Ecommerce might be young in India but it’s growing super fast. India’s ecommerce market will reach US$6 billion in consumer spending in 2015, leaping from US$3.5 billion in 2014, according to the latest data from Gartner. This makes it one of the fastest-growing ecommerce markets in Asia/Pacific.
The potential for a 70 percent growth rate to be maintained or even accelerated can be seen from the low base from which it is emerging.
Ecommerce in India still represents less than four percent of the total retail market. And less than five percent of total digital commerce happens through mobile. But as the number of smartphone adopters is growing fast, so is mobile commerce. Thirty percent of traffic for ecommerce sites comes from mobile and tablets. The top ecommerce sites in India include Flipkart, Amazon, SnapDeal, and Paytm.
With increasing penetration of low-cost smartphones and a rapidly growing ecosystem to engage customers on mobile, new players like Paytm leapfrogged to mobile commerce, skipping the desktop wave.
Praveen Sengar, research director at Gartner, says: “The digital commerce platform market is maturing; incumbent vendors are investing in building out their commerce platforms, and those in adjacent areas, such as search, order management and marketing — both through organic development and acquisition.”
But the profitability and viability of B2C (business to consumer) ecommerce businesses in India are leashed by limited internet penetration, multiple payment models, logistics and fulfillment challenges, higher return rates, and low average order value.
As for B2B (business to business) ecommerce, it is still mostly limited to making the supply chain more efficient, with organizations using online channels to integrate with their partners and distributors. Large Indian enterprises have yet to engage with customers across channels, by investing adequately in people, process, and technology, points out Gartner.
The Gartner report adds:
Indian organizations will look at SaaS or open source platform-based digital commerce till the market matures and digital commerce revenue stabilizes.
For a sense of scale, India is Asia’s fourth-largest ecommerce market in terms of current online spending, behind China, Japan, and South Korea.