Last week e-tailer Quikr received funding of $90 million (around Rs. 540 crore), which only strengthened the belief that the Indian e-commerce segment, although nascent, is here to stay and growing fast.
Estimated at about $13 billion, the e-commerce industry is dominated by the online travel segment, which, according to a KPMG in India report, accounted for 71 per cent of total transactions.
“Globally, in a difficult economic environment, alternative medium sales rise,” Gaurav Gupta, Senior Director, Deloitte in India, a leading consultancy, said. “E-commerce is one such as people are keen on better deals and bargains.”
Understandably, growth of e-commerce depends on Internet penetration and literacy factors, which explain India’s slower trajectory.
“Development of e-commerce is also predicated on the expectations of the middle class,” Ashwin Vellody, partner, KPMG in India, said. “The main metros will grow but faster rates will come from Tier 2 cities where access remains the issue. On the supply side, companies have to sort out logistics like warehousing strategically,” he added.
In mature markets, e-commerce growth impacts brick and mortar (B&M) retailers but industry experts believe that over the next decade, B&M retailers will increasingly move online and 15-20 per cent of sales will shift in areas like OTC (over the counter) medication, books and travel.
“We believe the future of e-commerce is on ‘mobile’,” Rajesh Magow, Co-founder & CEO—India MakeMyTrip.com, told this correspondent.
“Mobile is one of our fastest growing channels and currently accounts for over 20 per cent of all our traffic. Most of these bookings are from smartphones.”
Given the competition, companies are trying out different models.
“India is a huge, attractive market but what keeps me awake is the need to innovate and maintain my position in the new part of the market that is expanding,” Pranay Chulet, CEO & MD, Quikr said.
The world is going multi-channel and e-tailing is just another selling channel, Kumar Rajagopalan, CEO, Retailers Association of India (RAI), said. “Being new, experimentation will continue. Companies are focused on growth, acquisition and investments rather than profitability. That will come and thereafter there will certainly be a consolidation.”