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Indian E-commerce Industry: What does the future hold?

Ritesh Dwivedy
Thursday, June 9, 2011
Ritesh Dwivedy
Let’s start with a question. Is ecommerce very big in India yet? My answer is not really, but we are getting there. Ecommerce by definition means buying and selling of services/products over the electronic medium, like Internet. In reality not many businesses in India are purely ecommerce. Even hugely successful companies like makemytrip or shaadi.com have physical stores to reach out to consumers who do not have access to Internet or those who have access to internet but do not trust the online medium yet to make their purchases. This is now a necessity for most businesses that in the west have been traditionally internet based.

The question one would tend to ask is why is there this disparity?

Though India is a huge market, internet is still available to a very small percentage of the population and is mostly restricted to the top few cities. Most of the active users of internet in the smaller cities access it at cyber cafes, which are frequented by students who are not really the target audience for most ecommerce businesses. The other disheartening fact is that the usage of internet by this profile of people is heavily restricted to emails, social media and job portals. But if the numbers are not so good why is there so much noise about ecommerce? Well there are various reasons, the primary one being that we are growing faster than most other countries in the world. The metros alone are bigger markets than many of the developed European countries! More people in India have mobile phones than the entire population of UK. Facts like these make India a really interesting story, but of course with a lot of new challenges.

A mere copy paste of a successful model from the west would not work in India. Innovative solutions are required to solve problems faced by the target audience. For example, since a lot of users who do not have access to internet but are still target audiences for many ecommerce businesses, last mile connectivity in terms of physical stores or reaching them out through telephone becomes important. Many OTAs have provided software solutions to the local travel agents to book flight tickets and make hotel reservations using their platform. This kind of approach though difficult to implement exposes the business to a market beyond the traditional internet users. While it helps in increasing the user base it also helps in bringing to all the real time availability of seats a win-win situation for all!

Each ecommerce business in India is faced with a unique challenge, for the OTAs it was reaching out to the users, for bus ticketing it was integrating the bus operators on a single platform, for online retail it was integrating the distributors on a single platform and devising ways of managing the supply chain.

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