The online gadget retail is one of the hottest topics in the e-commerce business today. The surveys by researchers show that sales rate of online gadget retail are higher than that of physical store retail. The first reason for this could be the ability to research online is much better than offline. “Comparison between brands and models is easier to do online than through physical stores. Even the features comparison that most sites offer or what is available on the internet is much better than what a salesman of a retail shop can do,” says Amarjit Batra, Country Manager, Olx.in.
The second reason can be the pricing strategy. The price that is available online is normally lower because of cost advantages that online businesses have due to real estate cost being negligible, and the other being the heavy competition between the e-commerce sites where they are passing on some of their margins onto their consumers or subsidizing the product.
Another factor is distribution network. The product may not reach every city in the country in the same time due to distribution challenges. However, a lot of people can access it better through e-commerce than locating in a physical store near them.
Growth driving factors for online gadget retail:
v The sheer variations and selections of gadgets that are available today and what keep on updating every week is best served online. No single physical store can have all brands and all models available for sale at any given point of time, whereas the same is easily possible for an e-commerce site.
v The pricing difference between online and offline is not much, in fact online is cheaper, which leads to a word of mouth among consumers that online is the way to go.
v COD (cash on delivery) option being offered by most e-commerce site has proved to be a major boost as people had a limitation in using credit cards and the internet banking, and reservation in making advance payments.
v Overall perception of e-commerce has improved over the last year and consumers are now touching and feeling the product in a physical store while making their purchase online.
Pain-points in online retail
For online retail, the most important factor is reliable delivery infrastructure that can insure high value electronic gadgets against breakage and theft. “The loyalty factor for gadgets sale is low and people keep on shifting to sites that can offer lower prices,” says Batra. There is a conflict of channels between online and offline, so the real advantage of offering low prices online is not effectively utilised because the brand doesn't want to offer different pricing for different channels. This is a challenge for online retailers to get reputed national and international brands. Another challenge is posed by grey markets for electronic gadgets that offer dealer warranties and unbranded or vendor branded gadgets. The low prices lures shoppers, but the bad experiences from these sales turn off online shoppers which is a larger challenge to address.
New trends in online retail
Earlier, it was more of mobile and mobile accessories category that was popular with the online shoppers. But now, an increasing number of shoppers are buying varied products from cameras, laptops, LCD TVs to DVD players and music systems. “Because of increasing incomes and spends, people are increasingly buying personal gadgets as gifts and online shopping is a very convenient way to decide, buy and deliver the gift to their loved ones,” says Batra. The other trend is that online retail for electronic gadgets is being used for newly announced products that are not easily available at stores and for the old models that the physical stores stop keeping. Industry experts believe that in the next one year, at least eight out of ten Indian consumers will make online purchases.