Growth of e-commerce web stores / ecommerce business in India
e-commerce web stores / ecommerce business in India, has evolved over the past decade in terms of magnitude. The reason for this rate being the increase in broadband internet and 3G technology, increased number of smart phone users, who can connect to ecommerce stores on the go and make the purchase. Second important reason is the availability of a much wider product range compared to what is available at brick and mortar retailers, rising living standards, busy lifestyles and lack of time for offline shopping. All had made a potent combination to look for online shopping rather than offline.
Ecommerce in India, has grown by 42% in last seven years despite of all economic meltdown and poised to grow in future as well. A major percentage of people searching for some product or service are found to end up in purchasing the product ultimately from one ecommerce website or the other. The e-commerce market in India has grown by 34 percent in the last seven years.
Indian e-commerce market comprises of industries such as travel, e-tailing, financial services like mobile bill payments and online transactions, online jobs, matrimony and other online services like entertainment, online booking, online food and grocery delivery. Electronics and apparel are the biggest categories in terms of sales.
Online travel constitutes a sizable portion (87%) of this market today. Online travel ecommerce market in India is expected to grow at a rate of 24% over the next 5 years and reach $12.5 billion. Indian e-tailing industry was estimated at US$800M in 2011 and estimated to grow to $11.8 billion by 2016.
The most dominant sector growing rapidly among all is online travel booking which includes:
Online Domestic and International air tickets in which Domestic booking dominates in India covering 50% of the online travel market and international covering 6% but increasingly rapidly for sure.
Railway ticket bookings cover the second most in number having 39% of the total share.
Hotel Bookings covering 2%
Bus ticket bookings covering another2%.
Tour packages and Insurace covering 1%
Overall e-commerce website and web stores market is expected to reach Rs 1,07,800 crores (US$ 24 billion) by the year 2015 with both online travel and e-tailing contributing equally. Another big segment in e-commerce is mobile/DTH recharge with nearly 1 million transactions daily.
A unique characteristic of e-commerce in India is cash on delivery as a preferred payment method. India has a vibrant cash economy as a result of which 80% of Indian e-commerce tends to be cash on Delivery. Other superiority of users use Debit cards / Internat banking as their preferred mode of payment as compared to Credit card users whose number is still lesser.
Another characteristic being direct imports which constitute a large component of online sales. This is because the demand for international consumer products is growing much faster than in-country supply from authorised distributors and e-commerce offerings. Ecommerce in India also follows a trend of free shipping to attract more and more users but at times this also make negative business as some of the heavy items have more shipping costs.
In India, the key to ecommerce web site success is in elivering high quality user experience which includes detailed and comprehensive product catalog, order management, different modes of transaction (credit cards, payment gateways, cash on delivery etc.) and simple and quick checkout. Furthermore, with the increase in competition in this sector, to capture the market in a place like India the e-commerce business people need to go through the customer understandings and satisfaction and in research and development of differentiated product catalogs and innovative services.
Author is a senior business analyst and an expert in ecommerce development and marketing strategy implementation.
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