India emerges as ecommerce powerhouse

India is emerging as an attractive target for online retail. The rise of mobile technology, cheap connectivity, and increased awareness has made Ecommerce a convenient option for many Indians.

Mon Mar 14 10:31:44 EDT 2016
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India is emerging as an attractive target for online retailing. The rise of mobile technology, cheap connectivity, and increased awareness has made online shopping a convenient option for many Indians. India overtook U.S. to become the world’s second-largest[i] internet user base in 2015 with 402 million users, second only to China.

Indian e-commerce market is expected to reach $38 billion in 2016, up from $23 billion in 2015, according to the Associated Chambers of Commerce and Industry. Naturally, there is a lot of interest in selling in India; from both Indian retailers and international ones.

However, international online retailers hoping to sell in India may run headlong into some very interesting challenges. These can be summed up using one convenient word: localization.

Entering a new market requires completely new ways to tackle risks, regulations, revenue and regionalities. What works in the home market may be disastrous in a new one, and vice versa. These challenges affect every part of the business, but are particularly applicable to marketing. Hence, this article examines the challenges of localization as it applies to the four "P"s or marketing – Product, Price, Place and Promotion.

India is probably the single most diverse marketplace in the world. It shows a lot of regional variation in consumer mindset and behavior, which is influenced by:

  • over 120 major spoken and written languages
  • 29 states each with their own taxation policies over and above the central ones
  • several religious and cultural drivers, including sports and film industry

Targeting the Indian consumer simply cannot be done in a homogenous manner.  However, going fully regional is not cost-effective, and may result in mixed messaging. The challenge is to come up with a strategy that is largely standardized and sufficiently localized.

Several multinational non-online businesses have learned the Indian localization lessons the hard way. We will use some of these as examples to understand what worked for them and why.

Localization involves customizing products as per local market requirements

Kellogg's International Indianised its corn flakes product to match traditional Indian foods by offering "Wheat flakes", "Basmati Rice flakes" all part of the Indian staples diet. McDonald's offers vegetarian products, "McAloo Tikki Burger" and "McSpicy Paneer Wrap" exclusively for the Indian market. Yum! Brands Pizza Hut conducted 'India to Bharat', an informal study to understand the Indian love for staples (rice and wheat) and launched Birizza (a fusion of Indian Biryani and pizza).

Finding the right product localization strategy involves in-depth consumer research and a thorough understanding of market nuances in different Indian regions.

Localization involves speaking the consumers' language

This is not limited to translating your marketing messages or website to the local language, although that does play a limited part. Indians largely do business in English, but think and feel in their own language – mother tongue as we call it. You also have to consider the idioms, colloquialisms, cultural mores, and prevalent feeling.

Amazon entered India as a marketplace rather than a retailer and today positions itself as India's "Apni Dukaan" (translated as "Your friendly neighborhood store") to break the Indian mindset of shopping at traditional retail outlets (kirana stores). GoDaddy India's localized its "GoDaddy. It's Go Time." campaign in regional Indian languages to attract small business owners from across the country to set up shop online.

Localization involves locale-sensitive pricing policies

Mostly Indians are value-sensitive people and respond well to “economy" pricing. They also tend to spend when they have cash in hand. Vodafone India realized this and offered its prepaid mobile recharge at small denominations of Rs. 10, Rs. 20, and Rs. 50, a product localization to capture a significant slice of 1 billion Indian mobile subscriber base.

McDonald's has offered a "Happy Price Menu" starting at Rs. 25 (less than <$1USD), localization based on pricing to break into the Indian street food category.

Offering products in Indian rupees is a big plus for selling online in India. Due to the fluctuations of the Indian rupee vs. the Dollar or Euro, the prices cannot be just the international prices converted to Indian rupees. GoDaddy offers the lowest-tier website hosting at Rs.99/month (the equivalent of $1/month in USD).

Online Shoppers tend to avoid websites that do not offer their preferred mode of payment. Amazon recognized this and offered "Cash on Delivery" payment that allows the customer to check the product authenticity and pay later.

Cost transparency is important, especially for online retailers

For online retailers, especially those that ship international products, cost transparency stands to be a very important parameter for Indian consumers. The Indian online shopper is well informed and will ruthlessly perform price comparisons before purchase. In the last two years, they have also been exposed to online vendors who have offered products at very cheap prices and have not been able to maintain service levels. They now expect fair prices at sustainable levels, so raising consumers awareness about your total cost will help them understand and accept your pricing. My own attitude towards online shopping experience supports this hypothesis, I was an early adopter of online shopping who has become a little careful about shopping online.

As both an analyst and a consumer, the experience Sam Coiro, of Pitney Bowes, shares with regard to his ecommerce experience completely resonated with me.

In a country with over a billion people, it is imperative to target the "right" audience with the right marketing mix. Localization with emphasis on locale -specific customization, cost transparency, and customer engagement would be the key. By 2020, Euromonitor predicts India to be one of the three biggest emerging economies, besides China and US, contributing toward 30 percent of global GDP in Purchasing Power Parity (PPP).  Localization is important if you want to seriously target India, so a business is wise to make the investment sooner than later.

This post was written in partnership with Pitney Bowes. Chitra Chaudhuri has been compensated, but the thoughts and ideas expressed are her own.