The e-commerce industry is estimated to be $1.8 billion in 2013

Despite spiralling inflation and decline in demand for goods and services, e-commerce continued to gather steam in the year 2013. It moved strongly ahead, finding great acceptance among consumers as they turned to online portals for buying electronics, home appliances, fast-moving consumer goods and even cars.

“The year 2013 has been a very exciting year for the Indian e-commerce industry. The general environment has encouraged new innovations and initiatives by industry players” Nikhil Rungta, Chief Business Officer, Yebhi.com, said.

Deepa Thomas, eCommerce Evangelist, eBay India, agrees, “Heightened interest in the sector and increased Internet usage among the average Indians have made millions of Indians eager to discover the many benefits of online shopping.”

The industry is estimated to end 2013 at a market size of $1.8 billion, according to a recent report by the Internet & Mobile Association of India (IAMAI). And, if this does not seem astonishing enough figure, as per the report, the sector is growing at 55 per cent year-on-year.

With eCommerce showing signs of becoming a household phenomenon, the year 2013 also saw many offline brands and retailers make their online debut either through own websites or through online marketplaces.

This year online marketplace model — wherein product is provided by third parties, while online platform and transactions are processed by marketplace operator — emerged as the preferred business model for companies.

This not only opened avenues for a lot of small and medium businesses to reach out to customer, but also helped save logistics and inventory storage costs for marketplace owner. In turn, with more choices available, shoppers had no reason to complaint.

“Overall, this year saw a battle between the two major business models of e-commerce — Inventory-led and Marketplace Models, the latter proving to be more efficient, scalable, sustainable and cost-effective; thereby gaining a lot of traction with a significantly higher return on invested capital,” Kunal Bahl, Co-Founder and CEO at Snapdeal.com, said.

Echoing similar views, Sanjay Sethi, CEO and Co-Founder, ShopClues.com, said, “The marketplace model emerged as the predominant play for ecommerce, not just for horizontal sellers but niche categories as well. Customers warmed up to the model as issues of trust, delivery, secure payments and the like are ironed out.”

Cars too sold online

Besides, rise in sales of apparels and accessories, one of the key trends this year was buying cars online.

“The top development in 2013 is the growth of the auto websites. Whether it is a new or used car, the consumers want choice and convenience and the Internet offers this to them. To illustrate, we have seen our traffic grow 10X during the year. Presently we have more than 30,000 used cars for sale on our site,” Vinay Sanghi, Promoter and CEO, CarTrade.com, said.

Online classified ads platform provider OLX said cars along with two-wheelers were one of its top selling categories.

Promising outlook

What can one expect in 2014 from numerous e-commerce players? More products, more discounts, more users, better service and shift to mobile commerce.

“The year 2014 will be the tipping point year of e-Commerce. We will see aggressive consumer push and branding by different players, which will help in increasing a numbers of new users by at least three times,” Mr. Rungta said.

“We expect the number of online shoppers to go up to over 30 million in 2014. Better infrastructure in terms of logistics, broadband and Internet-ready devices will be also fuelling the demand in e-Commerce,” he added.

Ms. Thomas from eBay said, “The past year has also seen many brands and retailers make their online debut either through owned websites or through online marketplaces such as eBay India.

The year 2014 will be more defining in shaping up of the industry as players with sustainable business models and the ability to deliver scale will dominate the consumer’s wallet and win in the long-run.”

Nitin Raj, Chief Marketing Officer at Stylemydiamonds.com, said a booming economy and increase in credit cards supply to young audience in India would give a push to online shopping in 2014.

Shopping to go ‘mobile’

“In 2013, mobile commerce contributed almost 25 per cent to traffic and 15 per cent to revenue. In the New Year, we expect that it will grow rapidly and contribute to over 35 per cent of traffic and more than 25 per cent of revenues,” Mr. Rungta said.

Similarly Peyush Bansal, CEO and Founder, Lenskart.com, said mobile consumption would definitely go up in huge numbers as customer can view and order the desired product through their mobile phones on the go.

Praveen Sinha, co-founder, Jabong.com, said, “E-commerce industry will see a change from web to mobile in 2014. Mobile commerce will become more important than web, as most of the companies have shifted to m-commerce and rest will also shift to m-commerce in the coming year.”

“Mobile is slowly becoming the preferred medium for e-shopping, and the online customer is constantly shifting preferences for which device he/she uses to access the Internet. Shopping websites will have to tailor their offerings for laptop, tablets and smartphones,” Sethi of Shopclues said.

Consolidation

The year 2014 will see continuation of consolidation of business in the over-crowded industry, and experts expect clear leaders to emerge in terms of specific categories.

Talking about the profitability of players and consolidation in the industry, Mr. Sinha said, “E-commerce is capital-intensive due to inventory and infrastructure requirements, and, therefore, overall profitability can only come with some minimal scale. We need a reasonable size of Internet-savvy user-base for e-commerce to be successful, and that might still take some time.”

He added a few players, who might succumb to consolidation, would mostly be the smaller ones. Also, the transition would likely be due to too many players and overcrowded state of this market. To salvage their investments, consolidation would be the only way out. However, the same would not qualify for category leaders.

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