India has an untapped cross border e-tail potential of US$ 2 bn
Vidmay Naini, Country Manager, eBay in India explains ‘How India can boost its untapped cross-border e-commerce (or e-tail) potential & how promoting Indian goods abroad will play a crucial role in this’. He also opines that the inclusion of e-commerce in India’s new Foreign Trade Policy (FTP) will bode well for the Indian economy.
IBT: What role did COVID-19 play in terms of increasing the popularity of your website and gaining traction among new consumers in the country? What strategies did you adopt to tap these new audiences to grow your business?
Vidmay Naini: COVID-19 was a challenging phase for everybody. It worked adversely for certain businesses, whereas certain businesses, specifically, ecommerce, had some advantages. And specifically, for eBay (- the focus is primarily on exports) and our business was doing extremely well, all over the world. And if you look at the numbers across the world, eBay had a fantastic year in 2020. Over 185 million buyers shopped on eBay across all global platforms, last year.
As far as India is concerned, from March 2020 till about June 2020, there was a strict lockdown, where logistics was a very big challenge, and we were not able to ship across goods. However, eBay worked with stakeholders, such as our sellers, the government authorities, and the logistics service providers to ensure smooth resumption of business for our sellers once the restrictions were eased. The company charted out a three-pronged strategy to address this: support existing sellers to restart their business; to provide additional support as far as logistics is concerned, & running various promotions as well as seller campaigns to encourage sellers to sell on eBay, all around the world. Consequently, there was a noteworthy rise in the number of sellers who wanted to sell their products to customers scattered in different parts of the globe though eBay.
The primary focus was to sell products that are made in India and are associated with India. So, the entire strategy evolves around products that are available in India. There was a significant uptick in our overall categories, specifically the COVID-related categories, i.e., masks, sanitizers and stay at home equipment. Indoor recreational activities like cards, board games, etc. did extremely well. gold and diamond jewellery do exceedingly well. This is followed by naturopath and natural remedies- another popular category that we are exporting from India. New categories are also emerging: home and bedlinen, auto parts and accessories and also high-valued fine jewellery. A piece of jewellery, for example, is sold within 3.6 seconds and this number is reducing. So, every three seconds, sellers on eBay are selling a piece of jewellery.
IBT: Recently, eBay signed an MoU with the Government of Haryana to help MSMEs tap into the international market. Which other states in India do you have/plan to have a similar MoU with? How are Indian MSMEs warming up to this idea?
Vidmay Naini: The government is doing a fantastic job of thinking about exports as the growth driver of the economy. And it’s not just exports in the traditional form, there is also a significant thrust given to e-commerce. So, we are in touch with various state governments, as well as the central governments and the ministries that take care of customs as well as the postal system.
eBay is working towards creating a sustainable and scalable ecosystem for growth and in the light of that, we not only have signed an MOU with the government of Haryana but also with the government of Uttar Pradesh a few weeks back. We are in discussion with various other state governments, at this point in time. And also, within Made in India, the company is specifically interested in the common programmes of ‘One District, One Product’, where the highlight is a particular district and a particular product. For example, traditional Indian handicrafts, traditional Indian footwear, traditional Indian equipment, and so on are being made, and we sell that to the world. So, sports goods from Ambala are something that we are looking into, then we have the entire handicrafts and handloom section from the Haryana belt, as well as the surgical equipment from the Haryana state, which very clearly demonstrate the quality as well as craftsmanship, & are well appreciated around the world.
IBT: What inhibitions/opportunities do Indian MSMEs have when it comes to enhancing their cross-border e-commerce through your platform?
Vidmay Naini: One of the significant challenges that exist is low awareness among Indian MSMEs w.r.t. market access to 190 countries. Typically, if one would sell to so many countries, he would either have to spend a lot of money on marketing or travelling or going to trade shows or investing a lot of money in terms of getting to these markets. Whereas eBay provides this at almost no cost- Indian MSMEs have hassle-free market access to 190 countries. From that point of view, it’s very important for MSMEs as well as artisans and small and medium businesses to come on board and exploit this opportunity.
The second challenge pertains to the technicalities on how to conduct business online, i.e., on an international forum, where your buyers are not from India, and Indian sellers are competing with international sellers. So, that requires some level of understanding of the international market, as well as technical expertise in terms of how to sell, because selling internationally is not equivalent to selling domestically. Vendors have to comply with additional compliances; they need to have import and export licences, they need to clear custom regulations and documentation & so forth. eBay provides this support by training and teaching sellers from India how to do this. So, that’s where we come as a platform for cross-border trade. eBay also offers logistics support through eBay global shipping.
IBT: What are the main commodities that are traded across borders on your platform? Which are the main markets that they are exported to?
Vidmay Naini: Indian products sold through eBay find significant traction from the US, our primary market. Another majority of our business comes from the UK. Third is mainland Europe, specifically Germany. And last but not the least, Australia also forms a part of our large five markets.
But each market has its unique characteristics. If you talk about high-end products like jewellery, the markets might have different requirements of designs, say an 18-karat versus a 24-karat embellishment. So, there are various nuances within each market. Like I mentioned before, we have a robust team of account managers, as well as training staff that provide this kind of information that is required for a seller to sell in various markets.
IBT: How is India’s cross-border e-commerce likely to grow over the next two years? What are the factors driving this growth?
Vidmay Naini: The beauty of cross-border trade (which is globally estimated to be a US$ 4 trillion business) is that the world is your marketplace. If you look at the recent past, i.e., the COVID situation, you’ll find that during COVID-19 in the US alone, the e-commerce penetration has moved up from 15% of the total to close to 35%. The first three months were like a hockey stick and post that the e-commerce market penetration of total retail in the US alone has almost doubled.
eBay estimates the total B2C cross border e-commerce market size, i.e. the pure-play or open b2c e-commerce is approximately around US$ 1 billion to US$ 2 billion. That’s the range that we are looking at, from an India point of view. This can be significantly unlocked through building a low-cost export-oriented shipping solution. Secondly, export friendly e-commerce policies are needed. For example, the new Foreign Trade Policy 2021-26 should include a separate chapter for e-commerce. Thirdly, awareness needs to be generated among 30 to 35 million SMEs in India in terms of the opportunities that cross-border e-commerce offers to them. And last but not the least, there is a need to create branding as well as awareness for Made in India products. Also, the creation of goodwill for India based products. You need to understand that selling in the global marketplace means that you’re not just competing against your fellow sellers, you’re competing against products from all over the world. So, it is very important and necessary that either the government or various trade associations or industry bodies create enough awareness about India based products, for us to get good customer attraction, in addition to what we have currently.
IBT: From your experience, how are Indian products, which are sold through your website, perceived among international audiences? What is brand perception about them?
Vidmay Naini: There is a very high liking for India based products sold through eBay, because of the training that we imparted, and because of the quality of the product and service. Frankly, our sellers do a fantastic job of follow-ups, communication, packaging, and presenting a very good image of the products sent from India. In fact, we have a very high repeat rate and our repeat rates are among the highest. If I were to compare this with the domestic repeat rate numbers, we are four to five more of that.
IBT: How does the cross-border e-commerce trade work in terms of payment options, return and shipping policy, etc.? What challenges exist in their operations?
Vidmay Naini: A buyer wants variety, reasonably priced quality product, fast and assured shipping methods in terms of product delivery and last but not the least, a good seller for post-transaction service. In light of that, it is very important to ship across the goods very fast.
So, there is a need to smoothen the process, involving the entire procedures of customs clearances. That’s one area where eBay is working with the government and the customs department, in terms of integration as well as legislation. It is also exploring cost-effective shipping options as our competition is with various other countries that have created low-cost trackable shipping options for e-commerce exports. And as far as payment is concerned, currently, we work with PayPal, however, eBay is working for its own payment solution launch, hopefully, we should have that solution pretty soon, so that this can be a seamless end to end experience within the ecosystem.
IBT: How can the contribution of e-tail to India’s GDP be enhanced in the next 5 years? What can the government & industry work together to facilitate the same?
Vidmay Naini: As an industry, a lot can be done. First and foremost, there is scope for improvement for digitalization, automation and integration. For example, ensuring that you can automate some of the customs clearances, like getting an IC code, and also have a dedicated 24/7 easy clearances channel. And also look at the single window custom clearances for goods through e-commerce. The second one is the infrastructure and logistics. This entails developing low-cost end to end tracking, having provisions for the return of unsold or returned goods & so forth. The third one is raising awareness among Indian SMEs about the importance of cross-border e-commerce is imperative. And the fourth one is offering incentives and benefits. Providing incentives as well as creating enough awareness about India-made products can potentially grow and significantly increase our business.
IBT: What expansion plans does eBay have in India over the next 2 years? What efforts are being made by the company in this regard?
Vidmay Naini: eBay is focusing on retail exports, which is providing support for sellers to sell to the world. Plans pertaining to the expansion of our product offerings and expanding the scope of how sellers can be roped in to sell their products are in the pipeline.