Massive Ecommerce Growth in India

Uzra Mohiuddin
by Uzra Mohiuddin 02 Jun, 2014

The ecommerce environment in India offers lucrative opportunities for brands willing (and ready) to get involved. In fact, in a race to be the world's largest economies, India jumped from the 10th position in 2005 to third in 2011. As per the report drawn by the International Comparison Program (ICP) of the Development Data Group at the World Bank, the U.S. retained its position as the largest economy while countries like Japan and the United Kingdom gave way. It was observed that two-thirds of the world's economy was contributed by the 12 largest economies in the world, six of which were of middle income categories. These six middle income economies included China, India, Russia, Brazil, Indonesia and Mexico. 

Clearly India is a lucrative land that is being eyed by investors from across the globe. As Business India puts forth, the booming industries in the subcontinent include IT Information Technology, Telecom, Healthcare, Infrastructure and e-Retail. While the rest have been in the race for quite a while now, ecommerce has come out with flying colors despite being new. 

Indian ecommerce Industry: A Retrospect

Amid the gloom that most experts and economists see in Indian industries, ecommerce or e-retail is one ray of light that promises to shine brighter by the day. Mumbai-based rating firm, Crisil Ltd. revealed that ecommerce businesses' revenue could triple in the forthcoming three years. The prime reason behind the growth would be the multiplying number of users using the Internet, which is currently 200 million users. The estimated figure by 2015 is 500 million, as per Mc Kinsey & Co. 

The financial year of 2013 ended with ecommerce companies' combined earnings of $2.24 billion. This is however projected to become $8.13 billion by 2015 as per Crisil Research. What has attracted venture capitalists and other investors is the phenomenal annual growth of about 56 percent since 2008?

Some of the industry highlights that mark the prospects include:

- Jabong, an e-retailing store generated about $100 million from a UK government backed investing agency.

- Myntra, another online retail brand, specializing in apparel and accessories, attracted investments worth $50 million.

- Flipkart achieved a sale target of $1 billion well before their planned period.

B2C Ecommerce: How Does It Look Like In India?

eMarketer, in its latest forecast reveals business to consumer (B2C) ecommerce global sales are estimated to reach $1,500 trillion this year which is a jump of 20.1 percent since the previous year. It is believed that in the next two years Asia Pacific will be leading the ecommerce market with China's spending becoming the greatest and India and Indonesia following closely. 

This massive growth will be fueled by a number of reasons like the growing mobile and Internet user base, especially in the emerging markets in the Asia Pacific region, advancing payment and shipping options, ever-increasing mobilecommerce sales and major international brands pushing into markets. Asia Pacific's growing strength of sales is primarily attributed to their huge populations which are acknowledging ecommerce and beginning to rapidly adopt this new culture. 

The forecasted growth of the Indian ecommerce market for this year alone is 35.9 percent and as per the Wall Street Journal, the Indian ecommerce market is expected to grow three times to become an $8.13 billion industry.

The Indian Advertising Market: A Key Player in Ecommerce Growth

India's ecommerce market is on a rise. Statistics reveal that by the end of this year, 44 percent of the Indian households will have access to the Internet. This clearly translates to a bigger market for ecommerce. This change is also going to affect related markets in a big way like the supply, logistics and advertising. Advertising in particular will be playing a huge role in facilitating the ecommerce growth by educating people about brands and assisting them in buying not only through e-stores but also their brick and mortar outlets. 

Ad Age, a leading source of news and updates from the advertising community, highlighted a few facts about the global advertising market, where India was highlighted to be having a bright future ahead. Here's a summary of the feed, in the form of a few advertising facts, as per the current market scenario:

* While the Latin America's growth will sustain as before and Western Europe's will be modest, Asia-Pacific countries especially China and India are set to grow considerably through 2016.

* Amongst the multiple ad mediums like Newspapers, Magazines, Radio, Internet and Television; Internet would grow to become the second largest medium of advertising, across the world. 

* China is ranking number three in the advertising market and is expected to rise up as the number one. It will be closely followed by the Indian subcontinent and Indonesia.

* India will become one of the 10 largest ad markets ascending from its current 14th position. It's expected to grow by 39 percent year ending 2016. 

* Spending in technology and personal care is growing the fastest among others making them the most lucrative businesses.

India, traditionally the land of charmers, is now being looked upon as a fertile land for investments that can yield great returns. With Fortune 500 names like Walmart, wanting to enter into the subcontinent through e-retail, ecommerce is clearly the next big stepping stone for Indian growth. 

What are your takes on the Indian ecommerce industry? Do you think it's a boon or just another mirage in the desert? Post your thoughts and opinion; we'd love to hear from you too!

Uzra Mohiuddin: Uzra is a digital marketing evangelist and frequently writes on various trending topics in SEO, Social Media Marketing and Ecommerce. She is a content expert at Techmagnate, a renowned digital marketing firm headquartered in Delhi and an active contributor to it.