By Chris Webster of eBay
Parul Arora always knew her mother had immaculate taste in jewellery – taste so good it appealed to both her younger friends and an older generation at the same time. Together with her mother, she decided to go into business and started selling locally-sourced, handmade jewellery on eBay from their home in New Delhi.
In doing so, Parul tapped into what is evolving to be one of the most virile online marketplaces in the world. The Indian retail environment is going from strength to strength, and not just for local businesses – this is a two-way virtual high street.
The explosion of the Indian middle class has created a new digitally-savvy consumer base. The online audience is growing, with more than 125m current internet users. A study from the Associated Chambers of Commerce and Industry of India (Assocham) predicts 330m to 370m users in the next two years, making India the world’s second largest online audience after China.
This in turn is having a significant effect on retail. Online commerce is on the rise sharply, with consumers from over 4,000 cities and in all 28 states now shopping online and via mobile, exporting globally, and tapping into a wider selection of international products through imports. An Assocham survey revealed a 65 per cent rise in online shopping compared to last year and this is only set to increase as more people migrate online.
Many of these people are young – more than half of India’s population is below the age of 25 – and, more importantly, as digital natives they understand technology and how to use the internet to source exactly what they want, from designer handbags to a cover for the latest phone model.
Jewellery is one of the largest selling products on eBay India. According to the eBay India census, a piece of jewellery is sold every three minutes on the site, so establishing an online presence is now the mantra for jewellers. Parul realised this and set up her virtual shop. But no sooner was she benefiting from Indian buyers, than she began to receive inquiries from all over the world.
Initially, she experienced some traditional hurdles that come with cross-border trade such as shipping and customs issues. Yet as the market for online trade has strengthened in India, both the government and logistics providers have helped improve the environment and enabled her business, Indiatrend, to flourish. Today, Parul has sold to over 40 countries, with major export destinations the US, UK and Canada.
Indiatrend is just one of many ‘micro-multinational’ businesses emerging in this new world of online retail, capable of selling to a global audience, without the infrastructure of a traditional exporter. Technology-enabled small businesses, entrepreneurs and individuals are now engaged in a process that was once only the preserve of large corporations. They have transformed ‘international trade’ into ‘international commerce’ and these nimble businesses are often the ones best placed to quickly seize on opportunities, identify new markets and forge business across borders.
Micro-multinationals exist all over the world, not just in emerging markets. For example in India, newly empowered consumers are now importing products globally, with the US and UK leading the pack. The online marketplace is allowing UK businesses to access these new categories. In New Delhi, for example, the top ranked city in terms of trading according to the eBay India census, necklaces are the second most popular imported item, highlighting how the demand is not just being fed by the domestic traders like Parul.
Today there are 2bn internet users worldwide. That’s expected to grow to 3bn over the next three years.These changing consumer shopping habits are having a dramatic effect on commerce generally. We are seeing the ‘death of distance’as online platforms enable small retailers to access potential markets with minimal red-tape. Cross-border trade on eBay in the second quarter of 2013 was $11bn, representing 22 per cent of the company’s total commerce and payment volume.
The opportunities in India for UK and EU-based businesses are huge. Over 95 per cent of British businesses on eBay, both big and small, export around the world, according to our latest report into global commerce. But the possibilities of this attentive new audience in India have not yet been truly realised by sellers on this side of the world. Businesses are unaware of the extent of Indian online trade and the growth of this consumer base,and at the same time are cautious of the perceived legislative and logistical problems.
We know platforms such as eBay dramatically reduce distance as a barrier to trade, providing companies with a low-cost way to easily reach international customers, access to compelling commercial pricing and group discounts on logistical elements such as shipping and translation.
So size no longer matters and the success of the micro could be further turbo-charged with the evolution of trade agreements originally drawn up for a global trading landscape dominated by large corporations. Legal rules and administrative procedures therefore need to progress to create conditions to help micro and small businesses lower trade costs and remove red-tape. Get this right and the likes of Parul and other micro-multinationals all over the world can truly recognise the cross border opportunity.
Chris Webster is commercial director of international commerce at eBay
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