The infant ecommerce market is now no more infant! It is in a phase of the great development. Many agencies in India provide the best ecommerce solutions and many physical stores have got their online marketplace developed from the ecommerce developers. So all I am going to discuss in this blog is how the infant ecommerce market in India is poised to become a mammoth in next couple of years and its implication over Indian economy.
Where India Stands
In 2011, the Indian ecommerce stood at just 10 billion US dollars, now if you compare it with US ecommerce sectors it’s almost 1/16th of it which is around 167 billion dollars. If you compare the populations of both the countries, India is three times the size of the US. And if US had the population size of India, then its ecommerce market would stand at a staggering 500 billion US dollars! The question is “What is stopping India from becoming a major ecommerce market?” Well, the answer is not very simple. When it comes to internet penetration, India needs to do a lot of ground work to increase its internet reach and speed. Another major factor which is holding down the ecommerce is the low online credit card usage by the Indian population. This is due to the widespread apprehension regarding the safety of online transactions among the middle class Indians.
But the future of ecommerce is not that bleak and the market is growing at a healthy rate (almost 47 % every year). In 2012, 137 million Indians were hooked to their smartphones, drove most of online transactions. The majority of them belong to tier 2 and tier 3 cities. Thanks to the big gap between the supply and demand in the retail segment, companies like Myntra and Snapdeal have made inroads in smaller cities and towns. Flipkart made the headlines for raising around 200 million in funds from investors, silencing all those who thought that ecommerce was just a passing phase. Even international giant Amazon has entered the Indian market, anticipating a robust ecommerce environment in the country. Close on the heels of Amazon, Future group has also announced its big ambitious plans about ecommerce business.
Rise of E-tailers
Market leaders like Flipkart, Snapdeal and Myntra are already giving a hard time to many of the established brick & mortar stores. The classic example is of Walmart, which entered the online sector despite earning huge profits from its offline business. They were quite sure that ecommerce is the next big thing. But in India the onset of ecommerce is mainly attributed to the hugely popular Cash-on-Delivery model which has been the driving force for these portals. The X-factor for these portals is the ability to customize and personalize shopping experience, which a retail segments can’t sustain. Cost effective and faster logistics have also played a pivotal role in pushing the growth upwards.
But according to some experts as the market matures the Cash on Delivery model will be replaced by the online Debit/Credit card transaction method. Which will free the retailers from the cash cycle. Even Flipkart is thinking of establishing itself as a marketplace player rather than inventory led business model. Industry experts feel that this move is more in tandem with government’s FDI policies. It would be interesting to see how the government and RBI will play their roles in the next couple of years.
Currently the major chunk (more than 80% ) of Indian ecommerce market comes under travel industry. But other segments like apparels, health and beauty products are catching up fast. With the onslaught of price wars among the existing players and increasing competition from the new players, it is going to be a win-win situation for the netizens. The year ahead is sure going to be full of promises.