Indian E-Commerce landscape
India is touted as one of the biggest eCommerce market spaces in the world, yet the term hasn’t found a firm ground with the Indian audience. Ask just about anyone and they would probably call it a novel concept not fully understanding that they use it every day to make product and service transactions every second. Your best bet is to talk about Online Shopping to explain the concept of eCommerce that is disrupting the way India functions.
Even the not so relevant consumer products such as shampoo, deodorants, makeup, lingerie and organic goods are now available and are gradually gaining traction in the country’s booming eCommerce market which was previously dominated by electronics, books and fashion. What else will explain the sudden outburst of dedicated online players selling furniture, medicines, and utility?
E-Commerce growth story
If recent surveys are to be believed, India’s eCommerce ecosystem is pegged for a phenomenal growth in 2015 with the Annual disposable income per household expected to grow by two-and-a-half times in the year. With the average time spent on internet progressively swelling the discretionary spending is bound to increase.
The penetration level of e-commerce business much lower compared to markets of the United States and the United Kingdom but is growing at a much faster rate with a large number of new entrants. The industry consensus is that growth is at an inflection point. In recent years the sector has grown by almost 35% CAGR from 3.8 billion USD in 2009 to an estimated 12.6 billion USD in 2013. The current trends firm that that the $12.6 billion market is estimated to reach $20 billion by 2015, growing at a CAGR of 37% over 2013-15. Despite a huge potential, long-term profitability of the e-retailing industry in the country is still under question. Let’s together understand why?
The story behind Indian E-tailing
The essence of e-retailing is in its ability to transcend physical boundaries and reach customers at their very doorstep. Hence, the foundation of e-retailing model is technology and logistical solutions that facilitate customer acquisition and the final ‘reach’ process. The eCommerce business players have brought about radical change in the logistical operations of retail in India to effectively cross enormous geographical boundaries while establishing some the most agile business operations.
India Presently has thousands of eCommerce players differentiated by the verticals and the type of business –inventory led and market place , in the form of online retailers, big and small, selling an array of products and services. The market dependency on the internet and mobile phone revolution to alter the way businesses reach their customers is extremely high.
Feeling the pulse of the market, the eCommerce players have customized their products and services to suit the Indian audience – Cash on Delivery is the biggest testimony to this. India has a vibrant cash economy and the consumer prefers inspection of the product from different perspectives and paying subsequently. As a result 80% of Indian e-commerce transactions tend to be on Cash on Delivery model
The two imperative characteristics dominating the eCommerce market operations in India currently are – Consumers expect the return process to be seamless and expect a free and quick home delivery of products. The expectations are bound to put pressure on the logistical front and further reduce business margins if the players want to be game changers and achieve economies of scale.
The above figures are taken from PWC and ASSOCHAM report
The above situations will call for huge investment demands in building infrastructure and warehousing segments to cater to the burgeoning eCommerce industry. A reflection to that is an increasing fund infusion in the eCommerce space by PI Funds and corporates, and snowballing of payers in each vertical every single day. It won’t be wrong to say that the eCommerce space will grow exponentially in the years to come and that Amazon is the new cool brand and not just Coke
The fundamental question everyone is asking-Why is every man jack bringing his business Online? The answer to it is simple- the magic wand called eCommerce can transcend boundaries to reach and market your brand a far bigger audience and build credibility like never before. What more, there are now platforms that can now enable absolute strangers sell and buy from one another through a reliable source. The only binding thread in such transactions being the authenticity of the platform being deployed. The role of eCommerce is becoming critical with an increasing urbanization every minute.
What does the future hold for ecommerce?
The government is deliberating on an industry status to regulate the regime and services operating under eCommerce ecosystem. As probably all of us know there will be many bills, sessions and regulatory changes to make that happen, for now we can all truly benefit from the eCommerce jungle in India.
After taking a rounded view of the e-commerce industry, we can firmly say it is poised for an exciting period of growth in the coming years. This is expected to lead to substantial investments in supporting infrastructure and innovative and game changing business models.