The proliferation of mobile devices combined with internet access via affordable broadband solutions and mobile data is a key factor driving the tremendous growth in India’s e-commerce sector. Mobile platforms have emerged as a major gateway for customer purchases as smartphones are increasingly replacing PCs for online shopping.
The surge in the growth of online retail transactions via marketplaces such as Snapdeal, Amazon and Flipkart is due to the underlying mobile technology and the ready availability of online access. Competition is heating up among online retailers.
Even previously closed marketplaces are now opening up, encouraging smaller players to embrace e-commerce and list their products on their platforms, thereby increasing product selection. Smaller players are likewise attracted by the incremental revenue potential arising from selling products via these online marketplaces which typically have a significantly large customer base.
Besides online marketplaces and online retail, other fast-growing areas within the e-commerce sector include online travel, online deals and classified listings. Increasingly, the online route is being used for information-seeking and for making travel arrangements. A growing number of internet-savvy consumers are posting and accessing classifieds for jobs, large-scale purchases such as property, and even for matrimonial purposes.
The Indian Government’s “Digital India” initiative is also expected to boost the e-commerce industry. The bulk of online transactions already arise from tier-II and tier-III cities. Once the Digital India project takes off, the government will deliver services via mobile connectivity and in doing so, is expected to bring the internet and broadband to remote corners of the country, thus providing the underlying connectivity for e-commerce. This will further expand the reach of the e-commerce market into India’s tier 4 towns and rural areas. Furthermore, the Indian Government is also modernizing India Post and aims to develop it as a distribution channel for e-commerce related services. This will significantly improve delivery services and cash transactions (via cash on delivery payment options) in more remote and rural areas, thus increasing the reach of e-commerce players and expanding the potential market.
AMI-Partners research shows that small and medium businesses (SMBs) are increasingly investing in website development and maintenance, in order to achieve an online presence and offer online purchasing capabilities. According to AMI-Partners’ Global Forecast Model, 15% of India’s internet-connected SMBs have already launched a website with e-commerce capabilities. In the last year alone, SMBs in India spent $937 million on website development, hosting and maintenance.
“The next few years promise to bring about a transformation in technology usage among Indian SMBs as they embrace an online presence,” opined Neha Jalan Goenka, Senior Manager of Client Services, AMI. “The success of vendors and website developers in helping SMBs meet their e-commerce goals depends on the former’s ability to convince customers of the relevance and value of their solutions,” continued Goenka. With more and more businesses embracing e-commerce and many of the roadblocks such as connectivity and logistics being sorted out, AMI forecasts that by 2019, close to three in ten internet SMBs will offer online purchase facilities via their websites.