You know things have come full circle when your mom tells you to check the internet for better prices before buying a TV. Unbeknownst to me my mom, who I thought was rather vary of the internet as a medium to buy/sell things, had been actively browsing the net, buying travel tickets, perusing ebay and other property sites and even indulging in online stock trading ! That’s when two things hit me. E-commerce is a reality in India and that my mom is officially more net savvy than me. Considering that I actively cover the digital space looking for the next big trend, this fact is greatly embarrassing.
But on a more serious note, the E-commerce trend in India requires a serious look considering that more and more people in India are using the net not just to chat or to look for more information but also to buy and sell commodities. That’s why the Consumer E-Commerce Market in India 2006-2007 Report released by the Internet and Mobile Association in India (IAMAI) is particularly useful as it offers insights on the size and drivers of the E-commerce Market in India.
According the report compiled by IMRB, the B2C E-commerce industry for the year 2006-07 was computed to be around Rs. 7080 crores. Further more, the market is set to grow at a whopping rate of 30% and is expected to be worth Rs. 9210 crores by the end of 2007-08. To fully understand the implications of the report it is important to understand E-commerce and what it consists of
E-Commerce
E-Commerce is generally defined as the buying & selling of products & services over the internet or other internet based computer networks. A vast array of commerce is conducted in this way through activities such as electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems.
Traditional commerce, which consisted of a physical market place, with physical products and physical payment methods was forced to evolve with the advent of the internet. The physical products were displayed on the virtual world and were thus available electronically. The online payment system through credit and debit cards also ensured that even the transaction was purely electronic
E-commerce in India
The E-commerce market in India has been largely spurred on by the huge upsurge in the online travel industry due to the entry of low cost carriers. The IAMAI Report, based on feedback from key players in the e-commerce industry, divides the E-commerce sector into the following verticals
1. Travel, comprising Travel aggregators, Tour Operators, Hotels and Railways
2. E-tailing, comprising Online Retailers and Online Auctions
3. Classifieds, comprising Online Jobs, Online Matrimony, Online Property, Online
Automobile and General Classifieds
4. Paid Content Subscription, comprising research, articles, exclusive videos, etc
5. Digital downloads, from Internet to Mobiles and internet
As mentioned earlier, The total market size of B2C and C2C E-Commerce industry in India is around Rs. 7080 crores at the end of 2006-07. It is expected to rise to Rs. 9210 crores by the end of 2007-08.
Following is the break up for B2C and C2C E-Commerce Industry in India for the year 2006-07 and 2007-08:
But on a more serious note, the E-commerce trend in India requires a serious look considering that more and more people in India are using the net not just to chat or to look for more information but also to buy and sell commodities. That’s why the Consumer E-Commerce Market in India 2006-2007 Report released by the Internet and Mobile Association in India (IAMAI) is particularly useful as it offers insights on the size and drivers of the E-commerce Market in India.
According the report compiled by IMRB, the B2C E-commerce industry for the year 2006-07 was computed to be around Rs. 7080 crores. Further more, the market is set to grow at a whopping rate of 30% and is expected to be worth Rs. 9210 crores by the end of 2007-08. To fully understand the implications of the report it is important to understand E-commerce and what it consists of
E-Commerce
E-Commerce is generally defined as the buying & selling of products & services over the internet or other internet based computer networks. A vast array of commerce is conducted in this way through activities such as electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems.
Traditional commerce, which consisted of a physical market place, with physical products and physical payment methods was forced to evolve with the advent of the internet. The physical products were displayed on the virtual world and were thus available electronically. The online payment system through credit and debit cards also ensured that even the transaction was purely electronic
E-commerce in India
The E-commerce market in India has been largely spurred on by the huge upsurge in the online travel industry due to the entry of low cost carriers. The IAMAI Report, based on feedback from key players in the e-commerce industry, divides the E-commerce sector into the following verticals
1. Travel, comprising Travel aggregators, Tour Operators, Hotels and Railways
2. E-tailing, comprising Online Retailers and Online Auctions
3. Classifieds, comprising Online Jobs, Online Matrimony, Online Property, Online
Automobile and General Classifieds
4. Paid Content Subscription, comprising research, articles, exclusive videos, etc
5. Digital downloads, from Internet to Mobiles and internet
As mentioned earlier, The total market size of B2C and C2C E-Commerce industry in India is around Rs. 7080 crores at the end of 2006-07. It is expected to rise to Rs. 9210 crores by the end of 2007-08.
Following is the break up for B2C and C2C E-Commerce Industry in India for the year 2006-07 and 2007-08:
The above figures show that along with online travel, the digital downloads segment is
expected to be one of the main contributors to the Online Non-Travel Industry in future due to an increase in mobile subscribers across the country.
E-commerce Usage in India
The adoption of E-commerce in the country correlates directly with rise in the internet usage in the country. According to I Cube 2007 Internet in India Report, the internet base in India grew by 40% to reach 46 million
expected to be one of the main contributors to the Online Non-Travel Industry in future due to an increase in mobile subscribers across the country.
E-commerce Usage in India
The adoption of E-commerce in the country correlates directly with rise in the internet usage in the country. According to I Cube 2007 Internet in India Report, the internet base in India grew by 40% to reach 46 million
As the base of internet users gain more awareness and exposure, it is expected that they will spend more time on the internet and graduate from basic internet applications like email & chat to using the net for advanced applications like finding information and making transactions online.
As shown by the above chart, E-commerce activities has risen to being 5% of the overall internet activities in the country. Although the bulk of the internet activities is still Email, E commerce is projected to grow as online transaction norms and other entry barrier ease over timeFacilitators and Barriers For The E-Commerce Market in India
As a marketer, it is important to understand the reasons behind the growth of the E-Commerce industry in India inorder to come to a decision on if your product is ready for the e-commerce route.
According to the I Cube 2006 Report, the top 6 reasons for buying online are:
Clearly consumers favour transacting online when time is a constraint. Another major reason is the convenience afforded by shopping from home. One of the biggest advantages of having a virtual store is that a wide variety of products can be displayed as space/retail rent is not a major constraint
For E-commerce to make rapid strides in the country, we also need to look at the barriers that are impeding consumer activities in this arena
As seen above, the biggest concern still remains product quality and the absence of the touch-feel experience afforded by physical products. Online payment transaction security is also a major concern given the spate of credit card frauds and phishing related incidents
E- commerce is undoubtedly the future of shopping in India, although, as shopping in this country is an experience in itself, it is unlikely to supplant the traditional mode of shopping. For this sector to grow robustly concerns regarding online payment has to be
addressed at the earliest. Internet users have to be educated about transacting online & their apprehensions in revealing credit card details must be allayed. Inorder to compete with the traditional store fronts, more customization and variety has to be incorporated.
An interesting way forward would be to supplement traditional store fronts with an online portal to service customers who are bogged down by long queues, who have little to spend on shopping and who are looking for more variety. A great example of this would be trying out a dress in a traditional store and on not finding the exact colour or size, going online and ordering it off the store’s online portal.
I would definitely recommend all those working in the digital media to check out the various internet and mobile telephony based reports available on the IAMAI website - http://www.iamai.in/, especially the “Internet in India 2007” report. These reports offer an invaluable insight, one that may save marketers a lot of money from that cash strapped marketing budget.
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