The Growing Pains of Indian E-Commerce: What You Need to Know

A survey conducted during the middle of last year had revealed that India has an internet user base of around 137 million. Of course, the penetration of e-commerce in India is rather disappointing as compared with many other developed or developing economies of the world. But it is noteworthy that e-commerce is steadily becoming more and more widespread in India because of several encouraging factors:

• Robust growth in broadband internet and 3G penetration
• Expanding middle class population with surplus income  and hence greater purchasing power
• Availability of an ever widening product range
• The natural disinclination to do offline shopping due to modern lifestyles, traffic congestion, crowded outlets, lack of time etc
• Online shopping means less prices as compared to brick and mortar retail outlets.

Do not forget that India is indisputably the most rapidly growing online market among BRIC (Brazil, Russia, India and China) nations and this obviously is trigging a highly promising e-commerce market. Many economist and market experts opine India will soon emerge as one of the largest online retail markets in the world.

It is universally known that any growth is accompanied by pain. But instead of becoming overly obsessed with the pain aspect, one should draw solace from the fact that Indian e-commerce is healthily growing. Admittedly, there are certain grim issues India has to contend with when it comes to e-commerce growth:

• The digital divide is still very pronounced and internet penetration is quite low.
• The profitability in online retail segment continues to be rather tardy.
• Despite having 110 million internet users, it is only a minority that is opting to use e-commerce
• Presently, online retail is woefully low at less than 1 percent of India’s retail market
• Bulk of Indian consumers does not have bank accounts or debit and credit cards.

Special efforts are needed to make buyers switch over to online shopping. But, the cost associated with popularizing online shopping in India is reportedly unaffordable for many online retailers.

India is still in infantile stage as regards e-commerce and investments have to be made to drive buyers and brands to the world of digital commerce.

To direct customers to online shopping, retailers in India must make inducements like payment by cash or through credit card on delivery and offer unambiguous return policies. Consumers in India will start buying online more once there is greater trust in the system.