamental analysis basically means studies of surrounding events that affect the market trends. For example FOREX market, fundamental traders will consider events and situations that will affect the value of a country currency value. These factors include the local bank policies, political states, country growth rates, natural disasters, market speculators mood, terrorism attacks, and wars.

The fundamental is commonly known as no-number analysis where traders are investing solely on their personal reviews on one-country economy trends. Fundamental traders normally review a country economys situation base on these fundamental elements and respond accordingly. Generally speaking, natural disasters and unstable political state poison a countrys economy; thus currency value drops. Vise versa, if a country is basically free of natural disaster, and its showing a steady economy growth rate, currency of the country will be strong.

In FOREX market, it would be difficult to trade solely based on fundamental analysis as it only provides an overall view on the market condition. Numeric data and graphs are much needed to give a more accurate estimation on the market movement. This will lead our discussions to the second type of analysis method the Technical.

The Technical

Quoted from one of the FOREX well-established website,, Technical analysis is a method of forecasting price movements by looking at purely market-generated data. (Well, at most of the time, this market-generated data means the price of the currency) The analysis is done base on the concept of history repeats itself and thru comparing present situation with the past, technical analysis is quite effective in drafting out the entry/exit price indicator.

Price charts are often the only item a pure technical trader concerns in. Through patterns of charts, various indicators will be generated and used for planning the investment tactic. A few well-known indicators for FOREX traders are strength indicator, momentum indicator, and volatility indicator. Technicians strongly believe currency price (or any other market numeric data) moves in trend and it will always follow a pattern similar to the past.

Although the methodology looks secure with proven tracks in the olden times, it would be relative unsafe to trade FOREX purely base on technical analysis. The future does not equal with the past. There are a lot of unexpected variables that technical analysis does not reflect on: change of country leaders, change of government, natural disasters, change of bank policies, investors mood, war-- all these factors affect currency value directly and might not have happened before in the past. A combined of two approaches (fundamental and technical) is always encourage to get the optimum plots on your investment plan.

FOREX can be extraordinarily beneficial to a variety of people. It gives huge leverage rates, it gives incompatible liquidity to your money, it gives convenience to trade on the Internet, and it can definitely give you a lot of money if you trade smartly. Like any other trading business, if you are new to it, best advice you can get is to learn and practice more before you test your wings. Seminars, eBooks, Internet, papers, video courses all these are handy to get yourself ready. You can also try out your skill on the demo account provided free. After all, FOREX trades 24hours a day and there is always money to make in the market, so why not be patience until you are fully ready for it?

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