The year 2014 saw e-commerce sector keep everyone on the toes — be it the e-marketplace operators, logistics / supply-chain companies, vendors selling online as well as customers. The sector also ensured an action-packed year in terms of fund-raising by players like Flipkart, Amazon.in, Snapdeal, Jabong, Myntra, Bigbasket and Urbanladder, among others.
In fact, such was temptation to be part of the e-commerce growth story that business veterans like Ratan N Tata and Azim Premji couldn’t resist jumping the bandwagon and picked up small stakes in some of the entities.
The sector also witnessed some degree of consolidation with big ticket (mergers and acquisitions) like the already concluded Flipkart-Myntra merger and the strongly rumoured (in the making) Amazon-Jabong acquisition.
The government authorities had their share of excitement with the sector posing new challenges in the area of taxation as well as consumer complaints arising out of e-commerce transactions. The seriousness of this issue can be gauged from the fact that the department of consumer affairs is understood to be putting together a framework (under the Consumer Protection Act) not only for consumer protection but also an orderly functioning of Indian e-commerce industry.
Calling 2014 as a year of coming to age of the e-commerce sector, Harish HV, partner, Grant Thornton India LLP, said, “We saw significant growth in revenues, traction and investments in the sector. The key learning is that the sector is here to stay, grow and prosper and no one can ignore it including the government which needs to adapt its policies to the new way of doing business.
“It is critical that government officials get a good understanding of the sector and its potential and engage with the sector actively to understand their concerns, issues and help them do their business with ease.”
With increase in investments, growth of niche category e-commerce firms and entry of global competitors / brands, the online shopping landscape in India is changing. The recognition of the Indian e-commerce industry as one of the key contributors to the Indian economy has been one the most defining moments for the e-commerce sector.
“Increased global attention and investment have significantly contributed towards the development of the online ecosystem, effectively putting India on the global map. Additionally, the support from the government along with the development of national infrastructure has helped this sector flourish,” said Ankit Nagori, SVP – marketplace, Flipkart.
A recent ASSOCHAM-PwC study said the last 12 months saw e-commerce fire the aspiration of the Indian youth and middle class. Valued at $17 billion currently and growing at an compound annual growth rate (CAGR) of about 35% each year, the report says Indian e-commerce industry will cross $100 billion in the next five years.
“And with average annual spending on online purchases projected to increase by 67% to Rs 10,000 from Rs 6,000 per person, the coming year will be even more promising for both the consumer and the entrepreneur,” the report said.
So what factors will drive more share of wallet for online shopping in 2015 and the years thereafter? A host of them including improved security on payment systems, focus on improving logistics, better consumer understanding through data mining to cross sell and upsell products and services, more and more products and facilitation moving online, increased efforts in brand building, growth of the multi-sector and niche players and e-commerce forays by large corporate houses like Reliance and Aditya Birla groups among others.
An interesting trend in the making however is mobile commerce or m-commerce which is gaining significant traction with smartphones, tablets and other hand-held devices getting affordable by the day. In fact, envisaging the potential m-commerce has, every e-marketplace / e-commerce player has launched their mobile app to facilitate ease of shopping.
Amit Agarwal, country manager and VP, Amazon India, feels India is a mobile first market and m-commerce is growing rapidly. “We had launched the Amazon shopping app for Android and iOS platforms last year, a few months after we began our India operations. In August this year, we launched the Amazon Shopping App for Windows Phones. Today, nearly 50% of our traffic comes from mobiles,” he said.
Echoing the sentiments, Nagori said mobile is becoming a way of life. “There is a surge in the number of people shopping on mobile across India with tier II and III cities displaying increased dominance. In fact, 50% of our traffic is coming from mobile and a majority of them are first time customers. With increased internet penetration and adoption of smartphone, ‘Mobile First’ will be the watch word for 2015,” he said.
Online shoppers, according to DS Rawat, secretary general, ASSOCHAM, are finding it easier to shop than ever before due to improvements in mobile and tablet shopping capabilities that smartphone and tablet shoppers will be strong growth drivers. “In 2015, mobile commerce will become more important as most of the companies are shifting to m-commerce. Mobile already accounts for 11% of e-commerce sales, and its share will jump to 25% by 2017,” said Rawat.
In conclusion, 2015 will see large scale growth in the Indian e-commerce sector with increased participation from people across the country. This industry will continue to drive more employment opportunities and contribute towards creating more entrepreneurs through the e-commerce marketplace model. In fact, e-commerce will enable local artisans from all over India to revive and expand their businesses and be a part of this growing ecosystem.
Mobile commerce will play a crucial role of bridging the gap between sellers and customers. People from the most remote parts of the country will be able to shop online through their mobiles – ably backed by superior supply chain facilities and payment options. The year 2015 will be the deciding year for Indian e-commerce, which will see a rapid growth along with a dynamic shift in the Indian shopping behaviour.
The article appeared in DNA. The article can be found here.