According to the retail advisory, Technopark, Indian retail e-commerce is pegged at about USD 2.3 billion. This is a very nascent market accounting for only about 0.4% of the entire retail industry. Its potential to grow is immense and it is estimated to reach about USD 19 billion by 2019. The upcoming festive season in India may provide the market the boost that is just the need of the hour. Or at least that is what retail giants believe.
Big Diwali plans
On September 22, 2014, Amazon kicked off its Online Shopping Dhamaka – an extravaganza comprising hundreds of offers, new deals and discounts, new products and store launches, and contests. The e-commerce giant believes that the run-up to Diwali is the biggest shopping season in the country and this “Dhamaka” is designed to capitalize on this shopping frenzy. Amazon also introduced its Deals Store and its Festival Season Gifts Store to streamline the traffic to the store. These sites manage the many deals and discounts offered and make it easier for customers to select gifts.
Flipkart, India’s largest e-commerce site hopes to achieve a GMV (gross merchandise value) of about USD 2 billion through this festive season in India. GMV is the aggregate value of goods sold through the site not including deals or discounts. The enormity of this can be gauged by looking at the average GMV of the site on non-festive months; Flipkart recorded a GMV of USD 83 million in February 2014. A number of other retailers are also coming up with huge plans for the Dussera-Diwali season in India with an expectation that this will be the biggest Diwali ever.
Meet the E-Commerce Titans
Amazon: With over 17 million products, Amazon is aiming at becoming India’s most diverse online retailer. Amazon’s India operations are about one year old. To enhance its base and to grow the site in India, the firm has promised an additional investment of about USD 2 billion. The company intends to test drone delivery services in Bangalore and Mumbai ahead of Diwali.
Flipkart: With 15 million products and a seven-year reputation of excellence, Flipkart is going all out to woo customers with a dozen deals and discounts coming out every week in each product category.
Myntra: Myntra – now wholly owned by Flipkart – is planning to all out thrust this festive season with 200 partner fashion brands enlisted including exclusive tie-ups with 3 private brands. Myntra’s fashion line, along with Flipkart’s, is expected to earn revenue of about INR 2000 crore this festive season alone.
ShopClues: According to news reports, ShopClues is in discussion with investors to raise INR 450-600 crore before the festive season.
Snapdeal: Snapdeal is planning to offer the best deals this festive season. Sales in October are likely to go up by about 45% – 50% over non-festive months. With a discount of 40% on women’s clothes, exclusive tie-ups in the electronics department, SnapDeal is all out to woo the online shopper this year.
Jabong: Rocket Internet’s venture Jabong is likely to take in about 150,000 orders each day during this festive season. The site is likely to increase its customer care manpower by 200 % – 300 % to handle the flood of orders during the festival.
Walmart: The world’s biggest online retailer had announced the launch of its online retail portal catering to Indian customers in 2015. In view of the growing Indian markets, the launch had been slotted to open up earlier (in October 2014) for 19 Indian cities. Not much has been heard about the India operations of Walmart, however.
Fab Furnish: Home décor and furnishing sales is set to skyrocket too. FabFurnish expects sales to go up by almost 80% this festive season.
Other Indian retailers such as the Future Group and Reliance Retail are also expected to launch online operations sometime this festive season, perhaps just before Diwali. In an unprecedented move, Reliance Retail announced its intentions to enlist perishable products such as vegetables, milk, and poultry for delivery within Mumbai.
Fireworks, gifts, and more…
For the last two to three years now, Rakhi has been one major occasion for e-commerce sales in India. With Rakhis, Lumbas, and gifts already being shipped online to Indian cities and even other countries, sales of electrical appliances, Diwali lights, and even sweets and chocolates may also take the online stores by storm this year. This should be great news for the customers whose greatest worry during the festive season is the quality of electrical goods that flood the market around this time. Buying from popular websites should assure the customers of minimum quality standards.
Online retail hazards
Is India ready for this e-commerce boom yet? That is the question online retail giants have been asking themselves the past few months.
Amazon has decided to limit delivery of orders above INR 5,000 in Uttar Pradesh (including Ghaziabad and Noida). While the e-commerce giant does not have an official statement about the cause for such a decision, it is rumoured that increasing numbers of fake orders abusing the Cash On Delivery (COD) facility extended on certain products has pushed Amazon to take such a stand. A few days ago Flipkart also resolved to pull off products above INR 10,000 from its site for all UP customers. According to the site fake addresses, just-for-fun or prank orders have been hurting the entire supply chain.
Online retail business is only a mere fraction of the retail industry in India. Growing from 0.4% to about 3-4% itself is a major feat for the business. It does lead to major concerns about India’s readiness to accept shopping over the Internet as a viable alternative to visiting physical stores.
Indians’ increasing purchasing power
Economists are predicting much better sales and turnovers for retailers and retail businesses including e-commerce sites this year in comparison with last year. The expansion of the economy could be the cause for such optimism. After almost three years of sub 5 percent growth the country seems to have scaled new heights with a GDP expansion of about 5.7 percent in the first quarter.
The BJP-led National Democratic Alliance has also done everything possible to keep the economy and the manufacturing sector buoyant. The launch of the ‘Make in India’ campaign, targeted to boost the Indian manufacturing sector and attract foreign investors, is also likely to boost the Indians’ purchasing power and the e-commerce business in the country. At the moment, however, foreign investment in retail e-commerce is not permitted in the country while FDI is welcomed in the wholesale markets.
E-commerce is big business. In a country like India, the potential for growth is very high, considering the high Internet penetration, the high number of mobile devices, and computer literacy. But is India ready yet? Should e-retailers celebrate? The weeks to come will show us the way ahead.
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