India is a highly dispersed country with 7 lakh villages, 7000 towns, 19,100 pin codes spanning 1.54 lakh post offices, 766 districts in 28 states and 6 Union Territories.
Catering to people in such a diversified geographical map is equivalent to meeting needs of population in 35 countries. This includes all the complex situations arising out of ordering, merchandise movement, payment gateways, inventory management and timely deliveries.
The biggest e-commerce markets are the US, UK and Japan. China, India and Indonesia are the fastest growing ecommerce markets. A B2B business, world-wide, comprises 90 per cent of ecommerce , and in US alone, it is estimated to be USD 21 trillion by 2023. In India, reportedly, it has crossed USD 10 billion and is multiplying very fast.
B2C transactions globally are also gaining ground and have touched USD 6.5 trillion in 2023, of which the US accounts for USD 1.7 trillion. Estimates of B2C gross merchandise value in ecommerce vary in India , but it can be assumed that it will be about USD 65 billion in 2023.
India allows 100 per cent FDI under the automatic route in B2B e-commerce activities. However, the FDI policy does not permit entry into B2C commerce.
With the expansion of mobile broadband user base of 840 million and a 5G user base of 100 million in 738 districts of India, the penetration of mobile network is surging enormously. With 5G subscriptions expected to touch 860 million ,out of 1.3 billion cell phone users by 2030, ecommerce will catapult to a completely different level.
Added to this is the likelihood of 60-70 million households joining the upper middle class by 2030 , accounting for 80 per cent of all retail spending , of which e-commerce will play a considerable part.
With UPI crossing a whopping 100 billion transactions in 2023, valued at Rs. 182 lakh crores, Ecommerce is getting a gigantic pull and push. Half a billion internet subscriber base, and huge demand generated from 1million+ population cities which are 46, and 10 million+ population cities which are 6, retail trade in India is booming.
In 2022-23, retail industry size was estimated at Rs. 62 lakh crores, of which unfortunately, 75 per cent is still in the unorganised sector.
In 2013, in India, ecommerce was USD 13 billion strong and has jumped 5 times by 2023 , because of the above trends facilitating online purchase. Some estimates are euphoric and claim USD 350 billion gross merchandise value by 2030 in India , but have to be taken with a pinch of salt.
In ecommerce retail, Amazon is at No. 1 completing 10 years in India and attaining a turn-over exceeding Rs. 21,000 crores with active sellers at 4.3 million by 2023. It has fulfillment centers across 15 states and sortation centers in 19 states with 2000 delivery stations, and delivery service partners in more than 750 cities.
It has 600 trucking partners and have added two aircraft to facilitate packages as air cargo. It is also using DFC (Direct Freight Corridors) of the railways to expand its network. Partnering with ONDC, it is enabling any seller to integrate with their logistics services. In 52 cities they claim to have same day delivery, specially of fresh perishable goods.
Flipkart is at No. 2 with a recorded revenue of nearly Rs. 15,000 crores in 2023. Flipkart is now owned by Walmart which also owns Myntra and ClearTrip.com. Walmart is bullish on India and is pumping fresh funds and integrating its fintech firm PhonePe ,to enlarge the reach of its e-commerce operations.
IndiaMart at No. 3 is way behind, recording a turnover of about Rs. 1000 crores and claims to have 7.4 million suppliers. It has been on an acquiring spree to strengthen its position and has gobbled up 14 companies in the process. It believes that each of its 4 recent acquisitions is likely to become a billion dollar market, namely – Livekeeping, Realbooks, Busy and Vyapar. Today, it operates in 56 industries and wants to enter agro and pharma also.
India has the youngest online population 75 per cent are in the age group of 15-34 years and 40 per cent are women. All ecommerce players are exploiting the potential to the fullest , as they expand to different sectors of the economy. 60 million farmers grow perishable goods and thousands of food startups are getting into this business. Used goods are again becoming big business and may cross Rs. 50 thousand crores say some experts.
Most commonly bought items in this space are bags and accessories, clothing, consumer electronics, furniture, books, movies and games, sports products etc.
In India, it has been noted that e-Commerce in tier-2 and tier-3 cities is growing fast, contributing to nearly half of all shoppers. Electronics and apparels constitute 70 per cent of this market, while ed-tech, hyperlocal and food tech are the upcoming categories opine experts.
Government emarket place (GeM) registered its total gross merchandise value of nearly 5 lakh crores by end of 2023, contributing very significantly to online purchases by government departments across states, districts and blocks.
Indian Railways Catering and Tourism Corporation sells 12 lakh train tickets daily, and is soon getting into air and bus tickets, helicopter bookings and ship ticketing for Lakshadweep Islands. Internet and Mobile Association of India feels that online travel sector will dominate the entire e-commerce market in a few years.
Google has confirmed that 75 million air tickets were booked online in India ,and 100 million hotel room bookings were also on the digital mode. Further, 80 per cent+ cab rides were done through apps, touching a whopping 880 million. Videos as a means of travel search , is increasing at a hectic pace , with just 1 Saputara destination getting 24 million hits through a Gujarati video.
Almost every progressive company in India , is now operating on a hybrid mode with both offline and online sales. Big groups like Tatas have launched several ecommerce ventures. Snapdeal has even signed an agreement with Tata Value Homes, to sell their houses online , through millions of its registered users.
L’Oreal feels that a large part of FMCG market is already online , and is growing extremely fast. Jabong has introduced its boutique platform a few years ago , with international and Indian brands targeting niche customers. Fashionara brings popular boutiques and designers in a city, online, for easy discovery. Marico and Godrej as also HUL , are big time into e-commerce.
Bluedart is energising e-commerce in a big way, by covering more than 50,000 locations and controlling more than half of domestic air deliveries. DHL is not far behind operating hundreds of warehouses in most megacities ,and tier-1 and tier-2 cities. Amway caters to more than half the pin codes in India , and has warehouses in more than 100 of its office locations. DTDC is a courier service provider , and has scores of exclusive delivery hubs in India , to enable millions of consignment deliveries every month. The list is endless , and is growing by leaps and bounds, thanks to the MSME sector getting into the bandwagon.
Business schools have caught on with the fever of e-commerce , and are running specialized courses to equip students with requisite skills. More than 30 per cent placements in IIMs are absorbed by e-commerce firms, although the demand is even more. Online MBA courses are also being offered, and even IIM Ahmedabad is also starting it this year.
Ecommerce demands highly secure, stable and protected posting and therefore, lots of sites have closed down. E-commerce in India must adopt best global business practices , to ensure efficient and effective customer service. India with its complexity cannot allow a monopoly in ecommerce and, therefore, fair competition is imperative and unfair trade practices need to be carefully regulated.
Consumer Protection Act in India doesn’t explicitly refer to e-Commerce. All this clearly implies that the e-commerce policy pending for the last 7 years , must emerge quickly , to enable further progression of e-trade in India.
Taxation norms have to be made clear including inter-state taxation rules. Existing provisions of law have to be tweaked , to deal with both online and offline situations simultaneously.
The complex world of e-commerce needs a comprehensive and holistic policy , which touches upon all the legal and regulatory compliances , without choking the speed or convenience of the consumer , in getting what he wants at home. The elements of trademark and copyright need to be studied and become part of the legislation ,so that there is no confusion regarding the jurisdiction of the courts ,regarding online transactions.
Similarly, for ecommerce exports, the policy must have clear guidelines and provisions so that there is no harassment at the customs ,and a big fillip is given to e-commerce exporters, who clocked nearly USD 3 billion worth of exports in 2023 , with immense potential for further push. A proactive well thought out policy will facilitate big ecommerce firms, to initiate demand estimation studies in all major importing countries.
It will also multiply the need for call centers for grievance redressal. Market research firms can have huge opportunities for collecting feedback on a regular basis , to sensitize the e-commerce players ,for meeting the exact consumer needs and interests.
Like the telecom revolution in India , etailing Is the next step in this direction. A good policy will enable harmonious development. A weak one will make life difficult for all.
Hence best brains must work on examining all aspects , consulting all stakeholders, & devising an ingenious solution ,that works for everyone.
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