India, being the fastest growing online retail country in the Asia Pacific, is being considered by many online retailers as a possible destination for global expansion. While the country is still developing, the e-commerce landscape in India currently caters to young consumers (75 per cent of online shoppers in India are under the age of 35) with a keen eye for fashion and technology.
The e-commerce industry has seen exceptional growth in 2014. This growth was driven by rapid technology adoption and easy access to the internet through broadband, 3G, Wi-Fi, etc., which ultimately led to an increased online consumer base. By the growth of homegrown players like Flipkart, Snapdeal, Paytm and the huge investor interest around these companies displayed the immense potential of the market.
Competition is expected to continue and hence the Indian companies are experimenting different ways to attract customers and increase online traffic. They continue to focus on expanding sellers and selection on their platforms, innovating on multiple customer touch points, and providing rapid delivery services in order to compete with the international entities.
According to the recent Assocham – Deloitte report, e-commerce sector has emerged as India's new sun-rise industry which is expected to cross $16 billion by the end of 2015. The e-commerce companies are concentrating their efforts on increasing the penetration of their mobile apps for higher growth. Big players in this space claim to have more than 50 per cent their revenue coming from mobile apps. The primary reason for e-tailers to focus their efforts on mobile app penetration is because it helps to reach more customers located even in remote and rural areas. E-commerce companies will be able to bridge the service gap considerably by sending service updates and other communication via their mobile app, e-mail, and SMS regularly.
On the same lines, the Indian government is developing its ambitious “Digital India” project. The Digital India project aims to offer a one-stop shop for government services that will have the mobile phone as the backbone of its delivery mechanism. The project will give a strong boost to the ecommerce sector bringing the internet and broadband to remote corners of the country will give rise to an increase in trade and efficient warehousing. Thus, the modernisation of India Post will affect the e-commerce sector and also be a way to penetrate into rural and remote areas.
Apart from this, the big traditional retailers are associating / partnering with digital commerce companies to extend their technology and logistics services. We also see other big retail giants stepping forward to create individual (digital) website to gather more traffic even on the online front. Like, Reliance retail - planning to launch its e-commerce website, Landmark group committing to get online with Lifestyle brand, Shoppers Stop - revamping its digital platform, which currently contributes 1 per cent of the revenue.
By the end 2014 and dawn of 2015, the (e-com) players are seeing rapid growth of mobile internet, especially of smart phones could unlock a significant market beyond the Tier-1 cities for the online retail segment.
This year (2015), e-commerce players see mobile commerce as the most preferred route with mobile wallet as the preferred way of payment. With the introduction of 4G services, we can expect an estimate increase in the mobile internet user base to increase to 213 million which will of course be a significant leap.
Niche categories are also expected to gather momentum including cars and real estate. Premium and international brands are likely to join eTail, purchases from Tier 2 and 3 cities will continue to rise and differentiated products such as exclusive brands by designers will grow. Riding high on the growth prospects eCommerce companies will look at more ways to raise funds such as IPOs. Some consolidation will also happen with the leaders focusing on high growth and smaller players finding their own niche.
It would be interesting to see how these eCommerce companies continue to solve problems and evolve. The other trends that can be focused are COD payments, which are unique compared to other countries.
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