State of Online Retailing in India

Online, December 31, 2009 (Newswire.com) - The power of Internet is slowly being unleashed in the developing countries and its effects are now felt in day to day life. The two giants of Asia i.e. India and China are leading the way. India has seen some dramatic changes in the way internet has affected the lives of the people. Though the internet using population in India is low in terms of overall percentage of total population but, in absolute numbers it is very high. This gives great opportunities for various ecommerce sites to reach this segment.
AT Kearney's annual Global Retail Development Index (GRDI), in 2008, puts India as the fifth largest retail destination globally. Currently the retail industry stands at 390 billion and growing at decent rate. Internet penetration rate in India is 7.1% which is one of the highest in the world. Moreover a very high percentage of the population accessing internet in India is in the age group of 20-45 years. In spite of all this online retailing forms a meager 0.08% of the total Indian retail market.
The ecommerce industry stood at roughly INR 9200 crores by end of 2008. If we ignore the big travel portals which contribute roughly 75-80% of this market the rest of the market is formed by online classified, etailing (online purchase of goods) and digital downloads. About 12% of the market is contributed by online classifieds like matrimonial and job portals.
Our area of focus is the remaining INR 1100+ crores market which is set to see tectonic growth given the right environment is built. This market is poised to grow at 30% per annum for next 5 years but, long term sustainability will depend on how must the market fabric changes. Market players have to be more proactive and innovative in their approach and offering to make serious inroads. In the current market bulk of online sales is in books, gifts, small electronic items. This market in India needs to jump to the next level. More than 32 million internet users makes the market lucrative but, the question is how the market players make the online retail mode viable and competitive.
There are numerous issues which is plaguing the growth of the market:
• Slow change in the buying behavior
• Inability of online retail players to sway customers from offline mode to online retail channel
• Online portals are not up to the mark
• Lack of seriousness by online ecommerce ventures
• Issues concerning security and transaction frauds
It needs to be seen how the existing ecommerce ventures and the new entrants in the market handle these issues. Will they be able to change the dynamics of the market and what will be the time frame in which they can do it?

Ranjit Behera
http://www.egully.com
contactus@egully.com

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