It is boom time for eCommerce in India

It is boom time for eCommerce in India,,,, are just some of the few ecommerce storefronts that have spun off in the recently part. Targeted for the Indian consumer, these ecommerce portals have not only made it big for their young entrepreneur but have also set the stage for the broader acceptance of eCommerce in the India market.

The Indian ecommerce growth that was only a speculation till very recently, is now an established fact. eCommerce is rapidly gaining acceptance amongst the Indian consumer and will only grow from here on giving way to a multibillion dollar market potential. Entrance of global giant like Amazon, Expedia into the Indian ecommerce marketplace is just another testimony to this potential – Amazon is expected to start its India operation sometime this year.

That said eCommerce has been around in India for while with the likes of (acquired by eBay in 2004),, and a few others. However, it was not until about 2009-10 that we started seeing an increase in eCommerce adoption and the market started gaining adoptions. If you take closer look, there have been several factors that have contributed to this growth:-

  • Spread of internet to local Indian households – high speed broadband internet is easily available to most host household in the tier one and tier two cities. The Indian govt has also laid out the National Broadband Policy that proposed an internet connection to every village panchayat by 2012. A Google estimate claims that 100+ million internet users exist in India today which is expected to grow to over 300 million by 2014.
  • RBI regulations to secure online transaction – in early 2009, RBI enforced strict guidelines that financial institutions need to adopt while making credit/debit card transactions online. Two factor authentications and SMS alert for every transaction above INR 5000, have not only curbed online frauds but have also significantly decreased buyers reservations about online transactions.
  • Innovative model like Cash on Deliver, 14 day / 30 day easy return policies introduced by some these young entrepreneur has further increased customer confidence giving them a customer experience which is quite similar to inStore customer experience.
  • The Indian lawmakers have been continuously working to improve existing law as well as introducing new laws that govern and curb cyber-crime. This is resulted in a market place that’s conducive for both seller as well as buyers.
  • The number of payment options that are now available to an online India buyer are far more that that is available in more matured markets like Credit card, Debit Card, Mobile banking, Net Banking (NEFT & RTGS), Cash on delivery. That said the transaction fee charged by the payment gateway service providers is quite high – as high as 7% which can be quite frustrating.
  • While the logistics support India is far from being perfect, it has improved over the past few years. logistics service provider who were initially only focusing on the bulk business from corporates, have now realized the potential of B2C business generated by eCommerce and have started gearing up for it. Unfortunately the Indian Postal services with has by far the best network in the country has not scaled up to the industry demand with no signs of improvement in the near future.
  • Last but not the least, creating an eCommerce website is not as expensive as it used to be a few years back where the market was either dominated by commercial eCommerce solutions that were quite expensive or the basic shopping carts that offered a very elementary set of features. The other option was to build your eCommerce platform grounds up which again was cost prohibitive for several small vendors. This has changed with several Open Source eCommerce solutions as well as economical eCommerce solutions offered by Indian service integrators.
  • Given the growth potential and attractive returns; VC funding is particularly targeting this market segment. This is attracting young entrepreneurs with innovative ideas.

The Indian eCommerce market segment is still in its nascent stage; it is expected to mature in the years to come and grow many folds. So if you are an entrepreneur who’s looking to start an Online only storefront or looking to compliment your brick and mortar store with an online sales channel, it is probably one of the best times to do so.

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