Future Perfect
E-commerce is valued at $13 billion in India. Set to become a $15 billion industry by 2016, e-commerce in India seems to have a bright future ahead. No one can deny the positive signs that are there. In the last 10 months, e-commerce has been able to garner deal value of $2.96 billion from investors. Around $2.3 billion of this amount has been bagged by heavyweights Flipkart, Snapdeal and Ola alone. Fund managers suggest that this rise in valuations is in anticipation of Internet commerce setting off in India. Although there might be speculations regarding this unprecedented inflow of private equity, there is no questioning the fact that e-commerce is here to stay. Fuelled by the record IPO ($21.9 Bn raised – largest IPO in technology sector) of Chinese e-commerce giant Ali Baba recently, e-retailers in India is being seen as the next best thing.
Google India reports that by 2016 India shall have an online
shoppers’ base of 100 million. With increasing internet penetration in India,
50 million of this would be from Tier-I and Tier-II cities, while female buyers
shall comprise 40 million of the total. Nearly 71 per cent non-buyers from Tier
1 and Tier 2 cities said they plan to shop online in next 12 months, which
augurs very well for the future ahead.
90% of all the new internet subscriptions in 2013 were mobile based.
Enhanced customer experience along with easy-to-use mobile apps has added to
the positive trend of people buying online. Taking this into consideration
Amazon, which has 35% of its traffic in India through mobile phones, has upped
the ante with the promise of a $2 billion investment with a view to leapfrog
ahead of the existing duo of Flipkart and Snapdeal.
Challenges
India is expected to grow to about a $30 billion industry in 6
years. It, however, lags far behind the likes of China which had around $300
billion in online sales last year. A variety of things might be impediments in
India’s chase of its neighbour.
In a recent poll conducted by Google India, 62 per cent buyers said
they were not satisfied with their online shopping experience, while 67 per
cent said the current return process was too complicated and expensive. Among
non-buyers, trust was a major issue with 55 per cent saying they did not trust
the quality of products sold online. Respondents even raised concerns about the
safety of online transactions.
Apart from the consumer-oriented problems, there are a lot of infrastructural
problems haunting the e-retailers. Although companies have managed to dish out
certain offers of same-day delivery in limited geographies, lack of a proper
logistic groundwork in most parts of the country has restricted growth in
sales.
These are fundamental issues that should be looked into a high
priority. Nevertheless, e-commerce in India is still in its infancy and has a
long way to go ahead to reach out to the underserved potential of shoppers in
the country. With e-tailers still reporting losses, to what extent the faith of
investors in these sites is vindicated, only time will tell.
References
4.http://online.wsj.com/articles/amazon-takes-a-long-view-with-2-billion-india-investment-1407474521
This article is written by Soumyadipta Dhal who is a first year PGDM student at IIM Calcutta. He can be reached at soumyadiptad2016@email.iimcal.ac.in
This article is written by Soumyadipta Dhal who is a first year PGDM student at IIM Calcutta. He can be reached at soumyadiptad2016@email.iimcal.ac.in
