Business – What makes eBay India tick?

Shivani Shinde

# Close to 3,500 people across the globe bid for Bollywood heartthrob Salman Khan’s towel last week on eBay India. The winner, a UK-based fan, bought it for Rs 1.5 lakh.

# Actor Priyanka Chopra’s dress that she wore recently on a TV channel was bought for Rs 50,000. The auction saw participation from 2,500 bidders.

Indian e-commerce has certainly got one of its biggest success stories from eBay India. So what makes an Indian buyer, who is still grappling with the decision to use his/her credit card on the net, go and shop on eBay? According to eBay India’s country manager Ambareesh Murty, it is the ease and convenience that the portal has been providing to the customers.

“Our success is basically validated by our three mottos – safety, ease of use and value. While, yes, we had the first-movers advantage, but we also stuck to our proposition to make online buying simple,” Murty said.

The numbers talk for themselves. eBay has grown from one million registered users in 2005 to 3.3 million as of June 30, 2009. Listings of products on the portal have increased to 300,000 from 75,000 in 2005. But most importantly, PaisaPay – its payment gateway – has seen a penetration of 70 per cent from 54 per cent last year and a mere 15 per cent in 2005.

According to JuxtConsult, an online research consultancy, almost 45 per cent of online buyers in India buy from eBay on a duplicated basis and 28 per cent of all buyers do that on a preferred basis. The Juxt Consult India Online 2009 study said, India had nine million-odd shoppers, who just search but don’t buy, and 3.5 million buyers. According to the comScore data, among the auction sites, eBay was the most preferred in July this year with 3,099 unique visitors.

For those who do not know how eBay works, here is a small description. Unlike a lot of other e-commerce portal, eBay is a marketplace where sellers come to sell their wares and buyers come to buy. Since eBay has multiple varieties and categories, buyers here get value for money. The portal has three categories – fixed price, auction and classified (for commercial vehicles, cars, bikes, services and real estate).

Avnish Bajaj, co-founder of bazee.com, believes that what has worked for eBay is its focus. “After the dotcom bust, several e-commerce players left the sector because they either thought it was too early for India, or it was not meant for India. We, on the other hand, knew that we were early and had a problem, but then we needed to search for a solution,” said Bajaj. Bazee.com was acquired by eBay Inc in 2004.

But from its inception to the present day, eBay India has emerged more as a fixed-price market than an auction platform, which its parent is. “India is predominantly a brand new, fixed-price market. So, two-thirds of the transaction we have on the portal are fixed price. Auction is the second highest, followed by classifieds,” said Murty, adding that in product categories like jewellery, auctions were the preferred mode of shopping.

The other thing that has made eBay India do better is the fact that a lot of its features are developed in India. Even its payment mechanism PaisaPay.com has been developed in the country. Some of the early features of eBay that still continue to be used are the cash on delivery option and seller ratings.

“eBay India’s purchase floor is very different… The check-out on eBay India is done in just four steps. But an auction check-out would have much more steps,” said Murty, adding that the four-step check-out would soon be adopted globally.

Even in case of PaisaPay, the buyer’s money is not transferred to the seller till s/he receives the product. In case the product is not received, the money is returned to the buyer.

Market experts said that other than being a different model, eBay India has worked towards evolving the e-commerce market. “One is, of course, the model that eBay has. But more than that, what is working in its favour is its efforts for businesses to be set up online,” says Muaralikrishnan B, director, Category and Product Management.

For instance, as part of the entrepreneurship focus, new sellers are given full support for a period of one to three months. During this period, a trainer provides them training on setting up eBay selling accounts, choosing what products to sell, creating an attractive listing (title, description and pictures), how to ship, customer service, pricing, seller profitability etc. Post-training, the seller is moved to an active account management bucket, where category-specific knowledge is imparted.

eBay also keeps a track of what is happening offline. “Our product category is domain-specific. Each domain has its category manager. These managers keep track of what is happening in the offline model, which products are selling more, discounts being offered and potential next ‘hot’ product,” said Murty.

Muaralikrishnan agreed that in the online world one has to be quick and reactive. “For instance, when HTC launched Android-based handsets, eBay India had that on the site much before they were actually made available in retail outlets,” he added.

Every product that is listed on eBay has a listing fee for the seller. If a transaction does complete a final value, fee is charged as a percentage of the item price. While there is listing fee for technology and lifestyle products, media is an exempt. If the item is paid for through PaisaPay, then there is a transaction fee. Besides, eBay also provides a feature upgrade for better visibility. It also offers an online store, which works on a monthly subscription fee. That apart, advertisement is another revenue stream for the portal.

Many people felt that eBay India was tilted towards buyers rather than sellers. “India has the highest number of frivolous buyers. There are chances that genuine sellers will get duped,” said an industry player.

But eBay said they had enough checks and balances to prevent such incidents. To address concerns such as items not received, eBay came up with an enhanced version of PaisaPay in 2007 that makes it a must for sellers to give shipping details which are passed on to the buyers via SMSs and emails. Until the buyer receives the product, the money is not released to the seller. In case a product doesn’t match its description, the buyer can seek eBay Buyer Protection or file a suit against the seller.

What if a buyer takes a seller for a ride? A year ago, eBay started a community court to address such issues. In the community court, cases are settled by a jury of 21 randomly selected eBay members. So far, there are 171 open cases on eBay and several thousands are being argued.