Ecommerce and its Fate in India

Posted in Operations & IT Articles, Total Reads: 535 , Published on 19 November 2015
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What is the first thing that would have come to our mind when we thought about the E-commerce industry during the first decade of the 21st century? Probably Ebay.in or Amazon.in would have been the websites that a normal Indian would have thought of. The Indian E-commerce industry was still naïve and under development for most part of the previous decade. But the last four years have taken the entire world and the internet by storm. This booming industry has been a witness to a growth figure of almost 233%, increasing from a mere 3 billion USD in 2010 to a mind boggling amount of 10 billion USD in 2014. Several new business models have been cropping up from all over the country and it’s due to the technological advancements of the 21st century that such B2B and B2C models are being brought into the picture.


The rapid growth of E-commerce in India is being driven by countless factors. Several supply and demand factors, aided by the dynamic environment are supporting the growth of this industry. A first class level of service, along with a strong business model is very much required for success. India has an internet user base of 252.3 million(as per July 2014) and factors like reduction in prices 2G services and introduction of 3G/4G services have been a blessing in disguise for all the retailers of the E-commerce industry. Factors like changing lifestyle of the urban and rural Indian, increase in disposable income of an average Indian consumer, ready availability of a huge variety of products, lack of time for offline shopping and increase in standard of living of the people has helped this industry reach beyond the horizon.


The huge variety of goods and services that can be brought over at a reduced price and at attractive payment options is catching the eye of the Indian consumer.



Image: pixabay


Today, most of the Indian firms offer attractive modes of payment like;

1- COD (Cash on Delivery)

2- Net Transfer through Cr/Dr cards

3- EMI (Equal Monthly Installments)

4- Redeemable Gift Vouchers

5- E-Wallets


The simplicity of the transaction and easy UI (User Interface) is the key to e-commerce. The stern security measures introduced by the RBI in order to reduce the risk of thefts and frauds has been a landmark event for this industry. Concepts such as “by invite only” and “flash sales” have been smashing hits in the past. Companies like Xiaomi have become an overnight success due to these inventive concepts. It was able to sell off its entire lot of MI 3 phones on Flipkart, in just over 2.2 seconds.


Today, e-commerce has its presence in almost every sector, be it government or private industry. For fashion, there are websites like- Flipkart.com, Zovi.in, Snapdeal.com, and Jabongg. To find information restaurants, we have been blessed with websites like Just Dial, Zomato and Burrp. Those days are gone when we had to personally go and buy grocery from the market. Firms like BigBasket deliver the groceries to your doorstep. LensKart has been a game changer in the spectacle/lens industry. Now we don’t even need to go to an optician to get our specs done. You can get them done with a click of your hand while you are sipping a cup of coffee. Travel ticket booking has also become very convenient. Who would have thought 10 years back that one could book plane/train tickets and customize your entire holiday with just a few clicks of the mouse. But websites like IRCTC, MakeMyTrip, ClearTrip and Yatra.com have converted this thought into reality


Since this industry is very lucrative, all the e-commerce firms have become cash rich and have been receiving funds worth billions of dollars. Many of the large Indian corporate houses have invested huge chunks of money and have flushed the e-commerce industry with astronomical funds. Recently, Flipkart received a funding of over 1 Billion USD from its investors. Myntra was bought over by Flipkart for 2000 crores and this news took the industry by storm as Myntra was still in its infancy. Snapdeal raised over 50 million dollars last year and the ticketing app- Book My Show was flushed with over 100 Million USD, last year. These magnanimous fundings make sure that the e-commerce industry has enough money to spend on extensive R & D and that they never fall short of cash in order to meet customer requirements. Amazon has been one of the biggest competitors to these online giants and the lions share of funds was taken by this American website. Amazon received an eye popping fund of 2 Billion USD so as to increase its market share in India.


Today a person in India can buy anything using the internet. The Indian e-commerce industry has several benefits and advantages to offer to its customers. 24x7 shopping and shopping convenience is one of the greatest advantages. You can order yourself a three piece suit without going to a tailor, you can buy yourself a car without going to a showroom and you can have the car delivered at your doorstep in no time. What more does an Indian consumer want. The lifestyle of the urban consumer is constantly changing and he is getting busier by the day. Hence online shopping is a blessing for him. Another advantage of the e-commerce industry is the wide variety of product line and range that is offered to him. There are numerous products and websites that cater to the needs and make sure that the consumer gets what he wants. In order to tap the rural markets, the firms have come up with various mode of payments. This ensures that a person who does not have the access to net banking can order what he wants and pay for it at the time of delivery. Experts have made a statement that the e-commerce industry will contribute 5% of the total GDP of India. Online firms have helped create a secondary distribution channel and have helped reduce costs by eliminating the middlemen.


As a coin has 2 sides, in the same way there are cons and negative points involved with e-commerce. One of the biggest threat to this industry is the lack of cyber laws. The cyber laws of India have many loopholes and they can easily be misused. There is immense risk of thefts and losses through malpractises. Identity theft is very common and rampant in this industry and a person may end up losing a lot of money from his bank account. Also there is a limit to the FDI limit and this is a major drawback for the firms. Also many a times the high failure rate of online payments deters a customer to go back to that website. The business of kiranas stores and other small retailers has been greatly affected and many of them have been pushed out of their business as they were unable to face the heat of the competition. Changing preference of the Indian consumer, absence of strong cyber laws, shortage of qualified manpower and constantly changing business environment are few the disadvantages of the industries in this segment. But the advantages of this industry outweighs the disadvantages it has hands down.


So what does the future hold for this lucrative industry? Mobile commerce would be the next logical and suitable step for the Indian merchants and firms. The penetration of smart phones in the Indian market has been phenomenal in the last couple of years. The mobile industry has been increasing with every passing day and with the use of debit and credit cards, mobile commerce will definitely pay off in the next couple of years as mobile technology will always give a firm an edge over its competitors. Today, the Indian customer has become very tech savvy and he has a strong presence on social media like Facebook, Twitter, Instagram, Youtube etc. Most of the online firms have now started to use social media advantage and have taken tremendous steps towards “social media marketing”. With concepts like “Google Wallet” coming in the picture, millions of consumers will no longer feel to carry the need to carry physical money with them while they shop. It has been predicted that this industry will cross the 40 billion USD barrier in less than five years. With better technology coming into the picture, the profits are only going to be multiplied.


Now is the right time for all those who want to enter this lucrative business segment as the market is not short of funds. Any person with a great start-up idea will be welcomed with huge amounts of funds to start the business at the earliest. Those days are not far where one can safely say that the Indian e-commerce websites will begin global operations like Amazon in the coming years. This is just a beginning for this booming industry and the golden era is yet to come in the next few years.


This article has been authored by Darshan Thakker from SIMSR



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