Group Discussion: Is India ready for E-commerce?

India has an internet user base of about 137 million as of June 2012. The penetration of e-commerce is low compared to markets like 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 with key drivers being:

·         Increasing broadband Internet (growing at 20% MoM) and 3G penetration.

·         Rising standards of living and a burgeoning, upwardly mobile middle class with high disposable incomes

·         Availability of much wider product range (including long tail and Direct Imports) compared to what is available at brick and mortar retailers

·         Busy lifestyles, urban traffic congestion and lack of time for offline shopping

·         Lower prices compared to brick and mortar retail driven by disintermediation and reduced inventory and real estate costs

·         Increased usage of online classified sites, with more consumer buying and selling second-hand goods

·         Evolution of the online marketplace model with sites like ebay, Infibeam, and Tradus

MARKET SIZE AND GROWTH:

India's e-commerce market was worth about $2.5 billion in 2009, it went up to $6.3 billion in 2011 and to $14 billion in 2012. About 75% of this is travel related (airline tickets, railway tickets, hotel bookings, online mobile recharge etc.). Online Retailing comprises about 12.5% ($300 Million as of 2009). India has close to 10 million online shoppers and is growing at an estimated 30% CAGR vis-à-vis a global growth rate of 8–10%. Electronics and Apparel are the biggest categories in terms of sales.

There are many reasons which make India a suitable market for e-commerce. Here are some of the reasons:

1.      The mindset of consumer has changed: The consumers have become quite technological friendly these days. Earlier, consumers in India preferred going out and shopping in the markets. However, e-commerce does not only provide one with comfort but also gives them a chance to avail on various kinds of offers which helps the consumer to save money. Thus, consumers have now started developing a penchant for e-commerce rather than shopping in the markets. 

2.      Internet friendly users: In India, people have become quite internet friendly these days. The numbers of users have grown phenomenally over the years. According to a survey, there were only 7 million internet users in India in 2001. The number had grown to 100 million in 2010. Since people are becoming quite internet friendly these days, e-commerce is becoming a comfortable option for the people. It is believed that around 75 million household are ready for e-commerce in this nation. 

3.      Entry of big names in the Indian e-commerce market: Many big names have entered the market of e-commerce in India. Thus, the consumers get the best of the options while sitting at home only. These big names are investing in the e-commerce market from a long term perspective rather than small term. Thus, the e-commerce market is to grow even more bigger and better in times to come. 

4.      The success of the some of the sectors in the e-commerce market: Some of the sectors like travelling and retail have already proved to be quite successful in the field of e-commerce. These sectors have already made a lot of profit through the e-commerce market. The success of these sectors has incited other sectors to enter the market of e-commerce and this is precisely the reason why the e-commerce market has expanded so quickly in India.  

Above mentioned are some of the reasons which make India a suitable market for e-commerce. However, there is still a slight bit of reluctance in the Indian Consumers regarding online shopping and e-commerce. Eventually this hesitation and reluctance will go with better services and offers and this is precisely the reason for believing that the market for e-commerce will only grow in India in times to come. According to a survey, it is believed that the number of e-commerce consumers will grow to 460 million individuals by 2024-2025.

Flipkart, Superbazaar.com, olx. Com, snapdeal are some of the e-commerce of online shopping websites that have already made it big in the Indian e-commerce market. With bigger and better online shopping sites like Amazon to enter the Indian e-commerce market in the near future, it would be right to say that the future of e-commerce is quite bright in India. (www.mbarendezvous.com)