Shrinking margins and tax benefits at home, rising competition abroad, increase in regulations, and global uncertainties have rocked the IT industry. On the other hand, the IPO of Justdial and Nasper picking up stake in Redbus show the digital world’s potential. The rules of the games in the virtual world are changing. We will facilitate sharing of your concerns with the government and regulators.
E-commerce is reshaping the business world. In smaller towns and villages online shopping provides access to big brand names. The expanding digital economy which benefits consumers and companies has immense growth potential. The Indian e-commerce market was about $600 million in 2011-12 and is estimated to touch $9 billion by 2016 and $70 billion by 2020. A Forrester report estimates a CAGR of over 57 percent for the Indian e-commerce market between 2012 and 2016, the fastest in Asia-Pacific. Some experts say marketplace models will propel this growth, accounting for two-thirds of the estimates. The e-market is currently dominated by online shops which own and manage the supply chain. Offline brands are also expected to shift their operations online. India has over 135 million internet user, and the numbers are growing. The internet penetration is nearly a third compared to China. The retail industry size is estimated at $400 billion. These are two more reasons to be gung-ho about e-commerce.
According to a study, online travel bookings accounted for 71 percent of e-commerce pie in 2012. This included booking of railway, air and bus tickets; hotel reservations and tour packages. E-tailing or purchases of consumer products and services had a 16 percent share. Financial service transactions, such as paying insurance premiums, utility and mobile bills, trading in shares and securities amounted to 6 percent of business. B2B and B2C classified ads contributed 5 percent, and other online services which included entertainment ticketing, food delivery, and buying discounts, deals and vouchers made up the rest of the sales.
The Indian e-commerce market has attracted venture capitalists in droves. Since the beginning of this decade venture capital firms have invested over $850 million in 53 e-commerce companies. The industry is now experiencing a phase of consolidation. Calendar 2012 saw horizontal e-commerce players purchasing category firms. In 2013, second-rung players are merging and raising funds to compete with the leaders.
The industry is being crippled by e-tailers offering huge discounts as this is making consumers price loyal rather than brand loyal. The absence of proper infrastructural support is hampering new businesses. The problems are compounded by unreliable logistics companies, complex interstate trade rules, and the fact that just around 2 percent of Indians use credit cards. New logistics companies are providing better services. Net banking and cash on delivery provide alternative payment methods. Players able to handle payment and logistics issues have the best chance to survive and prosper.
India is set to emerge as the biggest B2C e-commerce market in Asia by 2020. The B2C e-commerce turnover is expected to touch $6.6 billion, accounting for a 35.1 percent share of Asian market, by 2020. E-commerce companies need to have a long-term plan. As the traditional mom-’n’-pop stores have shown consumers put a premium on trust. So e-tailers have to outshine traditional retailers in terms of convenience as well as reliability. Focus on user experience in terms of merchandising, customer service, interface design, and guaranteed delivery and return policy is a must for e-commerce companies to survive.
(Disclaimer: The information has been aggregated through secondary research. IFIE is not responsible for errors if any)