eBay: E-Commerce To Be $1bn Biz In India By 2013

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?
A: I think it is more and more the Indian consumer’s experience, experience PayPal and then experience PaisaPay. We see PaisaPay being a critical component of eBay’s growth in India in the domestic market.

Q: When will PayPal be official in India? Are there any plans to launch a full-fledged PayPal here? You have had some problems launching it or some regulatory issues, are they all sorted out?
A: Soon.

Q: We were talking about PayPal and you said it will be here soon, how soon and by when?
A: PayPal is here today for cross border transactions. So when an Indian seller wants to sell to consumers all over the world on eBay, PayPal is the way that those consumers like to buy and that is the way the Indian consumer gets to pay. Indian consumers we hope over time will be able to use PayPal to buy from outside of India. So, our cross border capability is there today. We are working with the regulatory authorities to make sure that is completely in compliance with Indian laws.

Over the time, we would like to be able to also offer PayPal in domestic Indian transactions. We are working with the Indian regulatory authorities to do everything we can to make that happen as soon as possible. So, the desire is there, we are working hard on it.

Q: How soon you will be able to go out there and get more credit cards than just ICICI and HDFC?
A: Within sixty days you are going to be able to access over 40 banks on PaisaPay, you are going to be able to have mobile payments, you are going to be able to have prepaid cards. So, by October we would have significantly expanded the number of payment options.

Q: We have been talking about the mobile screen for quite a bit now, is there anything unique to that screen? What will you have for the mobile user, especially in India because that is the screen that most Indians access the net from or will access the net from in a short while?
A: We will be launching an India specific mobile web solution in later this fall. What we have seen outside of India is the eBay application on the iPhone has resulted in explosive growth. In the US, 11 million people have downloaded the eBay iPhone that will do almost USD 2 billion of volume this year.

We think inside of India, however, there will be room for applications on Nokia based platforms. But we also think that many Indian consumers will want to access eBay through the mobile web. So, we will have an Indian specific solution that we will be launching here within sixty days.

Q: What steps are you taking to reduce cheating of customers and selling of pirated goods by sellers on your site?
A: We take legitimate authentic sales very seriously at eBay. So, we work with the brand who writes down us around the world to ensure that any items that are not legitimate, both they and we have the right to take down immediately.

We also allow users anytime they see something they think is illegitimate to report it and we will take it down. So, in reality there are very few counterfeits or very few illegitimate goods that get sold on eBay. But just to make sure Indian consumers understand how safe it is, we now offer a money back guarantee, if you are not a 100% satisfied with your transaction on eBay, we will refund your money.

Q: That is something offered around the world or specific to India?
A: India is taking the lead on that.

Q: Why is that?
A: Simply because the Indian market, building trust, we view it as an important signal to the Indian consumer that you can buy safely on eBay.

Q: How many people have use that, how much have you had to spend on this?
A: It has not been that bigger problem for the simple reason that eBay is a very safe place to use. So, what we have seen, the biggest impact we have seen is more and more people are comfortable. It is giving people that confidence, people that maybe haven’t bought online before or haven’t used eBay, haven’t bought from an e-commerce providers giving that confidence to do it for the first time.

So what we have known all the way along is this is not an issue of there is actually a lot of fraud, but the fear of fraud is what keeps people away. So, the money back guarantee on eBay is a way to help someone overcome that concern and they can buy with security.

Q: We talked about the consumer, let us talk about your investments in India. You have a technology center in Chennai, so what does that do and what are you planning here?
A: It is our largest global development center outside our headquarters location. We have 1,400 technologists in Chennai both, who serve both eBay and PayPal what I think makes our development center so important in India is this is not an India focused or Asia focused development center. These engineers are a part of our global development teams and so they participate in the very core of what we do. It is interesting. We have innovations really important in our businesses because the internet is growing so fast. We have an annual innovation contest in each of our two businesses, eBay and PayPal. Every year some of the top winners of the greatest innovation come from the Chennai development center.

Q: How much have you invested, can you share that with us?
A: We have 1,400 people in Chennai.

Q: Is it likely to get bigger?
A: I think certainly a commitment is a long-term one. So, we will continue in Chennai and we are currently evaluating opening a second standard elsewhere in India. So, it has been a vey successful step in our evolution and an important part of our success.

Q: What is your favourite application on iPad, other than eBay?
A: eBay is my favourite. If anyone has not tried, it is the best iPad; it is the best eBay application. But here is a good friend of mine Chris Anderson runs Wired magazine in United States. Wired has an application on iPad that is stunning and in that it shows the future of online advertising because the advertisements have embed videos in them that make it very engaging and very entertaining. So, you begin to see how online advertising is really going to play its way out and the Wired iPad app is really an early illustration of that

Q: Do you shop on eBay?
A: Yes, all the time.

Q: What’s that you have shopped on eBay the most?
A: I both buy and sell. I have bought a lot of golf clubs and right now I am selling some golf clubs on eBay. Here is the problems I figured out, even when I buy the world’s best golf clubs they still don’t made me a best golfer. So, when I sell them I have to tell people that I am sorry to tell you that even though this is a great golf club I cannot guarantee it results based on my performance.

Q: Do you use PayPal for your transactions?
A: All the time, it’s the safest way to pay.

Q: Technology is meant to make life more comfortable, but is there any tech product that you wouldn’t sell on eBay and want to ban?
A: Email. I want to ban email. I get too much of email.

Q: What’s the gadget that sells the most on eBay?
A: Cell phones, around the world because cell phones are something everyone needs. You can find the best cell phone deals in the world in every country on eBay.

Q: In India as well?
A: In India as well, cell phone is one of the biggest category, you will find great prices both on new and refurbished cell phones.

Q: What is the one gadget that you cannot imagine in life without?
A: A cell phones.

Q: So do you sell them on discount on eBay?
A: The best cell phones deals in the world are on eBay.