India & e-commerce
Recent years have seen a remarkable transformation in the way India shops and trades. E-commerce has taken the world of retail by storm and captivated the imagination of an entire generation of entrepreneurs, with e-commerce ventures with various business and commercial models. The explosive growth in the last few years has already catapulted the biggest firms among these ventures past the billion-dollar territory. The sector has grown three times in four years to nearly 12.6 billion USD in 2013. Various industry estimates project that the sector will further growth five to seven times over the next four to five years. Online retail, while today representing a small fraction of the e-commerce space is one of the fastest growing segments. It is also the most challenging in fulfilling its fundamental proposition of transcending physical boundaries to deliver a variety of products to the customer’s doorstep. Logistics and infrastructure in e-retailing becomes the very backbone of the fulfilment network and the basis on which stringent service level expectations are set and met, and customer mind-space among competing alternatives is won. In India, these are arguably the weakest links, and therefore the enhanced need for greater attention and management bandwidth to these critical functions. We estimate that a large proportion of investment in e-commerce retail will flow into logistics and infrastructure. In the absence of an incumbent ecosystem, e-commerce providers are beginning to build these functions from scratch. This will also spawn infrastructural investments into allied sectors such as warehousing, air cargo, road and rail-based transport transportation. As delivery reach and fulfilment networks become more entrenched and increasingly complex, opportunities will emerge for logistics service providers and 3PL players. All of these trends point to a bright future for talented entrepreneurs, operational managers as well as greater employment opportunities for blue-collared workers.
The rapid growth of e-commerce in IndiaOver the last two decades, rising internet and mobile phone penetration has changed the way we communicate and do business. E-commerce is relatively a novel concept. It is, at present, heavily leaning on the internet and mobile phone revolution to fundamentally alter the way businesses reach their customers. While in countries such as the US and China, e-commerce has taken significant strides to achieve sales of over 150 billion USD in revenue, the industry in India is, still at its infancy. However over the past few years, the sector has grown by almost 35% CAGR from 3.8 billion USD in 2009 to an estimated 12.6 billion USD in 20131.Industry studies by IAMA2I indicate that
online travel dominates the e-commerce industry with an estimated 70% of the market share. However, e-retail in both its forms; online retail and market place, has become the fastest-growing segment, increasing its share from 10% in 2009 to an estimated 18% in 2013. Calculations based on industry benchmarks estimate that the number of parcel check-outs in e-commerce portals exceeded 100 million in 2013. However, this share represents a miniscule proportion (less than 1%) of India’s total retail market,
but is poised for continued growth in the coming years. If this robust growth continues over the next few years, the size of the e-retail industry is poised to be 10 to 20 billion USD by 2017-2020. This growth is expected to be led by increased consumer-led purchases in durables and electronics, apparels and accessories, besides traditional products such as books and audio-visuals.