India has had restrictive retail laws for a long time, primarily designed to protect traditional small stores. It has only been in recent years that any foreign retailers have been allowed to enter the market and single-brand e-commerce has only just been permitted with a law change made in November 2015.
This change in the law has prompted the German sports companies Puma and Adidas to both register their desire to create single brand online retail outlets in India. Of course Puma and Adidas are bitter rivals, the two companies having been founded by two brothers in the 1940s – it’s interesting to see their rivalry now extends to developing new markets at the same time.
The interesting thing about the law change in India is that the law used to require local sourcing of items for sale. In effect this meant that online retailers needed to setup their own complex warehouse and supply chain. Now the law has relaxed all these restrictions so cross-border e-commerce becomes feasible.
This could lead to a large number of luxury brands developing their offer in India. The population of India at present is 1.25 billion people and the middle class slice of this population is almost 300 million. This offers an attractive opportunity for brands that have previously found India a difficult retail environment – the number of middle class consumers in India is almost equal to the entire population of the USA.
But for any brand to get this right in India requires a focus on the customer experience. Creating a successful e-commerce operation is about more than just a slick website. In particular there is a need to ensure that customer expectations in the new market are assessed and planned for. The customer service operation needs to be using the right channels to support this new wave of customers.
So although the law has changed and India can expect more brands to open there soon, joining the initial applications from Puma and Adidas, I believe that companies should proceed with caution. If they don’t plan how to support their customers in India then quick expansion plans could backfire – customers want the same great experience from an online retailer all over the world.
What do you think about the likely expansion of online retail in India? Leave a comment here or get in touch via my LinkedIn.
Photo by Bobby Vie licensed under Creative Commons.