e-commerce in India

 

India is the 3rd largest and one of the fastest emerging economies of the world. India is home to more than 1.3 billion population and currently going through the demographic dividend phase of the development. The rise in the wages and living standard of the people the demands for goods and services is increasing at a rapid rate. Indian economy is basically demand driven and therefore provides a huge consumer base for local, national and international goods and services. The vibrant democracy and demography of the country provide an excellent atmosphere for flourishing trade.

 

It is well known that even in the ancient world India had a strong trade relationship with ancient civilizations like Mesopotamia, Egypt, and Romans. In the ancient period, Indians traded crop produce, spices, silk, precious stones, metals, medicines etc. The transportation was mainly carried through oxen, camels, caravans in land and ships in oceans. E-commerce has emerged as one of the main aspects of modern trade and development.

 

E-commerce is nothing but buying and selling of goods and services over the internet. This means the payments and various data related to the transaction are managed through the internet and various software tools. The vibrant digital ecosystem in India offers a great opportunity for e-commerce. According to Internet and Mobile Association of India, internet users are 500 million. Although digital penetration in India is about 40% which is low in comparison to developed countries it is growing rapidly. The number of internet users is expected to be 850 million in the next 5 years. The below questions and answers cover various aspects like growth, potential, and challenges of e-commerce in India.

 

 

What is the growth rate of e-commerce in India?

According to Bain & Company, the compound annual growth rate (CAGR) has been 53% for the period of 2013-2017. While it has been 33% in the case of China. The total e-commerce market in India is expected to reach $200 billion in 2026 from $38.5 billion in 2017. In the next decade, India will maintain the highest growth of e-commerce across the world.

 

Who are the top 10 e-commerce players in India?

market is mainly dominated by big giants Amazon and Flipkart (Walmart). Both Amazon India and Flipkart has 30-30% shares of e-commerce in India is at the initial stage and mainly concentrated in Metro, Tier 2 and Tier 3 cities. Since this industry has tremendous potential and largely untapped so there is throat cut competition among different players. The discount war can be seen clearly to capture the market share. The e-commerceThe e-commerce market in India. The other top players are Myntra, Snapdeal, mJuntcion, Paytm and MakeMyTrip.

 

Which types of goods are mainly traded online in India?

Electronic gadgets are a major contributor followed by apparels. The share of electronic goods is 48% while that of apparels is 29%. The growth rate of apparels is expected to be 4 times in the coming years. The online demand for fashion and beauty goods is rising rapidly.

 

What are initiatives taken to boost online trade?

The Indian government took various initiatives like Digital India to increase digital penetration in the country. Under this scheme, the remotest part of the country will be connected through broadband. 100% FDI opened in the e-commerce sector. The new draft of e-commerce policy has been prepared. The Skill India will increase digital literacy. The startup India aims to boost the entrepreneurship culture by providing financial assistance to small and medium business owners. Google and Tata trust launched Internet Saathi to improve digital penetration in rural India.

 

What are the challenges for robust Indian e-commerce ecosystem?

Although India has the highest growth rate in the e-commerce sector across the world still it is very low in comparison to developed nations. This provides both opportunities and challenges for the e-commerce players. Digital penetration and digital literacy need to be increased. The logistics infrastructure has not developed properly and courier service doesn’t cover the entire country. The logistic providers are not skilled enough to handle high value or sensitive goods. The risk of breaking of goods is high.

 

The delay in delivery of goods is another major problem. The return of damaged goods makes the logistics more costly. The trust of Indian people in online payment is still low. They prefer cash on delivery over online payments. The cash on delivery becomes costly for companies it adds extra cost. Almost 70% of online customers in India prefer cash on delivery method.  Only 6% of the adult population has credit cards. The general perception is not good when it comes to online payments because of cybersecurity reasons. Because of slow internet speed and connectivity, many transactions are abandoned in the middle.

 

The culture of shopping in India is different from other developed nations. Indian people love to visit the shops. They spend considerable time in shops to see the condition of the goods and explore more choices. Although due to a busy and hectic schedule, more choices and discount war the number of online shoppers are increasing rapidly. During festive seasons online sellers lure people by offering huge discounts.  

 

Due to inappropriate addresses and non-availability of a person at home to receive parcels adds cost to merchants in the form of return and refund. The condition of the roads is not good for delivering highly sensitive goods. The vast rural market is still untapped by online merchants due to poor infrastructure.

 

What are the positive factors for the development of e-commerce in India?

India is a young and consumption-led economy. The country’s economy is growing by 8% annually. This continuous growth has brought many millions out of poverty. The middle class is rising very fast. The digital revolution supported by cheap data plans and smartphones is bringing revolution in electronic trade. The successive governments have taken many policy reforms to boost the sector. The big discounts and offers attract many millions for online shopping. There is growing trust in digital payments and cashless transactions. The mobile applications like BHIM, Paytm and Myntra are making e-commerce easy and hassle-free.        

 

Why e-commerce in India is increasingly known as m-commerce?

It seems that India has bypassed the desktop age and directly switched to smart devices. The e-commerce is largely done on mobile phones hence it is also called the m-commerce revolution. The revolution in the telecom sector has led to the availability and affordability of mobile devices. The internet users in India use 10 times more mobile or smartphones than desktops. According to Statista, the mobile users in India by 2019 will be around 813.2 million. Smartphone users may reach up to 468 million by 2021. The unprecedented rise of smart devices in India opens many opportunities for mobile apps and various types of mobile applications. The mobile apps for m-commerce are on the rise in India.

 

Top e-commerce sites mobile apps used are:-

gets almost 75 . Flipkartthe app, Snapdeal too gets above 70% orders from an appFlipkart,Myntra,Amazon,Paytm,Jabong,PhonePe,OLX,ShopClues,Infibeam,Tata CliQ.Shopclues gets its 70% orders from % orders from the app.

The app version has many benefits like better targeting of the prospects, better communication about discounts and offers through the mobile app.

 

There is no doubt that e-commerce in India has a very bright future at least for a decade. Many foreign investors are pouring money into many e-commerce companies. The foreign direct investment(FDI) into the sector is on a high trajectory. The government of India needs to provide an enabling environment by bringing desired reforms in the sector. The draft policy on e-commerce has been in the public domain for discussion and quality suggestions. The consumer psychology is also changing in favor of online trade. The companies who can provide better mobile experience will likely to get the benefit of the mobile revolution in India.