Forum Moderators: open
Been toying with the idea of e-com from India .. ie actually shipping products to other countries. I have made and launched one site for test drive. It has all the components of a real e-com site including ccavenue credit card gateway integrated for payments. Now I am stuck with the shipping part. Apart from the exorbitant $70 upwards cost per shipment .. its the compliance with customs and foreign currency .. two big dampeners for any one venturing into this I guess..
any one doing it from India with experiences to share?
Jaski
E-Commerce Lives
[business-today.com...]
A clutch of small enterprises and individual entrepreneurs
are putting the e-thing to good use and selling their produce globally.
Jaski
The basic problem for most including me is that they do not have any background in exports .. which looks like a complicated affair to the uninitiated with all those documentations and compliance with foriegn exchange laws. I am trying to unravel the mystries one by one .. but its painfully slow trial and error process.
From whatever I have gleaned so far .. here is a brief summary.
-----------------------------
Ingredients for e-com biz from India .. the way I understand as of now.
There are 4 areas to tackle
1) Marketing
2) Payments
3) Shipping
4) Legal
1) Marketing - SEO - no problem at all as not much competition is there in most of the areas.
2) Payments - Credit Cards - CCavenue gateway (may be there are more providers, ccavenue are the only ones that I know about).
3) Shipping - Exorbitant costs - starts from $70 for US for express shipping by DHL .. I believe it can come down to 40-50 for higher volumes but still will remain on the expensive side.
4) Legal
i) Customs compliance - need many many documents :)
a) Shipper's letter of instructions
b) Bank letter registration
c) SDF form
d) Export invoice (6copies)
e) Shipping bill of exports
f) Additional documentation for garments/fabrics destined to US.
All these are per shipment.
There are certain one time requirements as well, like
a) obtaining an IEC number - > Importer Exporter Code Number from DGFT
b) getting registered with EDI system of customs department.
these are the ones I have come to know of so far.
ii) FEMA (Foriegn Exchange Management Act) compliance :- You have to account for whatever foreign exchange is involved.
They are worried about people routing money elsewhere instead of bringing the dollars to India .. so you have to make sure it comes. I don't know how it works out in the world where chargebacks are a norm.
---------------------------------------
I think Legal complications and shipping costs in that order are the principle reasons of why e-com has not taken off in a big way from India.
Disclaimer :) :- These are just observations of some one who is not running any such e-com business in India as yet.
Most of the issues you brought up are relevant to any e-commerce enterprise that wishes to market worldwide.
The customs section seems to be the biggest hurdle in your case. I would look into this aspect and inquire if there are any opportunities for streamlining the process. I don't know what type of product you might be selling or whether there are any third party customs brokers operating in your area that could help.
Depending on what you are selling, you might also have to check the laws of the countries you are shipping to. Just to give you a recent example, the FDA now requires some sort of a certification for any food imports to the US. This is no big deal for the large companies, but I know of many small niche businesses in say Canada who are adversely affected.
I find it interesting that a lot of "Indian" exports of foodstuffs are really from the UK, where they have better packaging, better ingredients, better marketing savvy, and less red tape than India. Where India has good ingredients, the best is exported and leaves little for local manufacturers who want to export.
There must be some under-exploited export niches that your SE skills can discover. Doing local gift deliveries for NRI customers might be an easier way to get your feet wet with e-commerce without the added burden of learning exporting.
1) Marketing - SEO - no problem at all as not much competition is there in most of the areas.
The SEO part is no problem, but what about the rest of the marketing?
Over the years I have lost count of my friends and relatives who wanted to export something to this region. Many had no expertise in the products they wanted to export or in export formalities. They saw themselves as middlemen. I had to break the sad news that China and the Far East in general made better generic goods for lower prices, leaving a few uniquely Indian products worthy of export.
Funny story: I recently bought about Rs 200 worth of Cadbury's chocolates to take home to Oz and my family there thought I was mad - I had brought them a sizeable amount of Aussie Cadbury's, Nestle, Toblerone etc, so they couldn't understand why I'd want to buy Indian chocolate. My kids at home like to sample such things, hence the purchase. Despite the same brand name, the Indian version is simply foul. It is mostly compounded chocolate that had gone grey with the heat despite being manufactured a few weeks ago. If this international company can put its name on such crap, you can see how "quality" has a different perception in India.
Ash
Very True , In US most of the Indian Grocery Food Items come from either UK/Canada or from south asian emigrant pockets in US like New Jersey or Chicago . I think its may be due to strict FDA regulations which cut-out many indian manufacturers.
>> Doing local gift deliveries for NRI customers might be an easier way to get your feet wet with e-commerce without the added burden of learning exporting
NRI Market is already crowded with lots of big companies in it .But there is some scope for little regional players . I heard about an Hyderabadi Sweet-Stall (forgot the name!) which already have a big offline brand in AndraPradesh which went online and become quite sucessfull... But niches like that are rare and also not that big to bother!
But said all these i believe there is some great potential in the b2b space ...This is not pure ecom but the leads will be generated online and sales closed by phone and face-to-face and comprises of both industrial and service sectors .
Select a few industrial widgets that goes out of india and make marketing arrangements with local manufacturers . Marketing involves SE's and b2b directories like alibaba and Thomas Register .I really want to explore this but time constraints kill me :)
There are some product niches which are ripe for being exploited. Not very big markets .. but big enough for some one looking just to start.
>>$15 shipping
There are only 2 ways it could have happened
1) That product was "actually" shipped from somewhere in the US itself. It might have been by some arrangement with their agents in US who import in bulk and then sell in retail.
2) They "shared" the shipping burdern with you. I have been talking to DHL Manager North Zone for the last month or so on how to reduce costs. He tells me its min Rs 1900 (upto half Kg) .. then their is some air freight charges which is another 500+ and then their are 11% taxes.
So $15 is not possible if they really ship individual packets from India.
<added> I just re-read your post gopi .. if it was only a $20 item then option 2 is also impossible .. so it can be only option 1 I mentioned above </added>
I discussed this whole issue with fedex today .. they tell me that its very complicated to send stuff (red tape) if you want to send commercial shipments. Popular alternative I was told was to declare packets as gifts .. that circumvents the law basically .. grr ..not a braveheart to do that.
>>b2b
Gopi you are very right about b2b .. I want to try b2c first...b2b is a bigger game and a capital intensive business .. and one ought to learn some thing in the selected widget domain .. before getting involved in the bigger game.
oh boy I am getting real taste of Indian red tape that I had only heard of till now.. any way .. let us see how it goes. The real inspiration for me is the fact that there are some brave souls out there who are actually doing it .. so there definitely is some light at the end of the tunnel .. moving on to find that .. :)
Ash thanks for all the ideas .. I am afraid you are correct on all counts .. really "afraid" :) .. but will try to give it my best shot any way.
Jaski
[firstandsecond.com...]
I dont know how they do it ...Maybe a portion of the shipping is priced on the products already :)
[edited by: gopi at 4:44 pm (utc) on Dec. 23, 2003]
This is the reason the NRI B2C ecom market dont have many succesful sites that directly ship hard goods to US from India ...
The succesful ones operate in these spaces
1, Virtual Products (Calling Cards ,Flight Tickets, Visitor Health Insurance etc)
2, Services (Matrimony , Cash Transfer , NRI banking , etc)
3, Gifts to India (shipping is within india)
4, Indian Product sites operating out of US/Canada/UK - shipping is not a problem here
I dont want to discourage you but want you know the practical reality :)
The other point is that you may find a niche market in a nearby geography that has less competition, e.g. shipping to Australia/Malaysia/Singapore is less expensive than that to the US.
I dont know how they do it ...Maybe a portion of the shipping is priced on the products already
I missed that in my reply - that company doesn't spell out that it uses only shipping companies. Perhaps it uses Registered/Unregistered post for some orders and this could help lower its average rates.
I have also found that shipping companies negotiate special rates with large customers, so it pays to find out what other e-commerce sites are quoting and try to get something just as good.
Another critical factor in this business is scale. eg. if you have sufficient volumes you can think of having a tie-up with agents in important countries to act as a distribution hub. It is very interesting to note that apparently reducing number of shipments going out dramatically cuts down the cost as well as hassles.
Yes niko I have been discussing this with postal guys as well .. they have their own problems .. but they are definitely lowest cost wise.
