At
the top MBA college in Greater Noida, Ishan Institute of Management &
Technology the academicians of the faculty of business administration have been
studying the recent developments in ecommerce in India and the world with
interest and curiosity. As the new financial year commences, we take a look at
some readily available data on ecommerce in India and the world and extract
some useful insights to explore patterns that best describe the trajectory
ecommerce has been taking.
Ecommerce Market Size in India over
the Years
The
size of the ecommerce market in India has steadily grown over the years. This
is best substantiated by the data that we have collected from a research paper
published by Deloitte.
|
Year
|
Market
Size in $ Billion
|
|
2010
|
4.4
|
|
2011
|
5.9
|
|
2012
|
7.9
|
|
2013
|
8.9
|
|
2014
|
13.6
|
|
2015
|
16
|
The ecommerce market in India has grown from $
4.4 billion in 2010 to $16 billion in the year 2015 and is forecasted by many
leading business consulting firms and corporations to grow at a rate of 20%
from the year 2016 and onward for the next 4 years. There are some key growth
rivers behind this stupendous projection. While there are government,
technology and demographic drivers, at Ishan Institute, the first MBA college
in Greater Noida we attribute the lion’s share of credit to the enablers of
technology. There are multiple reasons behind this hypothesis. The previous
government did precious little to contribute to the ecommerce bandwagon by
promoting paralysis by analysis and the policy paralysis did not do too much
good for an industry that requires the government to streamline the business
regulatory framework. On the other hand technology enablers have been operating
in accordance with the invisible hand of the market and shown results faster.
Some of the technology enablers that the faculty of business administration has
explored are as follows:
The Adoption of Internet and Smart
Phones
The
biggest enabler of the ecommerce movement in India has been the adoption of
technology. India as a market for technology has traveled a long way from the
days of the license quota raj, followed by the landline phone revolution, the
feature phone revolution and then the smart phone revolution. As a bottom of
the pyramid market with job creation and increasing purchasing power, India has
seen tremendous growth in the headcount of smart phone users and internet
adoption. As in the year 2014, there were 300 million internet users in India
and it is growing fast. The smart phone segment consists of 35% of the overall
mobile handset market in India.
Cloud Computing and Personalization
of Ecommerce
The
verdict in the technology space among companies is clearly in favor of cloud
computing. There is clear evidence to assert that the adoption of cloud
computing is gaining steam in corporate India and ecommerce companies are
increasingly relying on cloud technology to streamline their marketing
campaigns and offer personalized products, services, offers, discounts and
loyalty programs to reward brand loyalty. Cloud computing has also enabled
ecommerce companies in India to streamline costs, time and efforts of marketing
and operations because of greater flexibility, scalability, mobility and
efficiency.
Mobile Apps Development and
M-Commerce
Mobile
apps development and m-commerce are partners in crime. They show a string cause
effect relationship. India is already the largest producer of mobile
applications in the world. A data from ASSOCHAM shows that there are 235
million people who access internet on their smart phones. This number is
compelling enough for some companies like Jabong to adopt a mobile first
strategy while other companies are jumping on to the platform of mobile apps
development for higher sales and business development. There is also evidence
to assert that their mobile apps development efforts are being rewarded. State
Bank of India is stressing in mobile apps development to build feasible
business models in rural India where brick and mortar is not feasible. The
revenue coming from the mobile segment is one the rise. Flipkart gets 50% of
its revenue from the mobile segment whereas Quikr gest 70% of its revenue from
mobile platform only.
Challenges that India Faces in
Ecommerce
In
the last three years as many as 9 students have in their summer internship
projects meant for MBA courses concluded that the story of ecommerce growth in
India faces some big impediments that require a long haul. These challenges as
mentioned in the summer training projects of the top MBA College in Greater
Noida are as follows:
Price Warfare and Low Non-Price Competition
The
price warfare quotient in the Indian ecommerce market is very high and to add
to the woes of ecommerce players there is hardly any non-price competition. At
Ishan , one of the top MBA colleges in Delhi NCR our students and academicians
have collaborated on 9 projects on ecommerce to observe that companies have in
the initial stages competed against one another to gain market share by means
of aggressive use of low pricing point as a traffic building measure, offers,
discounts and loyalty programs. These measures have gained traction but have
given rise to a new challenge of financial efficiency. Given that top ecommerce
companies like Snapdeal and Flipkart have opted for investor funding, sooner or
later they will have to find ways to move form customer acquisition and
business development to profitability. Else, the going will be tough in the
face of investor firepower.
Poor Supply Chain and Logistics
The
poor state of supply chain and logistics is a big threat to the growth of
ecommerce firms in India. The absence of last mile connectivity adds to the
woes and increases the cycle time of operations thereby dampening productivity
and efficiency of the team of safe delivery persons (SDPs). Many courier
companies do not have a pan India network for delivery; do not have skills for
handling cash on delivery, commercial merchandise, digital sale and complexities
of point of purchase. This is forcing ecommerce firms to establish their own
delivery network thereby increasing overhead costs.
Payment Modes and Heavy Reliance on
CoD
Research
conducted at Ishan shows that more than 70% of the people purchasing merchandise
from ecommerce firms rely on cash on delivery and fear sharing confidential
information on websites and other digital wallets. This leads to reliance on
cash on delivery. Cash on delivery also leads to a higher rate of returned
goods that lowers the profitability. Companies like Amazon are thus introducing
new process innovations like Card on Delivery method whereby the sales person
carries the device so that a customer may make his payment using a card on
delivery at his doorstep.
These are just some of the insights on ecommerce in India based on the research projects done by students at one of the top MBA colleges in Greater Noida, Ishan Institute of Management & Technology.
