)
Latif Nathani, managing director of eBay India, says his company has had a good run in India. He tells Kalpana Pathak eBay is here for the long haul. Excerpts:
How has the decade been for eBay in India?
It has been a wonderful 10-year journey. It is exciting to have built and contributed to the seeding of e-commerce in India. Being in the marketplace is not easy, but we have earned our stripes and trust. Every 10 seconds, somebody in the world buys a product from eBay India. India is a fast growing but a relatively small market.
According to Forrester Research, last year the entire e-commerce size for India was $3.9 billion, while for the US it was $350 billion. So, India has a lot of catching up to do. We have had to understand the Indian market and do things for it to earn that trust. India was not accustomed to buying things by looking at a picture online. It is a nascent market in that sense. There are issues such as shipments getting delayed due to infrastructure problems or the wrong products being sent. We had to innovate and customise to a great extent.
Could you elaborate on the innovation and the customisation?
In 2007, we had introduced our online payment platform PaisaPay. This ensured the seller will only get paid after the buyer has received the product and confirmed that this is what he/she/it wanted. PaisaPay is only for the India market. Then we came up with the eBay guarantee, ensuring satisfaction even after the delivery of the product. Another innovation we did for India is PowerShip, a technology solution that integrates our logistics partners with sellers. It is all automated. When the order comes in, logistics companies know when and where they have a parcel to pick from. We have integrated this entire technology with our sellers.
You had the first mover advantage in e-commerce, but the competition has raced ahead of you.
We don't have a valuation angle to our play in India. We're looking at a long-term sustainable business here.
It requires building reputation and trust and that's why today we are operating the biggest mall online with 30 million products, 50,000 sellers and 5,000 villagers in India. Of the 50,000 sellers we have, 15,000 are selling cross border. Today, a leather merchant in Dharavi can sell his jackets to 30 countries. It is impressive to see him ship products to Canada and the US. This is what eBay has been doing, contributing to the exchequer through these small manufacturers and helping them move up the chain. We are giving a lot to the community.
What about the eBay brand recall?
We do not believe in big-bang advertising. We do a lot of outreach. E-commerce is going to be here when we have a million sellers selling online. India is about traders and online players. We have signed a memorandum of understanding with All India Traders Association, which has 60 million members and we are educating these people about the advantages of e-commerce and doing business online. Also, we do our regular campaigns. Our thinking is not for the quarter, or six months. It is long-term. So, we don't need to sponsor a fashion week or any other such event.
Aren't you losing out to the competition?
Our competitors have a very different model. Some players have both models-of being a marketplace and an e-tailer. Some have tried to move away from one model to the other. We don't have that kind of a conflict of interest. We are very clear that we're a marketplace. So we don't own, price, or store the goods. Whenever a sale happens, the product is listed and the price is dependent on what the seller wants. Sellers' names are on the website and our sellers pride themselves on the service they provide because of the feedback score. There are some sites that do not identify the sellers. We allow our sellers to build their reputation and their brand. We are a platform that helps facilitate the transaction.
Logistics is one segment where e-commerce companies are investing heavily. What about you?
We have partnerships with all the courier services. We have even launched a pilot with India Post. Just like we don't compete with our sellers, we don't compete with our partners either. We have not built an in-house logistics arm and we have no plans to do that.
Many people question the business model of e-commerce companies...
E-commerce business model is profitable and we are the biggest testament to it. We are listed in the US and we are profitable. The bigger question however, is with all the private equity and venture capital money flowing in, where is it going? If that money is going into predatory pricing, then it is an issue. We don't participate in predatory pricing. We believe that benefits of e-commerce is not just pricing but also supply, choice, availability and convenience. There are many advantages of e-commerce that are not coming out when it becomes just a price game. When you compete on price, you can't build a long-term sustainable business.
Sebi is planning to ease listing norms for on-line companies. Any plans for an IPO?
We are a 100 per cent subsidiary of eBay Inc. We don't have any listing plans. But we do see ourselves growing and doing well in the coming years.
