The e-commerce market in India is set to reach $102 billion by 2020. As India is embracing digital technologies, growing internet penetration, reducing cost of communication and related hardware, growing aspirations, it is a major advantage to the e-commerce companies. India will see more people come online than any other country till the next 15 years. With digital devices and social media, online sellers are getting unprecedented opportunity for growth and have thus become continuously more attractive for investors. Even though B2C is getting all the attention B2B is not far behind.
The major opportunity that India is having is its rising per capita income coupled with unexploited hinterland where with the advent of technology, people are able to tie-up with e-commerce companies to offer their products and services, coupled with an expanding logistics support and e-payment gateways which are secure and safe. The proliferation of mobile devices, e-wallets and digital banking is fuelling the growth with the new generation being tech savvy.
India received $6.6 billion in venture capital and private equity investment in 2015, a 50% increase from 2014 which probably contributed to a steep growth in the gross merchandise value for ecommerce companies.
The e-commerce in India, currently has a 75% share of transactions based on cash on delivery and a lot of companies are offering deep discounting to increase their turnover and hence their valuation. This gambit is increasing the pull of the consumers to the online shopping and consumers are getting good products with the convenience of shopping at home at low prices.
By 2020, India is expected to generate $100 billion online retail revenue out of which $35 billion will be through fashion e-commerce. Online apparel sales are set to grow four times in coming years. In addition to that new Indian brands are emerging and going to emerge with the government’s thrust on ‘Startup India’
Some ‘brick and mortar’ retailers are facing the heat from the competition from the e-commerce sector, others are leveraging e-commerce to their advantage by augmenting their sales channels. Grocery, Jewellery, furniture, handicrafts, Computer hardware, gadgets and even used household items, alongwith services like travel, real-estate, matrimonial, movies, TV and even online gambling are being consumed by the users.
The backbone of the e-commerce is the technology, which is becoming increasingly affordable, cloud computing, data centres and digital analysis are some of the drivers for this revolution.
The Government of India policymakers are trying to develop a conducive regulatory framework and a level playing field for all stakeholders in the ecosystem and the introduction of GST (Goods and Services Tax) will bring in much awaited relief for the e-Commerce sector.
In the recent guidelines issued by Department of Industrial Policy & Promotion (DIPP), 100% FDI in B2C e-Commerce marketplace model has been allowed. Additionally, DIPP has clearly defined e-Commerce, marketplace and inventory based models. Thus, at a stage when India is rapidly becoming a digital economy, the role of the government is critical to enable a conducive and sustainable environment for the entire e-Commerce ecosystem. The recent Government Initiatives such as Digital India, Make in India, Start-up India, Skill India, Innovation Fund and e-market platform for agro-commodities are positive steps in this direction.