INDUSTRY ANALYSIS REPORT

ON

ECOMMERCE IN INDIA

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Contents
INDUSTRY ANALYSIS REPORT..............................................................................1 Contents................................................................................................................. 2 Ecommerce In India...........................................................................................2 Ecommerce............................................................................................................ 3

Ecommerce In India

Ecommerce
The term Electronic commerce or e-commerce consists of all business activities carried on with the use of electronic media, that is, computer network. It involves conducting business with the help of the electronic media, making use of the information technology such as Electronic Data Interchange (EDI). In simple words, Electronic commerce involves buying and selling of goods and services over the World Wide Web. Customers can purchase anything right from a car or a cake sitting comfortably in his room and gift it to someone sitting miles apart just by click of a mouse. Shipping method is generally used for the delivery of the goods ordered.

Ecommerce in India
The low cost of the PC and the growing use of the Internet has shown the tremendous growth of Ecommerce in India, in the recent years. According to the Indian Ecommerce Report released by Internet and Mobile Association of India (IAMAI) and IMRB International, The total online transactions in India was Rs. 7080 crores (approx $1.75 billion) in the year 2006-2007 and expected to grow by 30% to touch 9210 crores (approx $2.15 billion) by the year 2007-2008. According to a McKinsey-Nasscom report the e-commerce transactions in India are expected to reach $100 billion by the 2008. Although, as compared to the western countries, India is still in is its initial stage of development. What do the numbers speak? A sum of 343 stores was taken under study out of which 130 stores sell clothes. 6 of the online stores have Kart in their name and 23 of them have Shop. 26 brands have their own online stores like Nokia, Puma and Reebok and 23 websites are the online versions of their offline counterparts.

Source: http://www.siliconindia.com What do they sell

More than half of the stores sell a single category of products like books, media or electronics with only 59 stores selling multiple categories of items. Some stores classified as Niche sell only exclusive entities like travel books and novelty items.

Source:-www.siliconindia.com

Scope of Ecommerce

Home Internet usage in India grew 19% from April 2006 to April 2007. In April 2007 it became 30.32 million and the eMarketer accept that there will be 71 million total Internet users in India by 2011. India is showing tremendous growth in the Ecommerce. Rival tradeindia.com have 700,000 registered buyers and it has the growth rate of 35% every year which is likely to double in the year 2008. Indiamart.com claims revenues of Rs. 38 crores and has a growing rate of 50 every year. It receives around 500,000 enquiries per month. Undoubtedly, with the middle class of 288 million people, online shopping shows unlimited potential in India. The real estate costs are touching the sky. The travel portals' share in the online business contributed to 50% of Rs 4800 crore online market in 2007-08. The travel portal MakeMyTrip.com has attained Rs 1000 crores of turnover which is around around 20% of total e-commerce market in India. Further an annual growth of 65% has been anticipated annually in the travel portals alone.

B2B Transactions
According to Outlook Business magazine (May 20, 2008), the total B2B transactions in India in the year 2008 are likely to be US$100 billion and B2B marketplaces could account for $15 to $20 billion out of that. Indias largest B2B portal Tradeindia, maintained by Infocom Network Ltd, also stated that e-commerce transactions in India show a growth rate of 30 percent to 40 percent and will soon reach the $100 billion mark. In near future, ecommerce is going to play a major role in multimedia, entertainment and fashion industry. The foreign branded companies are eager to take full advantage of the growing Indian market and are trying to create market for their products over the net. Gucci Co. an Italian iconic fashion and leather goods label is eager to make its hold in India with Business to business transactions. Some of the key B2B exchanges in India are tradeindia.com, matexnet.com, Alibaba.com, AuctionIndia.com, Indiamart.com, TeaAuction.com, MetalJunction.com, etc.

B2C Transactions
Although business-to-business transactions play an important part in e-commerce market, a share of e-commerce revenues in developed countries is generated from business to consumer transactions. Railway and Airlines have played a vital role in e-commerce transactions in India. Travel portals are exploding in India. Recently MakeMyTrip.com has shown Rs 1000 crores of turnover. Travel alone constituted 50% of Rs 4800 crore online market in 2007-08. In India, online services like ticketing, banking, tax payment, bill payment, hotel room booking, entertainment, online games, matrimonial sites, job sites, etc. are showing signs of development in business-to-customer transactions. There has been tremendous boost in the online business with the stock exchange coming online. Online valentine gifts and Diwali gifts are also becoming popular along with the birthday cakes. No doubt, the total value of the B2B transactions is much larger than that of the B2C transactions, because typically B2B transactions are of much greater value than B2C transactions. It seems that the B2C market in India will take time to grow as compared to the B2B market.

Ecommerce and the Government of India

The government is aware of the increasing misuse of the electronic media and online frauds. Therefore, the government of India has passed the Information and Technology Act to keep a check on the transactions carried on via the electronic media and to make the process of Ecommerce safe and reliable. The Act imposes heavy penalties and punishment on those who try to misuse this channel for personal benefit or to defraud others. The law has also established the authentication of the electronic records. Increase in the Cyber crimes in Ecommerce is causing concern among the credit card users in India. Now, the government has opened Cyber Crime Police Station. Online complaints can be filed for both cyber and Non Cyber crimes, through an online form which is available at

http://www.bcp.gov.in/english/complaints/newcomplaint.asp to accept complaints filed with digital signatures. The Government of India has decided to impose service tax on E-Commerce transaction and that will result in making the net shopping expensive. Mcommerce in India Mcommerce is the use of mobile services to interact and transact. Mcommerce is frequently referred as subset of all Ecommerce; hence while talking about Ecommerce, we cannot ignore the importance of mcommerce in India. In India, there are total 12.45% of mobile subscribers, as compared to the Broadband subscriber penetration of 0.2% and the Internet user penetration of 2.6%. Mobile subscribers can get access to Internet immediately without any plug in. Mcommerce is rapidly becoming an easy and affordable channel for reaching and attracting the customers.

Flipkart: The King of Carts in India

Who tops the ranking charts?

Flipkart stands at the top of the charts followed by ebay at second and SnapDeal at third. As per the rankings of Alexa India for the top 500 websites in India, Flipkart and ebay take the twenty third and twenty fifth positions respectively. The online apparel store Jabong tells an impressive story by reaching the fourth position of the list within a years time.

Source : silicon India

WHY IS IT #1?

1. Discoverability:
It is the case with any venture on the web, How does the customer find us? Answer: Organically! Flipkart has been the baap of SEO. This has been the most important contributor to their success. I say this, because only when you see people coming to you, you get encouraged

to deliver more and keep adding. There is no fun (motivation) in adding features to a product that no one is using. Though from what I had noticed, SEO did not come the straightway. There were particularly 2 things that are worth mentioning. a. Yahoo News: Until last year Flipkart had a feed of Yahoo News on its product pages. From what I understand of SEO, this is to increase the keyword density and introduce original content on the page, as the product description across all books sites is same. This was removed later as it was violating the Yahoos ToS on using the service for a commercial site. Check the Waybackmachine here. I loved the risk they took for this. b. We Do Not Sell Used Books: This one is my favourite. If you check the Waybackmachine in the last line you will notice the following text. We DO NOT sell old books or used books. All the books listed at Flipkart.com are new books. The books listed at Flipkart.com are NOT available for free download in ebook or PDF format. The magic of this text is that if you search for <book name> free ebook or <book name> pdfdownload you would always get Flipkart among the top results. These are very popular search queries and Flipkart had nothing to do with it but still they cashed in. This was also the time when Flipkart had Adsense embedded. People would come to the site, see nothing like a PDF download button, and then see an ad for PDF download and click. This meant more revenue for Flipkart. I have done this at least twice myself. Given that the margin on books are very small after the discount, Flipkart was probably earning more by saying what they did not do than by doing what they actually were suppose to do.

2. Payments:
No credit card/netbanking, fear to transact online, repeat transaction failures, no access to web these are the common problems with online payments. What Flipkart is doing to overcome these? From what We last counted, Flipkart had atleast 4 different Payment Gateways integrated. They introduced Cash-on-Delivery. Then they are also doing order on phone. Payment via DD/Cheque is also accepted. 2 basic things that they are currently doing that take little tech. effort but quite some product management will: a. Auto redirection to banking site: Unlike most other ecommerce sites, Flipkart never lands you on CCavenue page, you are auto redirected to the banks page where the info is required to be filled.Flipkart by-passes 1 unnecessary page by passing the required parameters directly to CCavenue and not through a user interface. b. Banks Status: Flipkart maintains its own real time status if the banks netbanking is working or not. So there are no surprises after you have chosen the bank and then go to the netbanking page. And if you think Flipkart gets very good rates from Payment Gateways, not really. Atleast 1 big PG that We aware of charges quite high rates to Flipkart, atleast 40-50% more than to lesser known players.

3. Inventory:

For the last 1 year atleast Flipkart maintains its own inventory(or atleast it seems so). They are selling what they have. From pure hearsay, Flipkart is taking up a big warehouse in Bangalore and is in talks for one in NCR as well. One of the few companies that is using the funding to build a business and not spend it like a FMCG company on ads.

Delivery:
We have dealt with courier companies and quite aware of the fcukall standards they have. Most similar looking envelopes are never delivered thinking that it is a marketing package and no one would track it. They would be willing to bargain on rates but would never say anything about the service. Paying a premium may not solve the problem always. Flipkart is exploiting this problem as a cashable need gap and building its own delivery backend. Flipkart is seen delivering through their own delivery boys in Bangalore and at times within 12hrs from order. Flipkart has started putting fliers in newspapers in Bangalore with a product listing, call-toorder phone number and a promise of delivering tomorrow. This means more discoverability, no payment problem and no delivery delay. The way it is actually suppose to be. From what We heard from multiple sources, Flipkart is looking to build its own courier company.The recent $20Mn funding from Tiger Global was only part of a larger sum they are known to be raising. Flipkart is looking to raise $100Mn at a valuation of $200Mn. Recently, Flipkart has started selling everything from cameras, laptops to gaming consoles to personal and health care electronic products. There are major talks about Amazon acquiring Flipkart but it would only make sense to grow it bigger and better from here. A handover wouldnt see the same product management will. Flipkart is a story that is come from smart work and an it is possible attitude. There is a need to for a couple of more stories like these and there would be no cribbing about Indian eCommerce not working.

Ecommerce in India: Pitfalls in the way of Ecommerce

The scope for Ecommerce in India is no doubt tremendous in the years to come, but still there are some pitfalls in its way of success that should be taken care of. They are: 1. Studies have revealed that 23% of the customers quit even before they register themselves at a particular site because they hesitate to register themselves. 2. The time of delivery stated is unclear. 3. The time taken for downloading is very long. 4. People in India have habit of buying goods only after feeling the goods. This drawback can only be removed if matured companies enter the Ecommerce in whom people have good faith. 5. The behavior of the Indian customer is very need driven as compared with the US customers who are impulsive buyers. 6. Most of the entrepreneurs in India lack is sufficient capital or resources and hence cannot wait for a long period of time for positive results.

Ways to remove the pitfalls

Consistency in execution. Strong government policy against cyber crimes and frauds. Tight integration of the system by the online retailers. Stating clearly the time required for the delivery of the product and delivering the goods within that time period. Making the payment mechanism safer.

How to attract Indian Online Customers?

Goods should have value for the customer along with quality. Security is promised. Selling Brand articles. Establishing trust and winning confidence. Providing easy guidance. Clear information regarding delivery time. Articles ordered and the article delivered should not vary. Giving discount offer and other gift items. Limited personal information. Providing value added service at lower prices. Full information regarding the product is simple words. Innovative products. Social shopping phenomenon. Providing price comparison. Transparent information regarding the product. Indian customers want to buy things that do not cost them much.

Forrester Researchs projections for Asia-Pacific e-commerce sales by country (in billions, in U.S. dollars), in 2012 and 2016.

As we can see that india is the fastest growing ecommerce country in the world. Sales in 2012 is 1.6 billion in india and china has the highest sale with 169.4 billion but the sale in the china will be 356.1 bilion in 2016. which is going to be increase near about 200 percent in 4 years. But in india ecommerce sale will be 8.8 billion in 2016. Which will be increased by 550 percent in 4 year.so from above we can conclude that ecommerce has a good scope in indian country . people are paying attention to these ecommerce company to buy online.