E-commerce industry of India and world-An overview (Part-1)

Voxytalksly takes a look at where the Indian e-commerce market currently stands in comparison to foreign markets

E-commerce industry of India and world-An overview (Part-1),voxytalksy
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India has a new buzzword for a few years and it is called e-commerce or online shopping! Thanks to the likes of Flipkart, Snapdeal, Amazon, Myntra, Infibeam, etc., a slew of online marketplaces have cropped up that offer just about anything and everything for sale online in India!

The basic trend of shopping for products started in the West like the Macy’s Day parade and the iconic Black Friday and Cyber Monday sales, but Indians soon caught on! The frenzy is attributed to the very fact that Indians are so busy in their work/ private lives that they now prefer more and more to shop online. Not only do you get doorstep delivery, but you get various discount offers, cash-backs and what not as compared to the local retailer you always went to.

The Great Online Shopping Festival, Big Billion Day sales and other flash sales of products online bolstered the participation of every average Indian customer and excited them with the proposition of ‘what next?!

Let’s look at where the Indian e-commerce market is currently at in comparison to foreign markets:

  • India has an internet user base of approximately 450 million as of July 2017 which is basically 40% of the country’s population. Despite that, the penetration of e-commerce is low compared to markets like the United States (266 million, 84%), or France (54 M, 81%). We are also far behind China (650 million, 48% of the population) which is the second-largest internet user base in the world.
  • Our e-commerce market penetration is growing by adding around 6 million new entrants every month.
  • Snapdeal has an employee base of over 8,000, which makes it one-fifth the size of Flipkart, whose employee strength is 30,000. Amazon’s global workforce has 3,41,000 employees.
  • Cash on delivery is the most preferred payment method, accumulating 75% of the e-retail activities which is a hindrance because many users tend to cancel their orders before delivery. This leads to a loss in estimated revenue for key e-commerce players in the country.
  • Demand for international consumer products or imported items (including long-tail items) is growing much faster in comparison to in-country supplies from authorized distributors and e-commerce offerings.
  • The largest e-commerce companies in India are Flipkart, Snapdeal, Amazon (Amazon India), Infibeam and Paytm Mall.
  • It is estimated by market analyst Gartner that India’s e-commerce market will reach the market cap of at least USD 8 Billion by the year 2019. Which means a substantial growth of 70% from USD 6 Billion in 2016-2017. Thus, India’s e-commerce market is now slowly tailing the US in the area of e-commerce.
  • Online apparel is still one of the more popular verticals that people go for, which along with computers and consumer electronics (gadgets) make up to 42% of the total retail e-commerce sales. This is comparable to the volume of sales in China and Japan (at least 60%).
  • Many startups in India have failed like Snapdeal. Snapdeal’s losses doubled to over Rs 3,316 crore in fiscal 2015-2016, while its revenue growth plummeted drastically. Since then, Snapdeal had posted a 150-percent increase in losses year-on-year due to many bad decisions like unnecessary acquisitions, failed omnichannel strategy and no niche marketing like Flipkart does for gadgets or Amazon does for groceries. Since then, Snapdeal has improved, but still languishes behind bigger players in the market.
  • With Snapdeal now laying off 600 people and looking to approach ‘lean’ mode, one cannot help but wonder – aren’t technologically-driven businesses actually supposed to be lean? However, according to sources inside the company, the pink slip has been given to over 2,300 employees, which is close to 30 percent of the workforce.
  • “The company will let go of these 2,300 employees in phases that will be completed by end of March,” says a senior vice president who left the company earlier this month.
  • Many established brands cater only to niche online merchandising like Arvind, Headbanger’s Merch, No Nasties, Redwolf, etc.
  • The overall e-commerce market has reached Rs 1,07,800 crores (US$24 billion) by the year 2017 and this is due to a massive push by the Narendra Modi government to promote the use of online payment and the people of India slowly adopting and transitioning towards a cashless economy.
  • Currently, India’s online mobile/DTH recharge segment sees nearly 1 million transactions daily by operator websites which is a massive push towards a digital economy.

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The future of Indian e-commerce

  • A new sector in e-commerce that is slowly becoming popular is online medicine purchases. This is an idea that we have adopted from the European and US markets where people willingly buy prescription drugs and alternative medicine online.

Online sales of luxury products like jewelry, furniture, and high-value IoT gadgets are also rising in India. This is also a huge plus with regard to curbing black money hoarders in India.


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