eBay wants to change the popular perception of being just an e-auction site and make the most of the fast-developing Indian e-commerce market
In an interview with CNBC-TV18's President & Editorial Director of TV18 Business Media, Senthil Chengalvarayan, eBay's President & CEO John Donahoe spoke about the company's India plans. Below is a verbatim transcript of the interview.
Q: eBay is synonymous with online marketing, online auction, but you are really more than that; you are into telephony, you are into payment solutions with PayPal, you have got Skype, you have got a ticket exchange through StarHub, you have got number of classifieds sites across the world. So, what are the various consumer touch points that you like to be in to feel connected?
A: eBay is about connecting buyers and sellers. eBay, market place was the first way we connect buyers and sellers and ten years ago that was the only way to connect buyers and sellers online.
Q: You think the telephone is something to connect with buyers and sellers.
A: Payments is the way to connect buyers and sellers. We actually we have sold 70% of our stake in Skype simply because I didn’t see synergy in that business. So, today we have got two core businesses; eBay, our core e-commerce site and PayPal, our core payment site.
Q: Any other touch points you like to be in or you think you need to be in?
A: I think with e-commerce it’s going to be multiple ways to connect buyers and sellers. You mentioned StubHub which is a ticket exchange in United Stated, our classifieds. We have numerous classifieds sites around the world.
What we want to do is offer consumers choice to buy in a format they want from the seller they want. We want to offer sellers choice to sell in the format they want to the consumers they want.
Q: Are you in India little too early? I will tell you why I am asking you this because if you look at the Alexa rating for traffic onto the internet, in the US you are number nine and I think Amazon is five. But look at India, we have got Big Bazaar, which is India’s largest retailers, with 860 or something, Shoppers Stop, which is 1,800 so the big brick-and-mortar boys in India seems to be saying it’s great fun out there but we would rather be down here, investing in where the real money is. So, are they getting it wrong or are you too early?
A: I do not think we are too early. I am very bullish on e-commerce in India. I think India is still in its early days and the Indian e-commerce market growing at 30% a year. eBay’s business is growing 60% a year. So I am certainly not feeling we are too early. We have got 2.5 million registered users now and I think the Indian e-commerce market can experience significant growth over the next three-five years as 3G comes online, as broadband gets more ubiquitous.
Q: How do you see it evolving because at the moment I think 60% of online transactions are tickets; railway tickets, aeroplane tickets? Is that similar to any other emerging market around the world, how do you see this emerging?
A: I think what you are going to see here in India is with more people having access to the internet through their mobile devices or through broadband, you are going to see changes in consumer behaviour in terms of willingness and an ability to buy online.
Q: Is there any emerging market that you like to compare us with or is it too newer business to draw compare with somewhere else?
A: I was with our India team today and what I said to them is I want other emerging markets to be comparing themselves to India because I think India will be a resource of innovation and Indian consumers are very demanding consumers. So, whether it’s through mobile commerce or through other ways to connect with buyers and sellers and the way things could be delivered, I expect India to be resource of innovation in e-commerce in the next three-five years.
Q: Before we look ahead, what’s been the biggest challenge that you faced in India and what is the biggest challenge you think is holding e-commerce back?
A: I think internet access. If you can’t access the internet and you can’t access with respect to high speed it makes it harder.
Q: We have about 6.8 million broadband users or connections and about 35-80 million internet users depending on which server you go by, so it’s pretty large in an absolute sense it may not be in terms of penetration, but it’s still pretty big in India. Isn’t it?
A: Yes, and we have a good business in India. eBay has got reasonably sized e-commerce business and as I said it’s growing 60% a year so.
Q: So, you don’t think logistics or anything will be a problem, you think that will evolve to meet the demand?
A: I think India is getting better on all the key friction points that reduce things like e-commerce, taking online payments, any friction away and PaisaPay has been the way we have done that at eBay. So, today 70% of payments are paid for electronically or commerce paid for electronically and that is upto 15% three-four years ago.
Trust is growing online in India. We have used a Escrow like intermediated solution here that allows people to buy with trust online. So, there is a natural evolution. I think India is right at the tipping point here where over the next three years you are going to see significant growth.
Q: How big do you think it can get because I think Forrester research says that e-commerce will account for 8% than the total retail sales in the US by 2013, what kind of proportionate numbers can we look for in India?
A: India where e-commerce is today 5% of offline retail, Forrester says 8% and I think it will be 15-20% within five-seven years across the globe. I think in India the way I look at it, it is a half a billion US dollar business e-commerce is today. There is no reason why that cannot double in the next three years and then double in the following three years after that.
Q: Are we talking about sales made on television or are we talking only about online sales?
A: No, the sales closed online. So, I think there will be sales on television. But I think what you are going to see in India is we are seeing around the world is with things like mobile devices, people are accessing the internet seven days a week, 24 hours a day. You don’t have to be at a laptop, you don’t have to be at a desktop, you don’t have to be at a computer, you can be standing in line at the coffee shop or waiting for the bus with the smartphone or be standing in a store and use an sms or text to price discover where the price of an item you are thinking of buying is online. Things like that are pulling people into internet and e-commerce. As a result of that, line between online and offline is blurring.
Q: Payments, do you think India will go the payment way the rest of the world has gone? It is still largely a cash on delivery (COD) market whether it is television shopping, even the railway says that they still sell a lot of tickets COD, so will it be a predominantly COD market?
A: What our research says both in India and outside of India is consumers want safe, convenient ways to pay and cash has always been a safe and convenient way to pay. However, online what is happening is our products like PayPal are now proving to be the safest way to pay online because an Indian buyer can buy from a seller anywhere in the world, can buy from a seller in China, a seller in Sao Paulo, Brazil or a seller in Chicago and pay money by never sharing any other financial information online, not sharing the bank account, not sharing the credit card by using PayPal.
Q: How do you convince the average Indian consumer or you think it will just happen over the time?