Monday, May 27, 2013

E-commerce in India - What's ahead?

There's a hype in recent months that eCommerce in India is getting punched and can be brought down by the mounting pressure on the eCommerce companies as they struggle to survive. Heat is on these companies as they couldn't turn profitable since they shed lots of money as operating expenses. Venture Capital firms prefer to stay away from investing in any new start-ups in this sector.

Except a handful of companies like Flipkart and Myntra, others are feeling the heat. Even these successful companies are yet to be 'profitable' even after they were successful in raising funds.

One emerging trend we could see in recent months is that eCommerce industry is in a 'consolidation' phase now. Few examples include: Babyoye.com, a baby e-store merged with Hoopos.com, another baby products seller and Buytheprice.com was bought by Tradus.com. So the question is where the market will go?

Experts think that the industry may consolidate further and get stable as more smaller and new companies would be thrown out or sucked in. But considering the internet usage by 2015, the eCommerce market in India still looks promising (it is estimated that more than 300 million people will use the internet by 2015, up from 100 million now).

The eCommerce market may be still has a long way to go in India as people are still have constraints like lower speed internet connections, fear of using credit cards online (e.g identity theft), 3G internet on mobile devices has long way to go as more and more people are still using non-smartphones, lack of efficient payment platforms (gateways), etc. The whole point here is that the younger population may be interested in doing online transactions more than the middle and aged population. This may be due to the cultural shift that's happening now. Hence we could expect that the future has lots of potential for eCommerce market in India and it may take another 5-10 years to see the real value of 'eCommerce' in India.