E-commerce in India in Acceleration Mode

Opportunities & Challenges

The Indian e-commerce market is estimated to grow at a compounded annual growth rate (CAGR) of 63% to reach $8.5 billion (as per a PwC market report) in 2016 backed by growth in penetration levels of mobile Internet and increased consumer demand. The number of users making online transactions has grown exponentially and it is expected to cross 50 million soon.

To understand these trends, a study was conducted by Market Pulse with 4500 consumers across SEC-A and B in the age group of 18-35 years to understand their shopping patterns. The various parameters that were covered under this study were as follows:

  • Consumer awareness of online portals.
  • Adoption of online services & product purchase.
  • Preferred portals for different products and services.
  • Consumer experience during online purchase
  • Profile of people adopting online purchase and services usage
  • Likelihood of non-users to adopt online platform
  • Average spends on online services & purchase

Here are a few highlights from this study

New online services are witnessing increased adoption. Need for convenience, choice and availability of reliable vendors are driving demand for these online services. The various services considered for the study were as follows:

However, adoption has not kept pace with increased awareness. Consumer awareness of emerging online services in healthcare and food ordering is substantial –the beginning for service adoption process in Tier 1 towns. Healthcare and household services are likely to register high levels of competitive activity as well as teething troubles in delivery.

Mobile apps are being used to access ‘anytime, anywhere’ services such as food ordering and mobile recharges. Involved decision-making for services such as healthcare and travel is done through websites.

Every third person among SEC B online shoppers searches for jobs online.

Consumer wear and electronics are driving revenue for e-commerce portals. All local and international brands of electronics and consumer wear at discounted prices and doorstep delivery are some of the motivators behind consumers flocking to online portals. The various products considered for the study were as follows:

Both 18 - 25 year old men and women are driving this exponential growth. Women dominate the online purchase of most product categories except electronics. High incidence of purchase of food and gift items across Tier 1 towns is also being witnessed.

Shopping online through smart phones is proving to be a game changer and almost 65% of the shopping is done through the mobile apps. Further, 3/4 orders are paid for, through cash on delivery.

The huge potential for eCommerceis not going to be without its share of challenges, be it operational, regulatory, or digital. Therefore, how a company prepares itself to meet these challenges will decide whether or not it succeeds in this competitive framework.

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