According to a recent report by the IAMAI the ecommerce industry in India is pegged at INR 630 Bn by December 2013 year end with a 33% jump from December 2012. To put this in context, as per the India Retail report 2013, modern retail in India was estimated at INR 2236 Bn in 2012 and this was only 8% of the total retail market in India.
So why is there so much buzz about E-commerce and specifically E-Tailing in India?
First of all, it is still the story of the great Indian middle class but with the added chapter of burgeoning internet access. In a recent report by comScore India, at 74 Mn online users, India is now the world’s third largest internet user after China and the US with three-fourths of this online population under 35 years. This is youngest online population globally.
The online retail market in India has a 60% reach v/s a 74% worldwide signifying high potential.
The very large young Indian online population has reached critical mass and are primed to leap, if they haven’t already, into shopping online.
So where does E-tailing figure among E-commerce as a whole?
E-commerce can be divided into 5 segments (refer chart).
An IAMAI study shows that the bulk of purchases went to travel 73% of the total value in 2012 (Domestic and International ticketing for air, rail, bus and Hotel/tour package bookings and travel Insurance).
E-Tailing (books, apparels & Footwear, Jewellery & Personal/healthcare accessories, camera/camera accessories, consumer durables and kitchen appliances, home furnishings, M phones/accessories, Laptops/netbooks/tablets) while being at 14% of the total pie is growing the fastest at an estimated 55% much higher than the 25-30% growths of other segments
What are some of the reasons behind this high growth in E-Tailing?
The E-Tailing growth is courtesy the immense potential that the retail category holds in India with online retail filling the distribution and convenience gap.
In a country as vast and varied as India consumers over the past ten years have become more aware and sophisticated. From the comforts of a home or office, at the click of a button everything from the latest gadgets to designer labels is available at their doorstep. Significantly, Google which ran a ‘great Indian shopping festival’ in 2012 saw 51% traffic from non- metros.
What are the key barriers to online shopping and how are they being addressed?
In a Google study in end 2012 consumers highlighted some barriers in shopping online – the number one factor was inability to touch and try the goods before purchase, fear of faulty products, fear of posting their personal and financial details online and the inability to bargain were cited among the other reasons.
For E-Tailing companies the important factors to ensure customer acquisition have been to remove inherent suspicions regarding online transactions. Key features adopted by all major companies such as cash-on- delivery, 30 day return policies and shorter delivery timelines are critical to enable removing barriers for the offline shopper to move on and experiment with online purchases.
This blog post has been written by ANUPAMA VEDANTAM, Insight Consultant – Marketing Science and Insight Mining, Brandscapes Worldwide. Anupama spends most of her spare time reading. She enjoys travelling the world especially to places steeped in history but is yet to visit the Taj Mahal!
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