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E-commerce boom and hurdles in India |
From
$5 billion in 2009 to $6.3 billion in 2011 and $14 billion in 2012,
India’s e-commerce industry is growing at an aggressive pace but
the penetration of e-commerce market in India is still low as
compared to the markets in the United States and the United Kingdom.
Electronic
commerce or e-commerce or e-commerce is a product trading via
Internet. It consists of a website with online catalog displaying
products, online marketplace for buying and selling these products,
process of establishing online customer base, B2B buying and selling
through a secured and safe payment gateway.
Slowly
India is shifting towards virtual shopping from physical stores or
markets. Changing lifestyle, online banking facilities, plastic money
in the form of debit and credit cards, tech savvy generation, boom of
IT companies and increase in disposable income are few of the reasons
for e-commerce boom in India. Apart from technical reasons one of the
reasons for this change is the avoidance of all sorts of traffic and
mental stress on the roads. To reach at the shopping place one has to
travel through jam packed streets. With increase in the number of
smartphones, mobile shopping becomes part of e-Commerce boom in
India.
It
was mid 1990s when the Internet companies started rising in India,
but lack of awareness, low penetration of Internet and undeveloped
payment system were the bottlenecks. Online classified, matrimonial
and job portals were the main e-commerce portals at that time. The
dot com started gaining recognition in 2000s which gave a push to the
e-commerce industry in India. Along with the developments in dot com
sector, India’s retail sector started to excel. With time retail
stores opended their virtual stores.
Recently,
India’s 14 billion e-commerce industry got a boost with the
announcement of a proposal in the Union Budget 2014-15 which will
allow foreign retailers to sell their products in the country via
e-commerce platform. Brands like Nike, Puma, Marks & Spencer
which were selling through licensing agents and franchisees will be
benefited a lot with this announcement.
Major Challenges faced by E-commerce in India
Underdeveloped
logistics is one of the main hurdles in the development of e-commerce
in India. Multinational carriers like DHL and Fed-Ex do operate in
India but generally third party services are hired for the delivery
in smaller cities. Many a time last mile deliveries are made by
bicycle. Because of this, some of the large funded firms like
Flipkart have established their own logistics departments for the
delivery of goods ordered online. But huge investment in logistics is
required to be done.
Though
considered good from buyer point of view but for e-commerce companies
Cash on delivery (COD) mode of payment is regarded as a drawback. COD
delays the payment to e-commerce company because buyer will pay when
he or she will receive the product. It will then go to the courier
companies which after 2-3 weeks give payment to the actual seller. In
the meantime the e-commerce companies have to restock inventory. Also
high rate of return is another big problem in this regard. Sometimes
address is not found or buyer does not like the product then it has
to send back to the company for restocking.
High
competition leading to price war is also a hurdle.
Future of E-commerce in India
It
is expected that E-commerce industry will grow to become $56 billion
by 2023 in India and it will become 6.5% of the total retail market.
Cash on Delivery and free return option has definitely given a push
to online shopping. Social media is helping e-commerce industry by
creating a larger customer base. Mobile apps, improvement in
logistics, focus on smaller towns, brand consolidation, and
technological innovations can further boost the E-commerce industry
in India.
with the courtesy of : Mapsofindia