E-retailers join local retailers to tap small towns

Fabmart.com and Tradus.com have partnered local retailers

in small towns to tap non-internet users in these areas to sell their merchandise. Indeed, while the new model guarantees customer acquisition, profits may still be elusive. Fabmart.com has been testing the model in four districts of Andhra Pradesh during the past one-year, and now it is adding other districts of Andhra Pradesh along with expanding to Karnataka and Tamil Nadu. Another leading e-commerce portal Tradus.com is also in the process of experimenting with the model.

There are 120 million internet users in India, which account for only 10 per cent of the population. This model targets the major chunk of population who do not use the internet. Fabmart had tied up with 150 retailers in four districts of Andhra Pradesh. These retailers are sent detailed catalogues of the products. The customers coming to shop can browse through the catalogue and order products. The product can be collected from the store in a few days.

Through this innovative step, the retailer earns 50 per cent of the sales margin. Of the margin left with the e-commerce company, the logistics, payment and other costs are met making it difficult to make profits. But companies feel that the model can gradually become successful because they will not be lowering the prices just to acquire a customer or make a deal.

Tradus on the other hand believes that the absence of costs on inventory holding, customer acquisition and distribution can make the model profitable. Tradus.com will be partnering 1,000 small retailers of various or even kiosk owners who are offering travel-related services.