What is E-commerce?
E-commerce (electronic commerce or EC) is the buying and selling of goods and services, or the transmitting of funds or data, over an electronic network, primarily the internet. These business transactions occur either as business-to-business, business-to-consumer, consumer-to-consumer or consumer-to-business. The terms e-commerce and e-business are often used interchangeably. The term e-tail is also sometimes used in reference to transactional processes for online shopping.
E-commerce in India
India has an internet user base of about 452 million as of July 2017, 40% of the population. Being the second-largest userbase in world, only behind China (651 million, 48.1% of population), the penetration of e-commerce is low compared to markets like the United States (268 million, 84.6%), or France (54.1 Million, 81.2%), but is growing at an unprecedented rate, adding around 6 million new entrants every month. The industry consensus is that growth is at an inflection point.
In India, cash on delivery is the most preferred payment method, accumulating 75% of the e-retail activities. Demand for international consumer products (including long-tail items) is growing much faster than in-country supply from authorised distributors and e-commerce offerings.
E-commerce Market in India
E-commerce in India market was worth about $4.89 billion in 2010, it went up to $12.68 billion in 2013. In 2013, the e-retail segment was worth US$2.31 billion. About 72% of India’s e-commerce market is travel related. According to Google In India, there were 36 million online shoppers in India in 2014 Q1 and was expected to cross 100 million mark by end of year 2016.CAGR vis-à-vis a global growth rate of 8–10.1%. Electronics and Apparel are the biggest categories in terms of sales.
The Indian e-commerce industry has been on an upward growth trajectory and is expected to grow at a Compound Annual Growth Rate (CAGR) of 28 per cent from 2016-20 to touch US$ 63.7 billion by 2020 and overtake the US by 2034.1 The sector reached US$ 14.5 billion in 2016. The ongoing digital transformation in the country is expected to increase India’s total internet user base to 829 million by 2021 (59 per cent of total population), from 373 million (28 per cent of population) in 2016, while total number of networked devices in the country are expected to grow to two billion by 2021, from 1.4 billion in 2016.
Major developments in the Indian e-commerce sector are as follows:
• Venture Capital backed firms in India raised a record US$ 9.61 billion of fresh capital between January-September 2017, which is more than twice the amount of capital raised during the same period in the previous year.
• BankBazaar, a financial marketplace start-up in India, raised US$ 30 million in a funding round led by Experian Plc, a credit rating agency based in UK, taking the company’s total funding to US$ 110 million.
• Mr Jeff Bezos, Founder and Chief Executive Officer, Amazon Inc has announced plans to further increase its investments in the country to develop its infrastructure and technology. The e-commerce giant also received an approval from the Reserve Bank of India (RBI) for launching its own digital payment wallet in India, thereby tapping into India’s fastest-growing digital payments business.
• In April 2017, India’s online retail giant, Flipkart, raised US$ 1.4 billion in the biggest start-up funding round led by Tencent Holdings Ltd, eBay Inc and Microsoft Corp. It also acquired eBay’s Indian arm as a part of the deal. The company also raised US$ 1 billion in March 2017 in a funding round led by Chinese internet giant, Tencent and Microsoft, thereby valuing the start-up at US$ 11 billion.
• Paytm’s e-commerce unit raised US$ 200 million in a funding round led by Chinese e-commerce giant, Alibaba and existing investor, SAIF Partners, to become the Indian unlisted company to be valued at over a billion dollars.
• China’s largest e-commerce player Alibaba has planned to set up its first India office in Mumbai, in order to be a part of India’s growing e-commerce market, which is expected to double to US$ 34 billion by 2017.
Market Survey by Ernst and Young – Glimpse of Market Trends and Market Structure
To better understand consumers’ online buying behaviour, EY polled about 700 online respondents in six cities in India.
Consumer Trends according to EY report
• 61% will stop buying online if there are no discounts.
• 40% said that convenience was the most important reason for shopping online.
• 30% said timely delivery and a good return policy are the reasons for online shopping.
Payment trends according to EY report
• 71% of regular online shoppers prefer cashless transactions.
• 64% of online shoppers have concerns about sharing credit card info.
• 51% of consumers younger than 21 years prefer cash on delivery.
Most Influential mode of communication according to EY report
• 74% of consumers younger than 21 years said social media influences buying decision.
• 64% of women said that family and friends influence buying decisions.
• 51% of buyers 55 and older said email and SMS offers influence their buying decision.
India’s still-young e-commerce market has grown in part because of marketing strategies such as heavy discounts and free home delivery. However, this has come at the expense of profitability for many e-tailers.
• 96% of female consumers