Digital Technologies & Mobility has Pushed Ecommerce in India to an Inflexion Point

In 2016, with the increased use of digital technologies being used for buying and selling merchandise for convenience and mobility has pushed e-commerce in India to an inflexion point. In tier-II and tier-III cities, there has been a rapid growth of smartphones and internet connectivity across the country. This has led to people gaining greater access to various virtual shopping and e-tailing for the tech-savvy generation and millennials.

Even as e-tail behemoths Flipkart, Snapdeal and Amazon vied for a greater pie of the growing e-commerce market, various enterprises and businesses present in diverse sectors have all joined the bandwagon to hard-sell their products by leveraging the digital technology.

“E-commerce in India is at an inflexion point, thanks to robust growth in consumer demand. Mobile penetration and increasing use of smartphones have led to the emergence of m-commerce, which accounted for about 40 percent of the sector’s sales this year,” Tata CLiQ Chief Executive Officer Ashutosh Pandey told IANS.

A study conducted by the Internet Association of India (IMAI), the transition to mobile shopping has been very fast in India, which has even overtaken the US this year when it comes to active mobile users (220 million) and being next only to China in user base. Netizens shop across various e-portals, websites, apps and even in stores as per their convenience due to the emergence of the Omni-channel in e-tailing.

“As a result, e-commerce players are looking at the seamless integration of online and offline stores to offer consumers a unique shopping experience in the virtual and real worlds,” Pandey asserted. The aftermath of the November 8 demonetization has been a push for cashless transactions with an increase in digital payments through multiple getaways for online and offline buying as the consumers are preferring e-shopping and m-shopping.

With a greater use of data analytics, cloud computing and artificial intelligence, e-commerce players have not only become competitive and smart in retaining their mass user-base, instead, they have also started mapping shopping trends and even predict the purchasing patterns to consolidate their dominant position in order to sustain growth.

“The sector, however, continues to face a trust-deficit and last-mile delivery issues persist despite having robust logistics networks and partners. Lack of trust in online transactions makes many shoppers prefer cash on delivery, which is risky and time-consuming,” Pandey lamented. The sector is also tormented by infrastructure worries across cities and towns, increasing the operational cost for timely delivery and expanding the customer base.

Even though the demonetization has impacted the retail sector because of the cash crunch, the digital transactions have actually enabled e-commerce firms to weather the crisis. Growing at about 40 percent cumulative average growth rate (CAGR), the country’s e-commerce market is expected to touch a whopping $38 billion this fiscal (2016-17), with the online travel segment alone accounting for 70 per cent, followed by e-tailing, financial services, classifieds, job searches and matrimony.

“The key drivers of the sector’s growth have been increased internet penetration, growing acceptability of online payments and an increase in per capita income,” a Snapdeal spokesperson said. Improving the infrastructure and favourable government policies have all contributed to helping connect consumers and sellers across the country.

“The start-up ecosystem has gone through a phase of consolidation, indicating maturity in the sector for achieving scale, building capabilities and increasing the market share,” the spokesperson further explained. With the given the demographics and rapid adoption of the internet, it’s advantage for all the stakeholders will defintely grow and consolidate.

Sreedhar Prasad who is the e-commerce partner of the global audit firm KPMG said that demonetisation has impacted the sector with a 30 per cent dip in sales which as a result may not show a big spike on the annual growth. “The cost of business, including that of supply chains, remains a challenge. Unless the cost is regulated, profitability will be difficult in the sector,” Prasad added.

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