Tuesday 28 July 2015

E-commerce in India

E-commerce :Electronic commerce is trading of goods and services with the help of digital technology mainly with help of internet.It has presence in all business models, B2B,B2C,C2C,C2B.
E-commerce allows the companies to establish its market presence along side with establishing a strong customer relationship.It was in 1960s that first e-commerce transaction happened over electronic data interchange on VAN networks.But the big thing that changed the shape of e-commerce was starting of Amazon(1995)and e-bay(1995).
Coming on to the Indian context,India has an internet user base of 35 crores.Over the last 15 years due to the boom in internet and mobile sector in India the scope for the e-commerce is huge as that can be clearly seen with 30% CAGR of the e-commerce industry in India for the last 6 years.Indian e-commerce industry is about 16 billion$.But still Indian E-commerce is in its infancy as it contributes to only 0.6% to the GDP of India.With Only 12% of Indian population doing online transaction as compared to 50% of the neighbor china Indian e- commerce industry has long way to go.
The various reasons for such a high growth rate are convenience,lower prices and price comparision. The other reasons for the high growth can also be Rise of smartphones,secure transaction gateway ans easy issue of credit and debit cards.These thing clearly portray a rosy picture of the e-commerce industry in India,But the reality is not so simple. E-commerce is facing multiple challenges on different fronts.The first challenge is finding a way to grow a consumer base, as only 12% do online transaction which is lower than the Internet user percentage. Th next challenge could be the logistics,that is the timely delivery of the product,product return etc.Language is also barrier, not a major one but still a barrier with E-commerce English dominated and only 35% of Indian knowing it.Cash on delivery is the most preferred way of payment accounting almost 60% in e-tailing,But its not profitable for the companies due to various financial reason. FDI in E-commerce is not allowed in India which is also a major challenge for the industry.
E-commerce market in India has started to become crowded and complex with several players fighting for a fair share of customers’ mind and wallet. As the competition in the e-commerce heats up, the companies are using multiple business models in order to get customer attention including:
• Inventory model e.g. Shopper Stop, Croma
• Social networks e.g. TripAdvisor
• Aggregator Model e.g. Ola Cabs
• e-Marketplace e.g. Flipkart, Snapdeal,
• Transaction broker e.g. Irctc
• Click and collect service: amazon
E-tailing : Also called as the online retail.From the perspective of the general consumers this segment is most important as the customer base is larger.It contributes 29% of the total e-commerce industry in India.


Major players in the e-tailing segment are flipkart,snapdeal ,amazon,myntra. Here one point is interesting to note that Myntra has become app only and flipkart is on its way. This clearly establishes a trend for future in E-tailing that app only is the way With almost 70% of this business done over smartphones this has paved way to app only business.In the past year only Billion has become million for the E-tailing companies.Due to high investments and in the race to capture large customer base advertisement budgets of these companies are very high.



From the above data we have clearly seen that E-tailing has been making its presence felt in the market, 29% market share is the proof of that which has grown tremendously and travel segment of e-commerce has not grown at same rate leading to its decrease in the market share.
Listing of alibaba has clearly shown the way of future of the e-commerce. In Indian context,softbanks'627 million dollar deal with snapdeal, ola acquiring of taxi for sure or the high valuation of these companies flipkart at 11 Billion dollars.
These all things point towards huge potential for the future.But there is still the question of sustainability of these companies.Indian government initiative Digital India shows a great scope for the Future of Indian E-commerce industry.
 The way ahead:
Social media as lead generation :facebook,twitter and other social platforms has become the place for Analyzing consumer behavior and targeting the customers from them.
M-commerce : wireless transactions  is the road ahead with almost 60-70% traffic coming from mobiles i-pads companies should focus on this platform seriously. Other things to focus on would be online grocery stores,price comparison sites and last but not the least innovation in logistics which will help the company in operating efficiently.
Indian e-commerce Industry is here to stay and grow with expectation of growing up to 70 billion dollars. 



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