BOOM OF E-TAILING IN INDIA

E-commerce is witnessing a global resurgence, and E-commerce in India is

booming based, in part, on increased access to the internet in India and other
emerging economies. This creates varied business opportunities that will drive
organizations to become more up-to-date and enable increased competitiveness.

India's huge and still-expanding base of internet users includes increasing

penetration into the rural market. This promises a bright future for e-commerce.
Whether purchasing e-tickets from Indian Railways or fast-moving consumer goods
(FMCG) and other lifestyle products, consumers have started getting accustomed to
the online platform, which enables easier transactions and delivery at the preferred
location.

The gradual change in the buying patterns of Indian consumers resulted in the
mushrooming of start-ups in the e-commerce market. By offering options for
payment on delivery and return policies, plus attractive deals and discounts, online
retailers have retained and grown their base of online consumers. According to
reports, India's e-commerce industry has some of the key players in the $100-
million club. These include established player, Amazon, plus Flipkart, Snapdeal, Ola
Cabs, Paytm, InMobi, Zomato, Quikr and many other start-ups that are propelling
growth of this sector.

Scope of E-commerce Boom In India

According to NASSCOM, India's $14 billion Indian e-commerce market which started
as a niche industry a few years ago has been gaining momentum and shows more
than 25 percent growth. Online travel is the largest segment with about 70 percent
market share, a figure that's likely to escalate. E-commerce is expanding its reach to
the general masses on the back of social media, which not only provides a
mechanism for advertising but also for receiving feedback, building brand image,
and promoting new launches. Online retailers also use social media to track the
first-time and repeat buyers of a product. Social media has become a platform to
study consumer lifestyles and spending patterns.

E-commerce, driven by digitization and internet penetration in the rural market, is

creating huge opportunities for consumers. Competitive prices, deals, and efficient
delivery coupled with the convenience of avoiding long queues have completely
altered the buying experience. According to NASSCOM, India's e-commerce market
is forecasted to cross a whopping $200 billion by 2030 due to increased analytics,
transactions, and internet penetration.

E-commerce is revitalizing consumer demand and catalyzing growth in India's retail

industry. The focus has shifted a pricing model to a more value-added model.
Among the fastest growing domestic segments, the most popular categories are
tours & hotel reservations; airline and railway tickets; and lifestyle and
entertainment related products. The innovative business models of the "e-tail"
market attract more repeat customers. Although there is a strong build-up of the
e-commerce industry, a vast portion of the population is not yet aware of the
benefits. This represents a huge potential untapped market for e-tailers.

Among many other components, product availability is one of the primary drivers
that cannot be overlooked. In smaller cities where the consumers may be confined
to limited brands and availabilities, online shopping with the flexibility of delivery
options and possibility of getting what they are looking for has a wider scope.

A robust supply chain and a well-established reverse logistics network in India will
enhance the success of e-commerce companies. E-commerce companies and
similar enterprises seek a particular logistics requirement that may not be executed
by traditional logistics suppliers. The courier companies that generally deliver
documents are not experienced in delivering commercial goods. Thus, the e-
commerce companies are establishing their own delivery network. One such
example is Flipkart's logistics, which is

calls "eKart." On the other hand, logistics vendors like Express Logistics deliver bulk
loads to the retailers and distributors. They have a pre-established working
relationship with the dealers, enabling good execution.

E-commerce in India - statistics & facts

The advent of e-commerce has changed the way India shops, especially after the
exponential growth of the internet and online infrastructure of the country. In
addition, the shift in consumer shopping behavior since the pandemic and an
increasing share of the organized sector within retail markets created a strong
foundation needed for the establishment of e-commerce in the market. With a
population of more than 1.4 billion and a fast-growing economy, the number of
online shoppers is predicted to increase to 427 million by 2027. Consequently, the
booming e-commerce industry is estimated to be worth over 350 billion U.S.
dollars by 2030.
Besides the increase in disposable income, changing lifestyles, and convenience are
the primary factors due to which most consumers prefer online shopping. From
groceries to other essentials, everything can be delivered with the touch of a
button, sometimes even in 10 minutes, particularly for consumers living in urban
areas. Zepto, Zomato, and Swiggy are some major domestic quick commerce
brands that provide fast and efficient delivery services.

Digitalization in e-commerce sector

Digitalization made extensive leaps, thanks to the Digital India initiative by the
government. Despite recent digital shifts in India’s retail sector and pandemic-
related updrafts have boosted e-commerce adoption among both consumers and
enterprises. In order to simulate human-to-human contact and offer consumers
24/7 assistance, chatbots, and other AI technologies are set up for a decent
shopping experience.

Consumers in Tier 2 and Tier 3 cities are more inclined to make the ultimate choice
to buy online due to a great selection of payment options and attractive offers from
e-wallets. Smartphone use has also supported the transition to mobile shopping to
a point where it was estimated that every third of Indian consumers shop online
using a smartphone. Additionally, Amazon and Flipkart were the dominant e-
commerce players, battling neck and neck every festive season over extravagant
sales. By 2025, the government's aim to create a trillion-dollar digital economy
might become a reality after all.

Social commerce

Given the steady increase of social media users in 2023, brands are coming up with
innovative strategies to turn captive audiences into consumers. As a result,
the market size of social commerce was seven billion U.S. dollars in 2022. Besides,
users often spend an average of three hours online each day posting, browsing,
watching videos, and communicating. It provides a window of opportunity for
companies to reach customers with their marketing efforts.

Influencer marketing and celebrity endorsement played a crucial role in the success
of social commerce. With the incorporation of new features, Instagram was
the most preferred platform for social commerce, followed by Facebook and
YouTube. Moreover, advertisements on social media had a greater impact on the
purchasing decisions of consumers, especially for skincare and makeup which were
the most influential categories for social commerce

Strategies for the E-commerce Boom in India

E-commerce in India has experienced rapid growth driven by the millennials'
(Generation Y) purchasing power, influence of the internet leading to development
of varied mobile applications and websites, and the much-needed infrastructure.
Mobile penetration accounts for a vast market in India, making it more convenient
for consumers to shop for a wide variety of retail products. Other factors enabling
growth of the industry include:

 Ease of access: Growing internet usage at affordable rates and rise of

smartphones lead to easier access. This connectivity enables other services
like booking train/hotel/cab/movie tickets; mobile and electric bill payments,
etc.
 Connecting the financial system: People now use e-banking and other
schemes. Soon, digitization of the financial system will become the norm.
 Global reach of homegrown companies: Indian startups in e-commerce
industry are utilizing global channels, thereby increasing their customer base
and broadening the scope of growth.
 Attracting repeaters: A strong focus on customer service is the prime
reason that attracts and retains buyers. Cash on delivery (COD), reasonable
pricing, deals & discounts, faster delivery turnarounds with zero prices, and
reverse logistics are some of the drivers transforming the industry into
a booming sector.
 Leveraging technology for innovation: Information sharing between all
stakeholders in the supply chain is very crucial. The integration between
various supply chain aspects will help the e-commerce company have an
edge over the competition. Some of the initiatives may include the use of
bar-coding in logistics systems: EDI for communicating between partners;
visibility into the operations; tracking and tracing of the goods at any given
point.
  Analytics: Capturing real-time data and understanding purchasing dynamics
form the crux of this industry. The buying preferences, tastes, and
demographics of a customer can be addressed by gathering customer data.
The volume and complexity of data require analytics to derive customer
insights, optimize channels, and calculate ROI.

E-commerce Challenges in India

While this sector shows immense promise, certain challenges need to be addressed.
Some of the pressures that constrain growth include:

Logistics: Logistics, a key element in providing customer service, is one of the major
challenges confronting the e-commerce players. Local logistics firms in India are
generally not up to meeting the requirements of e-tailers; hence e-commerce firms
have to make huge investments to build their own logistics.

Infrastructure: E-commerce players also need to address the infrastructure needed

to overcome payment problems, build offline presence, implement more push-
marketing, manage price-sensitive customers, and compete on a global turf. The
payment gateway infrastructure is still at the nascent stage. The merchants have yet
to make amendments on the mobile front. As an example, one of the leading e-
commerce players in India could not handle the requests of its customers on Big
Billion Days' sale program due to unorganized delivery framework.

Competitive Analysis: E-commerce companies have to focus on issues pertaining

to rapid additions of customer segments and product portfolios. Information should
be collected related to market intelligence on growth, size and share, and managing
multiple customer engagement platforms in order to expand into new geographies,
brands & products; while simultaneously controlling a very competitive pricing
environment.

Digitization of Available Networks: At present, social media plays a significant role

in the life of an internet surfer/customer. Thus companies have to provide a rich
experience by managing erratic demands and inconsistent brand experience across
platforms, in addition to handling time-to-market efforts for new launches,
applications, and websites.

Mode of Transactions: Concerns about security, privacy, and tracking fraudulent

purchases are some external forces that impact a business. Other factors like cross-
border tax, back-end service tax, and regulatory issues can have serious implications
for e-commerce companies.

Other issues e-commerce businesses must deal with include inability of the
organizational structure to keep pace with the rapid changes, cybersecurity for
preventing fraudulent transactions and insider threats, tax restructuring, and legal
compliance.

Standardization of the E-commerce Network

The e-commerce sector in India is maturing and there is ample scope for growth.
However, growth comes incumbent with challenges on multiple fronts: operational,
management, regulatory & compliance, along with the fluctuating consumer
demands. The expansion of the internet user base and people buying online
suggests that the e-commerce companies should focus on customer experience and
technological advancements to accelerate growth. Apart from this, to provide a
gamut of offerings and increase reach, companies should ensure faster speed for
their websites and devise easier-to-use mobile applications to enhance user
experience.

Companies should also develop omni-channel business strategies to retain

customer loyalty. Addressing the right market with continuous innovation for a
better operational framework, same day delivery options like the Kirana shops
("mom and pop" stores); and convergence of online-offline shopping are some of
the innovations that the e-commerce companies are executing to meet the growing
competition.

Large e-commerce companies are on an acquisition spree to garner market share

and enhance their capabilities in a cash-intensive sector. These players are trying to
wield more clout, enhance variety, and increase their respective customer bases
through these strategic acquisitions.

Summary
E-commerce is the convergence of convenient shopping, competitive pricing,
discounts, etc. The changing market dynamics pave the way to a new model that
includes hyper-local space with innovative transactional platforms, payment
solutions, and a virtual brick-and-mortar retail experience. Old foundations based
on price and quality will be replaced by a more enjoyable and richer user experience
through guidance on selecting the right product, personalization, etc. The growth of
core online retailers in India is driving brick-and-mortar stores to revamp their
operations across regions.

STATISTICS

India’s e-commerce market is on fire! With consumers rapidly adopting online shopping
and renewed thrust from leading consumer goods and retail players in the country,
gross merchandise value (GMV) of India’s e-tailers touched US$ 60 billion in FY2023.
As per latest data from Redseer Research and Analysis, the surge in e-tailer GMV rose
22 per cent last year over the previous year. In FY2022, GMV of e-tailers stood at $49
billion.

While COVID related disruptions like lockdown and supply chain bottlenecks impacted
economic activities during the past three years, e-commerce sales grew by leaps and
bounds. In fact, since the end of FY2020, when the COVID pandemic hit the shores, e-
commerce sales have jumped by a whopping 140 per cent.
In FY2020, while the GMV stood at $25 billion - up by 13.6 per cent over the previous
year, in FY2021 e-commerce GMV grew by 44 per cent to reach $36 billion. In the
following year, it continued to grow rapidly (by 36.1 per cent) to cross $49 billion in
FY2022.

The data, however, shows that the yearly growth rate is slowing since its peak in
FY2021, when a stringent lockdown was in place and physical stores were shut for
several weeks. “Despite losing momentum, e-tailing today is 2.5 times of pre-COVID
levels and is performing much better than overall retail consumption, which has been
tepid in the recent quarters due to inflation concerns,” said Mrigank Gutgutia, Partner at
Redseer.

According to it, over the last three years new users who are willing to try e-commerce
throughout the country have increased and non-metro users account for a large share
of the total user base in FY23. “However, the growth pattern in FY23 (and likely going
forward as well) is different wherein the ‘regular shoppers’ i.e., the monthly user base is
now larger than ever before. Monthly shopper base (MTU) which stood at nearly 65
million in FY23 is now 31 per cent of the annual e-tailing shopper base –the same
metric which was just 23 per cent in pre-pandemic era. This goes to show that e-tailing
user base is maturing and customers now shop online more frequently across a range
of categories,” Redseer noted

According to it, over the last three years new users who are willing to try e-commerce
throughout the country have increased and non-metro users account for a large share
of the total user base in FY23. “However, the growth pattern in FY23 (and likely going
forward as well) is different wherein the ‘regular shoppers’ i.e., the monthly user base is
now larger than ever before. Monthly shopper base (MTU) which stood at nearly 65
million in FY23 is now 31 per cent of the annual e-tailing shopper base –the same
metric which was just 23 per cent in pre-pandemic era. This goes to show that e-tailing
user base is maturing and customers now shop online more frequently across a range
of categories,” Redseer noted

Limitations of Online Retailing in India

In spite of all the advantages that Online Retailing provides to the consumers and
retailers, it has not been able to penetrate into
the Indian market to a very large extent. The barriers to the growth of Online Retailing in
India are:

7.1. Lack of High Speed Internet Connection

High speed internet connection is needed for Online Retailing. But in India the speed of
internet is very slow and it also gets
disconnected frequently. This prevents people from shopping online as they fear that
the disruption of Internet connection will
lead to loss of money.

7.2. Less Usage of Credit Card

The usage of credit card in India is less when compared to the other countries of the
world. The most common fear in the minds of
the credit card users is that of an unsuccessful transaction. This prevents consumers
from making purchases online and hence it is
a barrier to Online Retailing.

7.3. Preference for Cash Payments over Credit Card Usage

Most people prefer to make payments in cash for the products they want to purchase.
This tendency leads to decrease in the credit
card usage and it indirectly affects the Online Retailers. Cash on Delivery is the most
commonly chosen payment option by the
customer but it has a negative impact on the Online Retailer. Most of the times it has
been noticed that the consumer orders the
product with the Cash on Delivery option but when the product is delivered to them then
they do not accept it. This is a loss to the
Online Retailer as they have to bear the expenditure on the transportation of the
product.

7.4. Concern for Authenticity of Goods Purchased

As the consumers cannot touch and feel the products in Online Marketing, they do not
have the faith that product that is being sent
to them by the Online Retailer is genuinely of good quality. This leads to creation of
anxiety among the consumers. Many cases of
fraud and delivery of bad quality product have been experienced by the consumers
previously due to which they do not prefer
buying products online.
7.5. Uncertainty about the Delivery of Products
Consumers are generally worried about the delivery of the product. Most of the Online
Retailers have the payment facility as
credit card or debit card or net banking. This means that the consumer has to pay the
money first and then on a later date he will
receive the product that he has ordered. This also creates anxiety in the consumer’s
minds as they have the fear that though the
money has been paid, they may not receive the product. Sometimes the consumer may
not be at home to take the delivery of the
product and in such situation, the product will be sent back to the company.

7.6. Security for Online Transactions

The most prevalent fear in the minds of the consumer during online shopping is the fear
of loss of sensitive information about their bank accounts when they are making
payment for the product. There have been several cases of hacking and fraudulent
transactions since the beginning of the practice of online banking and online shopping.
This is one of the main barriers to the growth of Online Retailing in India

. Other Limitations
Some of the other limitations of Online Retailing in India are:
 Online shopping can be done only by those people who are computer literate and can
operate a computer.
 It can be done only if the consumer has internet banking or debit card or credit card
facility in his bank account.
 Many consumers fear that the product they will receive could be different from the
product that they had ordered.
 All products cannot be bought online like grocery and other products of daily needs.

8. Suggestions for Making Online Retailing Beneficial to Consumers

The following suggestions are offered for making Online Retailing beneficial to
consumers, attracting more consumers and
retaining the existing ones.

8.1. Customer Database

The Online Retailing companies should maintain a database of all the necessary
information of consumers. This database will be
useful to the Online Retailer in providing better customer service. The consumers of the
company can be classified into different
segments and each segment can be provided service according to their preferences.
Thus, customer database is an essential factor
for the success of Online Retailing.

8.2. Ease in Ordering

The Online Retailers should ensure that the process of ordering for the products is
easy. The general fear of people regarding
buying products online is about the process of ordering. This fear has to be removed
for making Online Retailing more user-
friendly. The Online Retailers should provide guidelines in a stepwise manner by which
the consumer can easily order products
online. They can also provide support to the consumers through customer care centre.
The consumers may call the customer care
centre when they face problems in ordering products online. In this way, the Online
Retailers will be able to instill confidence in
the minds of the consumers towards purchasing products online.

8.3. Quick Delivery

Many people avoid shopping from Online Retailers due to the fear that they may not
receive the product that they have ordered on
time. One of the major points of difference between the traditional and Online
Retailing is the delivery of goods. When the
customer buys the goods from a traditional retail store then the customer returns home
with that product, but in case of Online
Retailing, the product will be sent to the consumer and they will receive it after a few
days of placing the order. This feature of
Online Retailing is a matter of concern for consumers as it creates anxiety among them.
They feel that the Online Retailer has
received the price of the product and there is no guarantee that the product will be
delivered. In order to make Online Retailing
more popular among the consumers, the Online Retailers will have to take care of this
concern.

8.4. Secure Payment System

The fear of losing money and hacking of bank account information is the biggest fear in
the minds of the consumers. Since most
of the Online Retailers have the facility of payment through debit card or credit card or
net banking, the consumers feel that
sharing information about their debit or credit cards may lead to hacking of their bank
accounts. This is not an unreasonable fear.
There have been several cases of fraudulent transactions where bank account
information has been hacked and the money has
been spent or stolen. It is important that the Online Retailers take proper measures
to protect the information shared by the
consumers. The main source of revenue for the Online Retailers is the amount paid by
the consumers through their debit or credit
cards, and if the consumers do not have faith in this process of Online Retailing then
they will not buy goods online.

8.5. Privacy and Security in a Transaction

The Online Retailer should ensure that the payment process is secured. The privacy
policy of the Company should be strong. The
use of Verisign and Secure Socket Layer (SSL) to provide a secure connection makes
the website more reliable and will attract
more consumers.

8.6. Websites Should be User – Friendly

The website of the Online Retailer should be easy to use and navigate. The website is
the only way by which the consumers are in
contact with the Online Retailer. If this interface is easy to use then it will attract more
customers.

8.7. Ease in Replacement of Goods

If the customer is not satisfied with the product he has bought online then he should be
able to return the goods easily. The policy
of the Company regarding the returning of goods should be simple and prompt. The
Company should also provide money back
guarantee if the consumer wants to return the product and get back his money.

8.8. Provision of Correct Information

The Online retailing Company should provide correct information about the product and
its availability. This makes the shopping
experience pleasant for the online consumer.

. Managing Online Retailing

The most important factors in Online Retailing are value and customer service. If the
Online Retailer is able to meet the value
proposition then the consumers will automatically become loyal to the Online Retailer.
Internet provides several options to the
consumers regarding purchase of goods. There is too much clutter on the internet.
There are too many websites that are selling
goods online. So the consumers are fickle, value driven and search for new
experiences. They are fickle because when they want
to buy a product they will search for the product in a search engine and then based on
their preference for speed of delivery or
price offered, they order the product. There is no guarantee that the consumer will buy
every time from one particular website
only. They will search for the product and wherever the price is lowest, they will buy
from that website only. But if the Online
Retailer takes proper measures then they can retain the consumers.

10. Conclusion
The future of Online Retailing in India looks promising. There is growth in the market for
Online Retailing. The acceptance of
Online Retailing in India is increasing with the emergence of new technologies which
are facilitating operations.
The youth of India is one of the major driving forces for the sales of Online Retailers in
India. They have access to internet and
they are ready to purchase products online. They are one of the major groups of
customers that have boosted the sales in Online
Retailing. India is one of the few countries in the world that have the advantage of
demographic dividend. Around 64% of India’s
population is expected to be in the age bracket of 15–59 years by 2026. This is the age
group that is ready to take risk, purchase
latest products etc. So, Online Retailers should tap this section of the market and utilize
the demographic dividend of India to their
advantage.
The Indian online retail sector is evolving rapidly and those who enter the market now
can learn local dynamics develop market
insights and establish leadership positions. We can say that this is just the
beginning for this emerging marketplace. Online
Retailing in India will quickly match the growth of Online Retailing in other countries.