ND Commerce Blog

India Entry by International Brands Using eCommerce Business As A Market Entry Strategy

November 24, 2014 No comments
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The Indian retail scene is booming. Growing consumer numbers, increasing purchasing power, access to Internet, access to credit. Leading to growth in the economy and consumption of goods by consumers – rural and urban.

This is a good time for any brand to enter India and get started on selling their products to consumers.

Competition is growing and brands need to invest in the brand, distribution and customer engagement and loyalty. These are all significant challenges for any brand. In the past some international brands have relied on a distribution model for India entry – Appoint a distributor in India and let the distributor sell the product. And when the business becomes large enough, open an office and set up a local team.

Going forward, new brands may have to look at a more accelerated approach to establish a presence in India.

One way that we recommend is for brands to make an entry through the ecommerce route providing online shopping in India. Establishing an online store in India and then expand to physical retail when the time is right and the country investments are prioritized.

International Brands from markets like Singapore, South East Asia, Japan, US, Australia, Europe, Central Europe, Middle East, South America, Africa and other areas can look at India as a promising retail market.

The two key ways to use an eCommerce business model to enter India are:

Exclusive Online Brand Outlet – EOBO

Marketplace Listings on Multi Brand Operators and Online Market places such as Amazon India, Flipkart, Snapdeal and others

Exclusive Online Brand Outlet

The advantages of setting up an Exclusive Online Brand Outlet (online store) are several and more so for India entry. These are

Provide consumers with an option to buy your products in India using a local payment gateway with local stocks and immediate deliveries

Test brand acceptance, merchandise and pricing – launching an Online Brand Outlet allows you to test products and consumer acceptance of your products before you come in with a larger distribution play

Building a case for your brand presence in India. Once you have tested the waters and understand the consumer response, your brand will be in a better position to enter India and also find the right distribution partners

Marketplace listings

Another way to enter the market using ecommerce business would be to list on various Internet marketplaces in India. There are several generic market places like Amazon.in, Flipkart.com, and Snapdeal.com as well as specialized market places for specific verticals like health, home, gifting amongst others.

How should a brand go about their India Entry using ecommerce?

India has some specialized ecommerce services companies that work with brands to set up and operate their exclusive online stores. One of the leading companies in India is Net Distribution (www.ndslindia.com)

Net Distribution is a local Indian company headquartered in Mumbai India, with office in Delhi, Bangalore and Kolkata.

Net Distribution can be appointed as the importer of record and merchant of record whereby products are imported by Net Distribution and then sold to consumers in India through an exclusive online store set up for the brand. The consumer makes the purchase from Net Distribution, a local online retailer. Through this arrangement, consumers can buy the brand products and pay Net Distribution for the products and have their purchases delivered to them.

Net Distribution can also be the retailer of record for marketplace listings. Under this arrangement, Net Distribution would import products and then sell these on marketplaces.

The process is the same as if the brand were to appoint a local importer who in turn distributes products to retailers. Except that this is in the online space and the brand retains control of the branding and consumer messaging.

For more information or insights on how you may leverage ecommerce business opportunity to make an entry into India, please do write to the author.

Ajay Miglani ajay@ndslindia.com