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E-commerce wave in India

E-commerce in recent times has been growing rapidly across the world. E-commerce means
sale or purchase of goods and services conducted over network of computers or TV channels
by methods specifically designed for the purpose. Even though goods and services are
ordered electronically, payments or delivery of goods and services need not be conducted
online. E-commerce transaction can be between businesses, households, individuals,
governments and other public or private organizations. There are numerous types of ecommerce transactions that occur online ranging from sale of clothes, shoes, books etc. to
services such as airline tickets or making hotel bookings etc. The bookings done through
electronic communication could be Business to Business (B2B) or Business to Consumer
(B2C). Business to Business i.e. B2B is e-commerce between businesses such as between a
manufacturer and a wholesaler or between a wholesaler and a retailer. There are several
variants in B2C model that operate in e-commerce arena. From the point of view of business,
there are two models of e-commerce. First model is known as “Market Place” model, which
works like exchange for buyers and sellers. The “Market Place” provides a platform for
business transactions between buyers and sellers to take place and in return for the services
provided, earns commission from sellers of goods/services. Ownership of the inventory in
this model vests with the number of enterprises which advertise their products on the website
and are ultimate sellers of goods or services. The “Market Place”, thus, works as a facilitator
of e-commerce. Different from the “Market Place” model is the second category of business
known as “Inventory Based” model. In this model, ownership of goods and services and
market place vests with the same entity.
India, the second most populous country in the world, is home to 1.2 billion people.
It is has a huge potential for the e-commerce business. India has an internet user base of about
250.2 million as of June 2014 and is still growing with a large number of new entrants.
Currently India has e-commerce for 11 categories and is open to still many. Let us view the
role of the key players in these categories that are growing to a much larger scale and
defining e-business in a new way in the Indian market. With a huge funding raised by the
companies have given boost to the new players in the market. The multicategory segment is
on fire in the current year. The top players- Flipkart, Snapdeal and Amazon are expected to do
$4 billion in sales this fiscal. Flipkart projects its sales to reach 10 billion by year 2014. On
average, Flipkart sells nearly 20 products per minute and is aiming at generating a revenue
of 50 billion (US$0.81 billion) by 2015. Cash-on-delivery has been one of the key growth
drivers and is touted to have accounted for 50% to 80% of online retail sales. Amazon.com
has said it plans to invest $2 billion more in India, where it has slashed prices, ramped up
marketing and accelerated warehouse construction to try and take on local competitors.

com. Key players in this category are Jabong. of which the furniture segment accounts for about half. As about 90 per cent of the market is unorganised.com. Groceries sell irrespective of the state of the economy. MyGrahak. Caught in the city's fast pace.com. German Rocket Internet-sponsored FabFurnish and Norwest Venture Partners-funded Pepperfry are among those who have entered the furniture segment. India’s online retail industry has grown at a swift pace in the last 5 years from around Rs 15 billion revenues in 2007-08 to Rs 139 billion in 2012-13. soap and. Omart. According to CRISIL Research.2 lakh crore). CRISIL Research expects the buoyant trend to sustain in the medium term. selling groceries online has become relatively easy. and was primarily driven by books. but there's no way you can live without toothpaste. translating into a compounded annual growth rate (CAGR) of over 56 per cent. You can stop going to the cinema and restaurants.com. Furniture sale is also picking up using e-commerce. Yepme. tedious commuting and long working hours. Online travel players are diversifying their offerings to include hotel reservations. vegetables. The 9-fold growth came on the back of increasing internet penetration and changing lifestyles.in. many consumers don't have the time to buy groceries or would like to avoid the chore. AtMyDoorSteps. along with the regular ticketing services. BigBasket.com. EkStop. well. and estimates the market will grow at a healthy 50-55 per cent CAGR to Rs 504 billion by 2015-16. ZopNow. it is an attractive avenue for online players. electronics and apparel.Online travel has traditionally been the largest e-Commerce sub-sector (by revenue) in India. . . Travel segment constitutes nearly 71% of the transactions of consumer e-commerce industry. With improving comfort with online payments. The Indian home and furnishing market is pegged at about $20 billion (Rs 1.com. Myntra (which has now been acquired by Flipkart) and many more. AaramShop.

Most of the existing etailers offer their service in metros and major urban centres. Given the large size of the country. Healthcare in India is an underserved and underpenetrated market. absence of seamless access to a significant proportion of prospective customers is a dampener. Internet penetration is low. There is a huge demand. Ancillary services providers such as logistics companies and supply-chain companies are also likely to benefit from this. . As such. According to Flipkart CEO Sachin Bansal. in five years. Firstcry are some of the leading names in this segment. or over 15% of the organized retail market.1 billion. and is estimated to grow to $22 billion. But since the real charm of the Indian market lies in its large population. Internet penetration in India is still a small fraction of what you would find in several western countries 2. 4. Ecommerce companies using Indian payment gateways are losing out on business. Logistics is a problem in thousands of Indian towns. 3. Healthkart.com and SeaToHome. extant FDI policy does not permit FDI in B2C e-commerce. The logistics challenge in India is not just about the lack of standardization in postal addresses. apart from the e-commerce companies themselves. RationHut. as several customers do not reattempt payment after a transaction fails. Singapore’s staterun investment firm Temasek Holdings and US investment firm BlackRock are queuing up to invest in India’s e-commerce businesses. FDI. Lenskart. up to 100%. Metropolitan cities and other major urban centres have a fairly robust logistics infrastructure. according to a November 2013 report by brokerage firm CLSA. India is going to be the third biggest e-commerce (market by value) in the world (after the US and China) going forward. or 10% of the organized retail market.com. Online retail is worth $3.LocalBanya. Cloud surrounding e-commerce laws Existing regulations on e-commerce in the country: As per extant FDI policy. there are thousands of towns that are not easily accessible. under the automatic route is permitted in B2B ecommerce activities. Challenges for the e-commerce players in India: 1.com are some of the online stores retailing groceries. Ratan Tata has made a personal investment in online jewellery retailer Bluestone as the former Tata Group chairman scales up his exposure to India's red hot e-commerce sector which has attracted a steady stream of investor money. Large global financiers such as Morgan Stanley. Payment gateways have a high failure rate Indian payment gateways have an unusually high failure rate by global standards.

Indian Penal Code. Conclusion Industry surveys suggest that e-commerce industry is expected to contribute around 4 percent to the GDP by 2020. India has the Consumer Protection Act 1986. State and District level to redress disputes. It provides for regulation of trade practices. but it is not exhaustive. This poses a challenge for potential entrants and existing players. the IT-BPO industry is expected to account for 10% of India’s GDP. The legal requirements for undertaking e-commerce in India also involve compliance with other laws like Contract Law. take the example of PayPal in this regard. it has to take a license from Reserve Bank of India (RBI) in this regard. creation of national and state level Consumer Protection Councils. With enabling support. Laws regulating e-Commerce in India are still evolving and lack clarity. 2000 provides legal recognition for transactions carried out by means of electronic data interchange and other means of electronic communication. by 2020. . which involve the use of alternatives to paper-based methods of communication and storage of information. Further. the lack of law firms or lawyers specializing in e-Commerce laws compounds the problem. Further. Furthermore. nothing in the Act refers explicitly to e-commerce consumers. online shopping in India also involves compliance with the banking and financial norms applicable in India. etc. For instance. However. The Act provides a detailed list of unfair trade practices. According to a NASSCOM report. the ecommerce industry too can contribute much more to the GDP. cyber due diligence for Paypal and other online payment transferors in India is also required to be observed.Information Technology Act. class actions and for recognized consumer associations to act on behalf of the consumers. If PayPal has to allow online payments receipt and disbursements for its existing or proposed e-commerce activities. consumer disputes redressal forums at the National. commonly referred to as "electronic commerce". while the share of telecommunication services in India’s GDP is expected to increase to 15 percent by 2015. to facilitate electronic filing of documents with the Government agencies.