Cultural influences in designing eRetailing portals

Submitted by Group 9A Sudhir Medithi(122049) Vinay Tejasvi (122105)

Table of Contents

Mr.Chris Lambert, the head of Marketing at CrySoft Technologies had reached office an hour earlier than his usual time to prepare for his meeting with the companys CEO. In the past few weeks, Chris had been working on the re-launch of his companys e-commerce website in India and his team had come up with a new design and layout. The earlier website failed to attract customers and had been criticized for neglecting key cultural aspects of the Indian consumer. The team had spent considerable time in identifying the needs of the Indian consumer and made substantial efforts to customize the website to gain a better cultural fit. Chris was hoping for a go-ahead from his CEO to initiate the changes in the website.

Company Background
The CrySoft technologies Ltd. Is an American e-commerce company, headquartered at New York, United States. Mr. Jeffrey founded the company in the year 1995 as an online retail bookstore but in a short span of time CrySoft diversified in to selling electronics gadgets, apparel, furniture, and toys. Vision, at CrySoft technologies, is to build an excellent e-commerce platform where people can buy anything at a cheaper, affordable price with a trusted experience. Crysoft limited ventured in to India and started its operations in the year 2009. Indian subsidiary reported a revenue of 217.78 crores, net loss of 116.69 crores in the year 2012 and 49.4 crores revenue and net loss of 24.01crores in the year 2011 (Exhibit -1). Others competitors like naaptol, best buy, snap deal are able to make profits in this business but crysoft is failing to do so since it began its operations. Main product categories that CrySoft offer through their website are Books: Covering all novels (fictional and non fictional), education related (textbooks, entrance exams materials, academic & professional journals), religious etc. Clothing: All seasons collections for both men and women are offered. More than 250 + brands products are available. Footwear: It offers both sports & causal shoes, chappals, sandals, floater collections for both men and women in more than 40 brands. Fitness, Home kitchen, Electronic products, accessories, and watches: Various brands products are available in each category with different price ranges.

Beauty &Skin care: It offers more than 70 brands cosmetics to the women covering wide range of products. Gaming: It offers various gaming consoles, games CDs, dvds and gaming related accessories. It covers all latest release of games. Payment Modes: CrySoft provides customers with a confidence of safe and secure online experience, simplified electronic payments flow, cash on delivery and customer friendly return policy. CrySoft with 24x7-customer service support and with globally recognized purchase protection, company leaves no apprehensions to customers regarding their security concerns.

Evolution of E-Commerce in India

Evolution of e-commerce in India started with the launch of internet using dialup connection in six cities. By the year 1998 online job portals, matrimonial portals ruled the e-commerce space. With the effect dotcom bubble, during the period 2000-05, e-commerce faced tough times but after the year 2005, this industry started growing at a rapid pace. Below image shows the time line of e-commerce developments in India.

Source: (RE-BIRTH_OF_ECOMMERCE)||KPMG report

Modes of Conducting E-commerce in India E-Commerce transactions in India are broadly classified in to three modes
1. Customer to Customer (C2C) 2. Business to Customer (B2C) 3. Business to Business (B2B)

Below image shows the various transactions carried over e-commerce space

Source: (RE-BIRTH_OF_ECOMMERCE) Customer-to-Customer (C2C): At present C2C, represents only small chunk in the ecommerce market space but numbers of entrants in this mode has been increasing. Many of these entrants are backed by venture capitalists and this segment expected to grow in future. Ex: Online classifieds about selling of cars Business- to- Customer (B2C): This market is predominant in India out of all available modes of e-commerce. In this segment, major revenue generators are online travel portals and e-retailing portals. This segment is rapidly growing and expected to continue the same trend in future years. Ex: IRCTC, Flipkart Business to Business (B2B): MSMEs (micro, small and medium enterprises) are the frequent users of this mode. This helps the businesses to find the market for their products/services and helps to overcome high financial & communication barriers

Key stakeholders in E-commerce Supply chain

In e-commerce, information flow, product flow and monetary flow constitutes key things to carry out a transaction. Three stakeholders play a vital role in carrying out these flows in ecommerce space (i.e. supply chain). One is buyer, second is e-commerce player and third is supplier. In product flow, movement of goods happens from supplier to customer via Ecommerce player and vice versa in monetary flow. Information flow happens across the value chain (i.e. key stakeholders, Enablers, Customers) right from placing of order to delivery of the product to the end customer. Below image shows the typical e-commerce supply chain.

E-commerce Market size in India

B2C and C2C together showed a phenomenal growth rate of 49% (CAGR) in reaching $ 9.9 billion in 2011 from $ 2 billion in 2007.

All figures in Billion

Indian retail market size was estimated at $ 528 billion in 2012 with a growth rate of 11% (RE-BIRTH_OF_ECOMMERCE). In 2012, 90.4% of the revenues are from the unorganized sector but organized sector showed a growth of 24% year-on-year growth. In the year 2012, online retail market constituted to 1% of the total organized retail market in India. Below image shows the market size stats of retail sector along with online retail contribution.

Considering the growth potential of Indian retail market, online retailing market is expected to grow at rapid pace in coming years

Emerging Models in E-commerce

With the changing times and needs the way of conducting the businesses are also changing with the time. New models, which evolved recently in e-commerce space, are 1) E-mall/E-market place 2) Deals/Group buying

1) E-malls/E-market place: This business model is similar to real world shopping malls. Here merchants can setup their virtual shops and carry out their normal merchandise operations. Advantages of this model are, merchants will have access to huge customer base when compared to setting up new website altogether and merchant can use existing channel for payment related activities. 2) Deals/Group buying: This model is gaining popularity in recent times, premise behind this model is to operate in large volume, by which merchant can achieve economy of scales thus can reduce the price of the product.

Outcome of launching a standardised website

CrySoft technologies launched their e-commerce portal in India by making few customization in terms of content (i.e. Address forms, phone numbers etc.). They believed in the maintaining standard layout across the globe and same business methodology. They continued to offer the same deals in India similar to that of USA. During initial days, website attracted huge number of customers, in due course customers visits to the website, logins and purchases eventually reduced. Below graph depicts the three years customers data. Interest of the people visiting the page has decreased from 80% to 15% even though company offering competitive prices compared to the others competitors in the market and purchases were almost stagnant.

Months

Cultures influence on Website

Interest (100% - peak interest)

Design

In the context of electronic commerce, the website layout and design must take into consideration, the behaviour, emotional response, purchasing trends and needs of the online shoppers. Hence, Mr Chris Lambert formed a team to design a website that reflects the taste of Indian consumer. The team adopted Hofstedes model of national culture to gain better understanding of the Indian consumer and to configure the websites layout & design according to the cultural dimensions, preferences and expectations of the Indian customer.

Indian Culture according to Hofstedes Model

The team then gathered information from the Hofstede Centre (The Hofstede Centre, 2013) on how to view India from the lens of the cultural dimensions model (Refer Exhibit 2 for the Hofstede Centre ratings for India) and made the following observations: Power Distance in India The Hofstede centre had scored India with 77 points on the power distance index. This number is fairly high on the power distance scale and indicates that people in the lower levels of organizations accept the unequal distribution of power and are accustomed to hierarchical social structures. Communication mostly happens from the top and critiquing opinions or voices from below are neglected. Centralization of power is another key element of Indian culture and the power holders expect and receive obedience from their subordinates. Due to power distance in social life, Indian consumers are expected to be very loyal and do not shift

their allegiances frequently. Hence, they will become loyal customers who will generate repeat business if they are satisfied with the services offered by the company.

Individualism in India India scored only 48 on the individualistic trait which means it clearly is a collective society. The social groups that individuals are part of have a huge impact on the opinions and decisions that individuals have or make. Acceptance in a social group is very important to Indians and people are expected to behave in accordance with the guidelines laid down by the group. In such a culture the buying patterns and behaviour are hugely influenced by the peer group, family and friends circle of online shoppers and products and designs that gain the acceptance of the society at large will also be adopted by individuals who are part of this collectivistic culture. The utility and expectations from products must reflect the collectivistic nature of the society. Masculinity and Femininity A score of 56 on the Masculinity index suggests that India is slightly more masculine than feminine. In India, the show of wealth as an indicator of success and the utility of brands and material resources is widely accepted. However, due to its spiritual inclination the country also displays feminine qualities such as focus on quality of life and well-being of others. The economy also is a mix of capitalism and socialism. In Masculine societies, the men hold more positions in social life and the result of an activity is considered more important than the process. Uncertainty Avoidance The Hofstede centre gave India a score of 40 on uncertainty avoidance which means that the national culture has less affinity to avoid uncertainty. Hence the Indian customer is open to

new and innovative products and is willing to adopt new ideas. When communicating to the consumers, the visuals and messages can be generic and need not be very detailed. Indians are also more tolerant to mistakes and failure of products and accept unconventional marketing strategies. Long Term Orientation With a score of 61, India can be called a culture that is pragmatic and focused on the long term. Being a secular nation, there is a tolerance for many religions, beliefs and sub cultures. Indian society forgives the lack of punctuality, is flexible about change in plans, and does not insist on adherence to a fixed path. The value placed on education and personal development is high in India that aimed at giving long-term benefits.

Proposed Layout and Design

Based on the Hofstede model of cultural dimensions, the team developed a preliminary layout and design idea for the website that are effective in adapting to the cultural differences in India. In accordance with the High power distance observable in the Indian Society, the layout would be very formal and categorized according to product lines. Each product line can then be classified clearly into multiple divisions based on a variety of attributes like age, price, size, features etc. Promotional messages and schemes need not be elaborately mentioned on the home page. Such promotions can lead to other pages of the website where users can get more information about the scheme. Also, due to low uncertainty avoidance of Indians the use of a site map indicator can be avoided. While navigating through the website, users can be offered choice of products that are related to the ones they are currently browsing and the catalogue of products can be huge as Indians do not mind browsing through a lot of products before they make a purchase.

The design of the website incorporates both flashy and sober renditions. Lifestyle items would be displayed in a flashy manner whereas as general purpose products would be displayed in a sober manner. Since Indian society is more masculine, the design of the website can focus on promotions or visual renditions with male themes such as contests, winner announcements. Also, the design can focus more on showcasing exclusive brands and designer labels that the company sells.

Dilemma
By accommodating these cultural aspects in the design of the website, the team hopes to reflect values of social life that are aligned with the cultural identity of Indian consumers and create a successful platform for the companys operations in India. Chris also wanted to incorporate colours, public figures and Sanskrit quotes that would increase user satisfaction and enhancing the online shopping experience. He was also worried about finding a balance between the masculine and feminine traits in the design of the website. Has the team considered all possible differences in cultural dimensions while making the new design? Will these changes suffice to turnaround the bad fortunes for his company in India?

EXHIBITS
Exhibit -1 Income statement of Crysoft technologies India

Balance sheet of Crysoft technologies India

Exhibit 2: Rating of India on Hofstedes 5 dimensions of culture

Source: The Hofstede Centre