E-Commerce so Successful in Bharat

 

E-commerce has become the most exciting sector in India today but if we turn the pages of history then one will notice that the domestic players like Rediff Shopping, Yahoo! Shopping, India times Shopping and HomeShop18 have been in the market since early 2000s; though they figure nowhere close to the top 10 players in India today.

The main reason is failure to sense the market demand, limited product catalogue and slanted focus towards sellers rather than consumers. Moreover, the consumer soppiness was also not so strong at that time due to lack of trust for buying online and internet penetration was not too high.

However, over a last couple of years, with growing numbers of aspiring rural and urban internet-connected customers, the ecommerce market has drastically evolved witnessing a flood of start-up companies. E-commerce has recently become an intensely watched sector in India, especially with some home-grown successful ventures being valued at billions of dollars. Currently, Flipkart, Amazon and Snapdeal are the market leaders. Flipkart grew at the rate of 476% in terms of goods sold in the year 2012-2013 which clearly is a sign of aggressiveness in the market.

According to Goldman Sachs, India’s ecommerce market will account for 2.5% of India’s GDP by 2030 and is expected to touch $300 billion. Global players like Amazon and Alibaba have entered the market to reap the advantage of this huge market potential.

So, what makes India an attractive destination for operating ecommerce shops? The following article will strongly analyze the success of ecommerce in India.

1. Changing demographics

Changing consumer demographics with high disposable income both in urban and rural areas has become the driving force in ecommerce growth. It has led to bigger online order sizes and changes in consumer lifestyle. Besides that, consumer purchase behavior has evolved significantly especially in tier-II and tier-III cities. The idea of sitting anywhere, comparing prices and product features has excited the Indian users by improving their shopping experience.

1. Proliferation of technology

At the same time, growth has been driven further by a rapid proliferation of technology — increasing adoption of devices like smartphones and tablets, and access to the internet through broadband and 3G data connections. Another fillip is likely when 4G telephony becomes a reality. These enablers were not there when the original shopping sites had started their operations back in the 2000s. The total mobile phone sale in India was recorded at 200 million units in 2014 and smartphones comprised more than 25% share at 53 million units. Globally, India is seen as the fastest growing smartphone market especially due to falling prices of smartphones and impetus towards smartphones from feature phones.

1. Growth in mobile application market

With increasing mobile internet connectivity and growth of smartphone users in India, m-commerce is a major contributing factor towards the success of the sector. According to a KPMG report, it is estimated that mobile application download would grow six-fold by the end of 2015 touching 9 billion apps. Moreover, India has been the fastest growing mobile app market consecutively in 2013 and 2014. The growth in mobile app market is so high that many ecommerce companies are focusing solely upon mobile platform.

1. Evolving payment landscape

Most of the Indians do not have trust to make payments online because online transaction is a relatively new concept in India. Also, payment gateways have not been very effective due to high transaction failure rate. This made it imperative for ecommerce companies to introduce cash-on-delivery. Around 60% of total trade happens in cash-on-delivery mode only, according to Goldman Sachs report. Launch of digital wallets like Paytm, Mobikwik has infused a level of confidence among consumers and is finding speedy acceptance.

1. Aggressive competition

The competition in ecommerce has become too intense with leading players adopting aggressive selling strategies. Most ecommerce companies are capable of spending big. The customer acquisition cost is running high. Companies are playing on volume trade and are incurring operational losses. They are offering deep discounts far below the MRP making it a lucrative offer for consumers. Free shipping further adorns the offer. All this is being done to acquire the majority market share.

Apart from all the above there are some more factors:

• Tremendous online demand for new products during festivals
• Online festivals days organized by e commerce players
• Huge network of vendors and suppliers who are ready to collaborate with e commerce

• Huge investment

The big difference now is that the competition is too intense and almost all players are capable of spending big. While the first-movers could not reap the benefits of early start, it might still not be too late, given that all of them are still operating.

Apart from that there are internet connectivity challenges, language barriers and logistics challenges which are gradually being resolved. If all these challenges are worked upon consistently, India will soon turn out to be the  topmost destination for conducting ecommerce business.

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