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With third largest internet user base, India’s e-commerce still falls behind China’s e-market

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shopping-cart-304843_640A digital research firm, eMarketer analyse from its data that retail e-commerce sales in India are expected to reach $17.5 billion (Rs.105,120 crore) by 2018, from $5.3 billion (Rs 31,800 crore) in 2014, but only two of 10 internet users in India shop online.

India’s e-commerce market is intensely competitive, with US giant Amazon establishing its presence in India in 2013 and Alibaba, the Chinese giant, planning to start selling by August this year. Flipkart, India’s largest e-commerce firm, recently raised $550 million (Rs.3,300 crore) at a valuation of $15 billion (Rs.90,000 crore).

Despite having the third-largest internet user base in the world with 200 million users at the end of 2014, India does not feature in the top 10 e-commerce markets in the world, according to an eMarketer report. The reasons centre on low Internet reach, slow internet speeds outside the metropolitan cities and poor customer services.

India’s e-commerce sales in 2014 were $5.3 billion (Rs.31,800 crore) – 80 times smaller than China’s $426.26 billion (Rs.2,557,760 crore) and 58 times smaller than US’ $305.6 billion (Rs.1,833,900 crore).

“If you look at Japan, China and US, e-commerce became popular as early as 2002-2003. It has taken them about 12-13 years to reach where they have reached. E-commerce really took off in India only in 2012-13. It will take India also that much time to reach there,” said Rajnish, a technology expert.

China and the US accounted for more than 55 percent of global internet retail sales in 2014. China’s growth over the next five years will widen the gap between the two countries. China will likely exceed $1 trillion (Rs.6,000,000 crore) in retail e-commerce sales by 2018, accounting for more than 40% of the total worldwide.

Globally, retail sales reached $22.492 trillion (Rs.134,952,000 crore) in 2014 but retail e-commerce sales stood at $1.316 trillion (Rs.7,896,000 crore, 5.9 percent of overall retail sales).

E-commerce sales are expected to increase 89 percent to $2.489 trillion (Rs.14,934,000 crore, 8.8 percent of overall retail sales) in 2018.

Digital-buyer penetration — a measure of digital reach — is a major factor in determining the success of retail e-commerce sales. India’s digital-buyer penetration was quite low at 24.4 percent in 2014 as compared to the global average of 41.6 percent.

The UK leads the world with 88% penetration. Ironically, China with 55.2 percent and US with 74.4 perent penetration do not feature in the top five. Indian e-commerce has a long way to go.

“E-commerce in India still has a lot of friction,” Rajnish said. “Till that is solved, it will be hard for penetration to go beyond 30 percent. For example, India has very low credit-card penetration and the cash-on-delivery (COD) model is why Flipkart really took off.”

People above 35 are not very comfortable using their debit card online. PayTm and others solve this problem but there is a lot of friction.

“I use PayTm for Uber and it is still a process that has friction. In US, the return policy is very generous. I bought a coat from Amazon in the Bay area; it ended up being the wrong size. My experience of changing to the correct size was very seamless. When I bought a down jacket in Bangalore, and it ended up being the wrong size, getting the right size was really a painful experience,” said Rajnish.

That view is echoed by Paritosh Sharma, an advisor to tech startups and an entrepreneur with PayUMoney, a digital-payment platform.

“Digital buying has an attached expectation to it. I place the order and it should appear in front of me over the next two or three days. In many cases this does not happen. Also, in a lot of cases (especially in Tier-2 and Tier-3 cities) in India, if you get a product that is not of the exact quality that you ordered, returning it is a major problem. Most people, hence, prefer what’s available in a physical retail store,” Sharma said.

There are two more reasons for low online sales, said Sharma. First, the internet infrastructure in India is poor. If one steps outside city limits, you automatically are shifted from 3G to an Edge (a lower-speed) connection, deterring buyers.

Second, lack of good service and support. While most Indian e-commerce companies are sprucing up their support via phone and digital media, it’s quite haphazard. Most companies still lack processes to ensure customer satisfaction and trust.

-(IANS)

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Big reforms Led to India becoming the fastest growing major Economy globally: Garg

It also has enormous implications for emerging markets and developing countries

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The RBI building in Mumbai.
The RBI building in Mumbai. Photo credit: AFP/Sajjad Hussain

The major reforms undertaken by the Indian government for raising economic growth and maintaining macroeconomic stability have made the country one of the fastest growing major economies in the world, said Subhash Chandra Garg, Secretary, Department of Economic Affairs (DEA).

Garg was addressing the Special Event hosted by US-India Strategic Partnership Forum on ‘Indian Economy: Prospect and Challenges’ in Washington D.C on Friday.

Indian economy needs more reforms.
Indian economy needs more reforms.

He said the launch of the Goods and Services Tax (GST) represented an “historic economic and political achievement, unprecedented in Indian tax and economic reforms, which has rekindled optimism on structural reforms.” He further emphasized that India carried-out such major reforms when the global economy was slow.

“With the cyclical recovery in global growth amid supportive monetary conditions and the transient impact of the major structural reforms over, India will continue to perform robustly,” Garg said.

During his meetings, Garg highlighted that the digital age technologies have profound implications for policies concerning every aspects of the economy. It also has enormous implications for emerging markets and developing countries.

Also Read: Biggest Bank Frauds Which Shook The Indian Economy

He expressed that the response to such a transformation will have to shift from ‘catch up’ growth to adoption/adaption of digital technologies for development and growth.

Garg also informed that India has started adopting policies and programmes for transforming systems of delivery of services using digital technologies and connecting every Indian with digital technologies and access through Aadhaar and other such means.

Indian economy should be on rise.
Indian economy should be on rise. Image: Mapsofindia

While citing the example of expanding mobile data access, he mentioned that India is now the largest consumer of mobile data in the world with 11 gigabytes mobile data consumption per month. He informed that India is investing in digital technologies, encouraging private sector to adapt these technologies and also addressing the taxation related issues by introducing equalisation levy.

Garg is currently on an official tour to Washington D.C. to attend the Spring Meetings of the International Monetary Fund and the World Bank and other associated meetings. He is accompanied by Urjit Patel, Governor, Reserve Bank of India and other senior officials. IANS