India is the emerging market and is the best option to start any kind of business. According to the statistical reports of Indian government, it has more than 238 million internet base as of December 2013. Although the penetration is low but it has the huge internet user base and stood at number 3 in the number of internet users in the world. The growth of the number of internet users has been increasing dynamically.
In Indian eCommerce penetration is very less when compared with the developed nations like United Kingdom and United States, but it is is growing at a faster rate. The new players are entering into the Indian market day by day. Here I am analyzing the current situation of eCommerce market size in India.
eCommerce in India
First eCommerce in India is introduced as B2B(Business to Business) portals in 1996. Business to Business activity take place when a firm wants to conduct any commercial activity with another firm through online. Now eCommerce in India has set to become one of the most popular medium for business transactions.
Here is the growth story of eCommerce in India
In the early years of the 21st century i.e, in 2000-2005, the first wave of eCommerce has started in India with slow pace and it is characterized by a small user base, slow internet speed, inadequate logistics infrastructure, low internet penetration, less consumer acceptance of the online shopping and many other factors. Unfortunately, IT sector has faced a down turn in 2000 and this lead to the collapse of more than one thousand eCommerce business in India.
After this for few years there existed an unfilled vacuum in the eCommerce space between 2000 and 2005. After this it took some more years for eCommerce to enhance in India.
This years we can say as the second phase of the eCommerce industry in India. These years we can say as the construction phase for the eCommerce industry in India. In 2009 the worth of Indian eCommerce market is about $2.5 billion and in 2011 it went up to $6.3 billion.
Here two major transitions took place that aided the growth of eCommerce industry in India.
- Online Retail : Change in the urban consumer life style and the need of the convenience of the shopping from home are the two main factors that partly driven the growth of online retail. Online retail segment developed in the second phase in 2007 with the launch of the multiple eCommerce websites. New eCommerce businesses are opened by the enthusiastic entrepreneurs who looked to stay out of the crowd by establishing the strong market presence and enhancing the customer experience.
- Online Travel : The share of the online travel in Indian eCommerce market is very high when compared with the online retail segment. The online travel segment includes booking airline tickets, railway tickets, hotel bookings, online mobile recharge etc., The main reason to increase in the online travel is entry of the low cost airlines in the Indian airline sector which driven the middle class and upper middle class people to look for flights and the decision of these airlines to sell their tickets in online and through the third parties enhanced the development of Online Travel Agents. These airlines developed their own websites and partnered with the Online Travel agents to sell their tickets. Indian railways has already implemented the online ticket booking by the time airline services has started their ticket booking online. Also the telecom carriers has introduced the online recharge and hotels also initiated online booking.
From 2010 onwards, eCommerce in India came into the full swing and below two factors driven the eCommerce market.
- Group buying : From 2010 a new global trend called group buying and daily deals business model sought a space for entrepreneurs in India. Group Buying has created a trend and these sites have seen a significant rise from 2010. The number of unique visitors and membership accounts are increased dynamically.
- Social Commerce : Social networking has become more popular in the recent times and so many firms started establishing their presence in the social media space to update the customers with the latest activities and deals, branding activities, advertising the new products and connecting with the customers for the feedback.
Factors drive eCommerce
- Increase in the usage of broadband internet and the penetration of 3G into the Indian market.
- Changed urban consumer lifestyle, busy life styles, lack of time for shopping, urban traffic congestion.
- Increased living standards, awareness of online shopping and convenience of shopping from home.
- Available wide range of products, model when compared to what is available at the shopping malls and offline stores.
- Online stores offer lower prices than brick and mortar retail stores, because reduced inventory and real estate costs.
- Reduced search and the transportation cost.
In 2009, India’s eCommerce market was worth $2.5 billion and went up to $6.3 billion in 2011 and $14 billion in 2012. It grew at an astounding 88% in 2013 and worth $16 billion and is expected to grow at 57% between 2012-16. According to CAGR Indian retail market is worth $470 billion in 2011 and estimated to grow at $675 billion by 2016 and $8590 billion by 2020.
Market share of big players
In India there are number of small and big eCommerce companies and of them Flipkart, Myntra, Snapdeal, Jabong , amazon and more. In my previous article I have discussed about the top eCommerce websites in India. These eCommerce site have acquired the maximum share in the Indian online retail market. In India 71% of eCommerce business is occupied by online travel and 16 % is occupied by online retail.
In the online retail Flipkat occupied 26.8 of online retail and Myntra 5.1% and Jabong 4.2 % and the remaining 63.9% of eCommerce business is occupied by different small and big players.