Booming E-Commerce Industry In India

By - CEM Team

With current pace of mobile adoption and observed online shopping trend by some of the major e-commerce players in India, most of the e-commerce companies in the next 2-3 years are expected to become m-commerce companies.

This transition into m-commerce companies is estimated to turn out to be immensely successful, with platforms expected to play a very big role in connecting sellers and customers. This makes them an important area e-commerce is going to evolve towards. 3-4 years ago, e-commerce was largely about internet retailers but now, India is entering an era where companies will become m-commerce platforms. E-commerce in India can be approached in 3 different ways: helping good Indian brands scale up rapidly, by bringing international brands into India and by creating indigenous brands in India.

In India, 14% of the online population are online buyers with online penetration in India itself being 16%. This makes the e-commerce market in India a nascent one but is expected to reach the ascending stage in the next 5 years. The retail sector in India is worth $520 billion, out of which only 8% is organized. In Tier II and Tier III towns, there is a large underserved consumer base who are willing to spend on branded products. To them, e-commerce is the key channel. 

The number of internet users in India increased by 32% from 2013 to reach 302 million in 2014. From Tier I to Tier II cities, the Indian e-commerce industry has broken a number of stereotypes about how India shops and what India shops for.
Organized offline retail accounts for 6-7% of total retail in India. Real estate boom following expansion of offline retail in India has limited its growth, paving way for online retail businesses.

To have a glimpse of Indian industry leaders’ statistics, Amazon India and Snapdeal are found to have partnered with 25,000 and 150,000 merchants respectively. Amazon India, currently holding a capital of $2 billion, made the fastest $1 billion as compared to any other branch of Amazon in the world. Flipkart, India’s biggest local e-commerce company had a turnover of $3 billion in 2014. Softbank invested $625 million in Snapdeal in October 2014, announcing plans to pump in $10 billion in total into internet companies in India.  In the past 10 months, investors have put in $2.96 billion across 55 deals in India, accounting for 32% of the total amounts pumped in by the investors.

Not surprisingly, India’s e-commerce market showcases a potential to grow up to $35bn by 2020 (Source: EY) from $4.5 billion in 2014, presenting a good time to market for players who are yet to explore its potential.