E-commerce market In India worth US$ 120B in 2020

The National Association of Software and Service Companies (NASSCOM) estimated the size of India’s e-commerce market at USD33 billion in the fiscal year 2017 (The Economic Times 2017).

  • Definition / Scope
  • Market Overview
  • Top Market Opportunities
  • Market Drivers
  • Market Restraints
  • Industry Challenges
  • Technology Trends
  • Pricing Trends
  • Regulatory Trends
  • Other Key Market Trends
  • Market Size and Forecast
  • Market Outlook
  • Technology Roadmap
  • Distribution Chain Analysis
  • Competitive Landscape
  • Competitive Factors
  • Key Market Players
  • Strategic Conclusion
  • References
  • Appendix

Definition / Scope

E-Commerce deals with the buying and selling of goods and services, facilitated by funds or data transmission over an electronic platform also referred as market space. Such types of transactions are categorized into B2B, B2C, C2C, or C2B.

  • In India, e-commerce companies fall under the B2C categories as illustrated in the chart
  • Emerging markets are going to be key potential segments for e-commerce growth, as retailers in developed markets may soon reach saturation in terms of consumer growth.


  • Internet retailing: It is a subset of B2C e-commerce; internet retailing does not include activities such as auctions or travel reservations (Francis and White 2004).
  • Mobile commerce: E-commerce activities conducted through wireless handheld devices such as smart phones and personal digital assistants.

Market Overview

The Asia and Pacific represents the largest share of the B2C e-commerce market. According to the Netherlands-based Ecommerce Foundation, the region accounted for over USD1 trillion of the USD2.3 trillion global e-commerce total in 2015 as shown in the figure. In terms of the market size of internet retailing, a subset of B2C e-commerce, Asia and the Pacific also does well.

India’s dominant position in the sub region’s e-commerce market is driven by the country’s population size and internet penetration rate in the country.

The National Association of Software and Service Companies (NASSCOM) estimated the size of India’s e-commerce market at USD33 billion in fiscal year 2017 (The Economic Times 2017).

Amazon and Flipkart are the big lions in e-Commerce space in India, together accounting for more than two-thirds of online gross merchandise value in 2016, according to research findings cited in yStats.com’s report.

The Gross Merchandise Value (GMV) is an important metric that businesses in e-commerce use for valuations especially during the early stages of growth. The majority of B2C e-Commerce companies, globally, despite being operational for 5-20 years, report low profitability but with a growing GMV but at an overall loss.

The GMV for B2C segment in India was approximately USD 16 Billion in 2015. This trend, however, does not hold true for the B2B e-Commerce companies which are profitable with greater GMV values. The Indian B2B e-Commerce market potential was valued at USD 300 Billion in 2014, and is expected to reach USD 700 billion by 2020.

The second graph represents the size of e-commerce market in India for the given years. In 2018, Indian e-commerce market accounted for USD 40.3 billion and is expected to reach USD 101.9 billion in 2020.

Top Market Opportunities

Investments: E-commerce companies can tap into the overseas market in other South Asian developing countries as there is a growing segment of groceries and electronics.

Moreover, the foundation for the growth of e-tailing is how efficient is the logistics chain. Hence investing in a robust supply chain is another huge business opportunity.

Market Drivers

Increasing number of internet users: Internet penetration in Urban India was 64.84% in December 2017 as compared to 60.6% last December. In comparison, rural Internet penetration has grown from 18% last December to 20.26% in December 2017. The reason is fast adoption of digital technology in India.

The factors towards online shopping as highlighted by the consumers are cash back guarantee as the number one benefit, ability to give cash on delivery, fast delivery, great deals and access to branded products.

India will have estimated 500 million internet users by 2020 while the number of online shoppers will reach 175 million at that time, smart phones being the prominent preferred device accounting 70% of total online shopping through such devices. The report reveals that, of the 175 million online shoppers in 2020, the top 60 million ‘high-value’ customers will contribute to 68 per cent of total spending.

Online consumer spending in India is expected to grow 2.5 times to around USD100 billion by 2020 led by growth in e-commerce, travel and hotel, financial services and digital media. At present online spending is around $40 billion.

Increasing average spending: The average spending per customer is continuously growing at a CAGR 18% as given in the second chart. The average online spending per customer reached USD 288 in 2018 from USD 247 in 2015 as presented in the graph below.

Government initiatives: The rising momentum from Government of India with various initiatives has been proactive in embracing and leveraging e-Commerce digital platforms to transform and organize traditionally offline markets such as those of agricultural produce, etc. The Government has launched an e-market platform to connect farmers with the mandis(shops) of various states to sell agro-commodities.

Digital India:Digital India is a highly ambitious project which focuses on transforming India to a digitally empowered and knowledge economy encourages and emphasizes to Build Digital Infrastructure as a Core Utility, enable Government Citizen Services on demand and Digital Empowerment of citizens.

Start-up India: This initiative aims to build a strong eco-system for nurturing “innovation” and “Exponential Start-ups”. The Government of India has taken steps such as providing funding support through a “Fund of Funds” with a corpus of USD 1 billion (INR. 100 Crores); “Start-up India Hub” (a single point contact for the start-up ecosystem), tax exemptions for the initial 3 years; faster exits for start-ups are some steps besides many others.

Furthermore, the Indian government’s initiative to extend banking facilities to its previously unbanked citizens through the ‘Jan Dhan Yojna’ scheme has added significant number of debit cards (over 110 Million) thereby providing these customers access to electronic payments. The launch of Unified Payments Interface (UPI) by Reserve Bank of India is aimed to transform the mobile banking.

UPI is expected to benefit the e-Commerce industry as well by reducing the number of failed e-Commerce transactions due to complicated transaction flows in the current payment systems. UPI is an instant payment system to send and receive money between two banks or mobile wallets and also allows multiple linked bank accounts in a single wallet assigned with unique authorization number using IMPS system

GST on the other hand will enforce a single comprehensive indirect tax regime that will be applicable across all states on the supply of goods and services. The implementation of GST is expected to entail the central excise duty, service tax and additional customs duty at the central level and VAT, CST, entry tax etc. at the state level.

Increasing number of smart phones users: India currently has 300 to 400 million Smartphone users during 2017-2018 and is expected to reach 530 million users by the end of 2018. As cost of Smartphone in India is decreasing drastically many people mainly in Tier II and Tier III cities are using it at an affordable price.

India Post: With over 150,000 post offices all over India has emerged as best friend for delivering goods in all states. The company itself is launching its own e-commerce portal to leverage through existing logistics channel.

Jio: Jio has transformed the way people use internet connectivity. With low cost, high-speed internet model, it has penetrated the internet use multiple times within a year. It has provided high-speed broadband in more than 30 cities in 2018 with 11x lower wireless 4G data costs.

India Stack: India stack is a set of APIs that help collaborate among government, businesses, startups, and developers. The technology covered under this stack is built on four pillars; Presenceless layer, Paperless layer, Cashless layer, and Consent layer.

The vision was set up with initially with the establishment of UIDAI( Unique Identification Authority of India) in 2009. “ADHAAR” is the first game-changer to act as a unique identification number launched by UIDAI. And now every digital transactions need to be verified only with ADHAAR.

Market Restraints

  • Network and bandwidth dependency: Access to e-Commerce platforms, through desktops, mobiles, and other devices is dependent on the network bandwidth which is still not broadly available in third tier cities in India. Thus, E-Commerce companies, who want to expand into tier 2 & 3 cities, are dependent on the Telecom Operators to roll out 3G/4G into such areas for connectivity.
  • Railways don’t allow partial usage of containers and air cargo not established: Presently logistics service providers are forced to lease full containers as railways don’t allow partial usage of containers which does not justify costs due to lack of volumes and air cargo hasn’t yet come into force in India.
  • Merchant’s lack of online experience: Small merchants are uncomfortable and unfamiliar with technology and need to be trained on the use of e-Commerce technology. The growth of the B2B e-Commerce segment is relatively slower compared to the B2C e-Commerce segment in India. The reason is the entry barriers in the B2B e-Commerce which is more than that in the B2C e-Commerce industry. Because a B2B e-Commerce company has to have a strong business model, long term logistical arrangements with rail, road and ports and also adhere to stringent regulatory and taxation governance.
  • Hyperlocal payment innovation: Cash on Delivery (COD) is the Indian innovation in payment solution started only in India first by Flipkart. Evolution of new payment solutions (CoD) remains a popular mode of payment for Indian e-Commerce transactions as Indian online users are still skeptic about the security concern when paying electronically.

Industry Challenges

  • Scaling of organizations and profitability: The main source of B2C e-Commerce companies’ investment comes from raising money from investors to scale operations. However, from a profitability perspective, the losses have grown faster than sales. Majority of the companies rely on discounting for customer acquisition leading to an absence of long-term sustainable business models.
  • Counterfeit goods: Supply of fake, counterfeit products by the merchants on the platform is rising.
  • Highly fragmented market: The B2B e-Commerce ecosystem currently is highly fragmented with fewer companies due to factors such as the requirement of domain expertise, detailed knowledge of product features and specifications.
  • High costs associated with complex logistics fulfilment: Delivering orders quickly and efficiently is another challenge as it often depends on size, scale and location that demand the use of specialist freight services increasing cost considerably.
  • High customer acquisition cost: Impulse purchase is less likely to happen in B2B e-Commerce, owing to the bulk nature of orders, and slow decision making process. This makes the customer acquisition process longer and costly.
  • Cash on Delivery (CoD) as a mode of payment: Customer’s preference for CoD increases chances of return and results in locking up of working capital for both the platform and the sellers.
  • Lack of customer loyalty: As switching cost is very low in e-commerce for customers, they easily and frequently switch among platforms based on best discount offered to them.

Technology Trends

There has been an adoption of popular technologies—such as blockchain technology, machine learning (ML), artificial intelligence (AI), the internet of things (IoT), and fifth generation (5G) wireless systems in Asia and the Pacific market and are shaping the online business environment, lowering transaction costs, improving advertisement targeting, and increasing data collection, among others.

Indian E-retailers Using Foreign-supplied Technologies as tabulated:

  • Big data and cloud computing: Using big data, for example, allows e-commerce companies to more accurately predict price, inventory, and traffic. Almost all Indian e-commerce giants have been using big data to lower costs on inventories, speed up deliveries, and/or generate sales.
  • Artificial intelligence and machine-learning: AI and ML are used in several ways to facilitate e-commerce. Machine-learning algorithms can analyze customer online activities, including websites visited, information searched, and products viewed and purchased to understand users’ demographic profiles, behaviour, etc. Major functions include: sales predicting, segmenting market, analyzing ratings and reviews, recommending and customizing products, and classifying products.
  • Internet of things: There are several ways IoT benefit e-commerce. For instance, it makes it easier to track inventory in real-time and manage more effectively, for example by reducing human error when reordering items. With application of IoT, minimization of waste, control of costs, and reducing shortages can be done.
  • Blockchains: It can help consumers, especially to provide birth certificates, utility bills, or other documents to open bank accounts for digital identity or thus participate in e-commerce. It could also help prevent counterfeit and fake products from being sold online by updating digital product data with ownership and storage records as it moves down the supply chain.
  • Clustering Algorithm: Clustering Algorithm technique works by identifying groups of users that have similar preferences. These users are then clustered into a single group and are given a unique identifier. New customers cluster are predicted by calculating the average similarities of the individual members in that cluster. Hence a user could be a partial member of more than one cluster depending of the weight of the user’s average opinion.
  • Collaborative filtering: Using a technology called Collaborative Filtering (CF), a database of historical user preference is created. When a new customer access the ecommerce site, the customer is matched with the database of preferences, in order to discover a preference class that closely matches the consumers taste. These products are then recommended to the new consumer.
  • PUDO centres: 3PLs are tying up with local retailers like ‘mom and pop’ stores and kirana stores to act as pick up and drop of points for shipments. Such tactics are enabling the players to expand their reach to pin codes where they do not have direct coverage.

Pricing Trends

Predatory Pricing: Predatory pricing involving deep discounts by large e-commerce players is a deliberate strategy usually adopted by a dominant firm to drive competitors out of the race by setting very low prices or selling below the firm’s average variable cost. It makes consumers more vulnerable as they deal with a monopoly/near-monopoly situation.

E-commerce players are able to price attractively compared to brick-and-mortar companies as they save on rentals and inventory cost (in case of a marketplace model, an e-commerce company does not maintain inventory but only provides a platform for buyers and sellers).

But, apart from their business model which gives them cost advantage, many e-commerce players are able to sell cheap simply because they have received a large amount of investments from private equity or venture capital funds. This funding enables them to sustain a model of deep discounting, which other players in the market may find difficult to sustain.

While deep discounting is beneficial for the consumer in the short term, it could be detrimental in the long run as it wipes out other players from the market. The dominant player indulging in predatory pricing could then increase prices to recoup the past losses, and consumers will not have much choice to switch. Therefore government is scrutinizing the discounting model and promulgating laws to protect small business from price war.

Regulatory Trends

  1. 100% FDI is allowed under the automatic route (i.e. no FIPB approval is required) in companies engaged in B2B e-commerce.
  2. No FDI is allowed in companies which engage in single brand retail trading by means of e-commerce.
  3. No FDI is allowed in companies which engage in multi brand retail trading by means of e-commerce.
  4. These restrictions are related to sale of goods and not services. And is not restricted to online platform models who act as aggregator and the sellers are third parties selling to end customers.
  5. But 100% FDI is allowed to invest into companies providing technology service to such e-commerce platforms and into wholesale companies.
  6. In the Union Budget of 2017-18, government has allocated USD 1.55 billion to BharatNet Project, announcing availability of high speed broadband connectivity on optical fibre and accessibility of wifi hot spots and digital services at low tariffs in more than 150,000 gram panchayats, by the end of 2017-18.
  7. Government announced the launch of BHIM app. It will help increase digital payments in the country. BHIM app has been adopted by 12.5 million so far. The Government will launch two new schemes to promote the usage of BHIM; these are Referral Bonus Scheme for individuals and a Cashback Scheme for merchants.
  8. Under the Digital India movement, government launched various initiatives like Udaan, Umang, StartUp India Portal etc.
  9. The recent announcement of GST roll out, another significant reform would help e-retail competitors streamline their supply chain and simplify their tax structure, while rationalising seamless integration of goods and services across the country. Moreover it will eliminate the dual taxes being imposed on the current ecommerce eco system.
  10. The Reserve Bank of India (RBI) has instructed banks and companies to make all know-your-customer (KYC)-compliant prepaid payment instruments (PPIs), like mobile wallets, interoperable amongst themselves via Unified Payments Interface (UPI) by April 2018.
  11. In order to increase the participation of foreign players in the e-commerce field, the Indian Government hiked the limit of foreign direct investment (FDI) in the E-commerce marketplace model for up to 100 per cent (in B2B models).
  12. There is no requirement under the Indian Contract Act to have written contracts physically signed. However, specific statues do contain signature requirements. For instance the Indian Copyright Act, 1957 (“Copyright Act”) states that an assignment of copyright needs to be signed by the assignor. In such cases the IT Act equates electronic signature with physical signatures. An electronic signature is supposed to be issued by the competent authorities under the IT Act. However till the date of this paper, the Central Government has not notified any electronic signatures.
  13. In India, e-contracts like all other contracts are governed by the basic principles governing contracts in India, i.e. the Indian Contract Act, 1872 (“Indian Contract Act”).
  14. The very nature of e-commerce is that is virtually impossible to check the age of anyone who is transacting online. This may pose problems and liabilities for e-commerce platforms. The position under Indian law is that a minor is not competent to enter into a contract and such a contract is not enforceable against the minor. The age of majority is 18 years in India.

Other Key Market Trends

Going offline and vice-versa: Many e-Commerce companies are opening physical offline stores. Such ‘Experience Centres’ offer online buyers the touch-and-feel experience, thus offering an integrated shopping experience especially for products with high-price points.

Companies such as FirstCry, Pepperfry, Flipkart etc. have opened physical stores to complement the online sales and experience. Similar option of click-and-collect is extended by Amazon in India by providing physical locations for customers to pick up the products at a time convenient to them.

On the other hand, various offline retailers have started the other way round selling products. Online or partnered with leading e-Commerce companies to attract customers at all touch points. For example, Future Group inked an exclusive deal with Amazon while Tata Group owned Croma, partnered with Snapdeal to sell private brands online.

M & A: Consolidation has been taking place in the form of larger e-Commerce companies acquiring smaller companies to either diversify the offerings or to enhance their business operations.

These mergers and acquisitions have largely focused on companies in the logistics, payment solutions and digital advertising space. It is estimated that a total of 930 M&A deals with a cumulative value of USD 26.3 Billion took place in India in 2015, of which 259 deals worth USD 2.43 Billion pertained to the e-Commerce industry.

Market Size and Forecast

The e-Commerce industry is expected to form the largest part of the Indian Internet market with a value of approximately USD 100 Billion by 2020.

Private equity and venture capital investments in the e-commerce industry in India touched a record USD 11.2 billion in the first half of 2017, a 41 per cent rise over last year.

In Asian market, India’s e-commerce sales is expected to grow at a CAGR of 30% while that of South Korea stands at 13%. Similarly, online sales in China and Japan is forecasted to grow at a same CAGR of 10%.

Market Outlook

Value-added services will be a key differentiator and over 90 per cent of online buyers will be willing to pay for premium value-added services. Customers are willing to pay extra for faster delivery and hassle-free return.

The country will see a 5x growth in the number of women shoppers by 2020 when they will more than double their share of online spend. They are likely to spend more on lifestyle categories, such as apparel and accessories, and look for the latest trends and brands online.

Lifestyle (apparel and accessories) as a category will overtake consumer electronics to become the largest online category by 2020 at 35 % of the total online spends. Consumer electronics will be at 20 % by 2020.

Niche categories such as home (furniture and furnishing) and personal care will see high adoption due to assortment and convenience of purchase, especially in Tier II + cities. Omni-channel presence will become a key in home and furnishings, lifestyle and consumer electronics category to serve the need-gap of non-buyers

By 2020, 55 per cent of online volumes will be driven by cashless transactions as opposed to 40 per cent today. Mobile wallet share will double by 2020 to reach 15 per cent from current 8 per cent.

Market driven by a young demographic profile, increasing internet penetration and relative better economic performance, India’s E-commerce revenue is expected to jump from US$ 39 billion in 2017 to USD 120 billion in 2020, growing at an annual rate of 51 per cent, the highest in the world.

Earlier food and grocery were never thought of as items for online trading. However, with the change of working habits, and consumers opting for adaptability and convenience, there are now innumerable small and large E-commerce companies selling provisions and food items like Grofers, BigBasket, etc.

Tech savvy young age group: India is expected to have 34.33% share of youth in total population by 2020. As of 2018, India has advantage of 356 million 10-24 year-olds, has the world’s largest youth population despite having a smaller population than China according to a latest UN report. The figure accounts for 28% of Indian total population.

This population comes with an innovator segment when it comes to technology adoption. For instance, Facebook users in India have crossed 240-million marks, becoming the largest audience country for the social media giant, according to a media report. This population is the easiest target for online businesses to market their products.

Technology Roadmap

Innovation in Payments: The digital wallets interfaced together with the newly launched UPI platform will foster innovation in payments. The UPI platform will be leveraged to offer innovative payment modes to customers and also make CoD seamless by cashless fulfillment at the time of delivery. This would make payments even more seamless.

New Delivery models: Keeping in perspective the “choked traffic” situation in India’s metros leading to late deliveries or increasing the biker count to meet the delivery timelines, e-Commerce and Logistics service providers are exploring moving from synchronous hand delivered parcel system to an asynchronous model, where parcels are delivered to a locker secured by a code sent as a text to the recipient.

This experiment, if successful, is likely to help e-Commerce companies to enhance customer experience. Efficiencies attained by Artificial Intelligence and the use of Drones: To meet the seasonal surge especially during festive in terms of managing the supply chain logistics to provide 5G wireless service on-time deliveries to all customers, Artificial Intelligence technologies will be leveraged in the future to anticipate demand, manage price fluctuations and to overcome challenges of last-mile deliveries.

Automated Guided Vehicles (AGV) could be deployed to solve many logistics problems of the e-tailers and result in highly successful product deliveries. For example, Amazon Prime Air is working on drone-based delivery of its products. Local knowledge of the delivery person complemented by GPS-based device could lead to efficient delivery of products.

Distribution Chain Analysis

These stakeholders coordinate among each other to facilitate the three main flows in an e-Commerce transaction:

Product flow: Movement of goods from suppliers to end consumers through e Commerce and logistic players.

Information flow: Information transmission of orders from customers and subsequent information flow of order status through the value chain.

Monetary flow: Payments from consumers to e-Commerce players and/or suppliers and vice-versa through financial intermediaries.

Logistics: The logistics sector pertaining to the e-commerce industry in India stood at USD 460 million in 2016 and USD 1.35 billion in 2018 and is expected to grow at a CAGR of 48 per cent to reach US$ 2.2 billion by 2020.

The e-commerce retail logistics sector is serviced by traditional logistics service providers (LSPs), e-commerce retail focused logistics service providers and captive logistics arms. It is largely a captive market (49 per cent share), however, a sizeable share is still dominated by new age players catering especially to e-commerce retail.

Logistic Activities: When a consumer purchases any product online, it undergoes a range of processes before they finally reach to him. The first step starts with first mile logistics, which involves pick-up of goods from the sellers and transporting it to the e-retailers’ fulfilment centre or directly to the mother warehouse, depending on the type of fulfilment model i.e., inventory-led or marketplace.

In the inventory-led model, products are sent to the fulfilment centre without packaging/labeling whereas in the marketplace model, products are completely packed and sent to warehouse for storage.

First mile logistics is followed by fulfilment, which involves picking and packaging of products once an order is placed on the website. After fulfilment, products are sent for processing/ sorting based on the delivery location at the processing centre of 3PLs and connected further in the supply chain through line haul depending upon the final delivery location. Line haul involves connecting the main supply centre with the main demand centre, via surface or air.

Surface or airline haul is dependent on transit time and cost matrix. This is followed by last mile delivery which involves dispatch and shipping of products from the mother hubs to the delivery hubs, from where they are shipped out to the customers.

Competitive Landscape

E-Commerce in India is a consolidated market with a handful of companies accounting for a significant share of the industry.

The online retail market in India is estimated to be worth US$ 17.8 billion in terms of gross merchandise value (GMV) as of 2017 and is estimated to increase by 60 per cent to USD 28-30 billion in 2018.

Electronics is currently the largest segment in e-commerce in India with a share of 47 per cent and is expected to grow at a CAGR of 43 per cent by 2020. The apparel segment has the second highest share of 31 per cent in the e-commerce retail industry. Currently, there are 1-1.2 million transactions per day in e-commerce retailing.

Competitive Factors

Logistics is a major driver of the e-commerce retail industry and is an important point of differentiation between market players aiming at better customer satisfaction and service.

Providing guaranteed delivery in every corner of India is an winning factor.

Key Market Players

Flipkart: Flipkart is an Indian E-Commerce company, which was started in October 2007 and is currently headquartered in Bengaluru. It was started by Sachin Bansal and Binny Bansal and as of March 2017, it has 8,000 permanent employees and 20,000-25,000 contract workers who form part of its supply chain. Flipkart is the market leader in India’s online marketplace with over 80 million products across more than 80 categories.

Since 2009, Flipkart was valued as an Unicorn and as of April 2017 it has raised over US$4 billion in 11 funding rounds. American investment firm Tiger Global participated in nine of them. Flipkart boasts of having 100 million users and 100 thousand sellers along with 21 warehouses. On average, Flipkart has around 8 million shipments per month. In 2016, Flipkart became the first Indian App to cross 50 million users.

In April 2017, Flipkart raised USD 1.4 billion from Microsoft, eBay and Tencent and in August 2017, it raised US$ 2.5 billion from SoftBank. In exchange of an equity stake in Flipkart, eBay made a cash investment of US$ 500 million and sold its eBay.in business to Flipkart, in 2017. Flipkart, just accepted a $16 billion investment from Walmart for a 77% share of the company.

Amazon: Amazon India is currently worth $16 billion and has the same 30% marketshare as local competitor Flipkart, according to a new report from Citi Research. Amazon entered the India space in 2013, and has yet to turn a profit. But it is poised to grow that 23% annually until 2027 to reach USD 70 billion in gross merchandise volume and $11 billion in revenue. During the initial years of entry in India, Amazon wheeled out a program called Amazon Chai Cart: mobile tea carts that navigated city streets, serving refreshments to small-business owners while teaching them the virtues of e-commerce.

The Chai Cart team reportedly traveled more than 9,400 miles across 31 cities and engaged with more than 10,000 sellers. To help these sellers get online quickly and address their objections to e-commerce. It created another campaign last year called Amazon Tatkal, a self-described “studio on wheels” that provides a suite of launch services, such as registration, imaging, cataloging, and sales training.

Other players in the industry (by category/predominant product) are:

Strategic Conclusion

E-Commerce players constantly have to upgrade their offerings with changing technology. For instance, smart phone users are expected to reach 530 million by the end of 2018, they need to devise easy to use mobile apps for their websites. They need to ensure that their websites have the required speed to do fast business, especially during sale, deals and discounts.

In rural India, the mobile phones they use don’t have enough storage to keep large application files and the internet charges are high when those applications run. Keeping these things in mind, Flipkart launched progressive app that runs on browser and doesn’t require separate application to download. This is the first of its kind innovative app in the world innovated in India.

Moreover, customers should be provided with convenient Omni-channel returns and delivery options along with the provisions of touch and feel the product before buying. They should also ensure sufficient after sales service and support. Online product reviews and ratings, videos, more advanced sizing and fitting tools should be provided.

As India is fuelling toward electronic payment, Data protection and the integrity of the system that handles the data and transactions are serious concerns. Companies should take necessary action for management even if this imposes a cost on them and should convince customers that electronic payment is safe and secure.

By doing so, the locked in money that remains unused when doing COD could be moved for working capital expenditure. Brand positioning is the key to long term profitability. Discount and offer to attract customers will not work to acquire customers.

The conversion rate is below 3% which means customers easily switch between competitors’ products as switching cost is very low. Therefore, creating strong brand attachment is vital for maintaining loyal customers.

The logistics needs of the e-commerce retail sector are evolving rapidly with the changing business requirements. Surface transit has gained importance due to improvement in surface connectivity and persistence of cost pressures.

Thus, it is most likely to become a dominant mode of transit contributing a large portion to e-commerce retail logistics revenues. Rise in demand from Tier II cities and beyond is expected to account for almost half the total demand by 2022. Hence, LSPs should focus on expanding their reach to these areas to meet the growing demands.

Further Reading

  • https://www.businessinsider.com/the-global-ecommerce-landscape-report-2017-11
  • https://www.financialexpress.com/industry/technology/500-million-internet-users-in-india-by-june-say-experts/1147709/
  • https://retail.economictimes.indiatimes.com/news/e-commerce/e-tailing/number-of-online-shoppers-to-surpass-120-million-in-2018/64729083
  • https://www.thehindubusinessline.com/companies/india-to-have-175-m-online-shoppers-by-2020/article8673698.ece
  • https://www.thehindu.com/todays-paper/tp-in-school/india-has-worlds-largest-youth-population-un-report/article6612615.ece
  • https://www.livemint.com/Consumer/CyEKdaltF64YycZsU72oEK/Indians-largest-audience-country-for-Facebook-Report.html
  • e-Commerce in India A Game Changer for the Economy, April 2016, Deloitte
  • E-Commerce in India Legal, Tax and Regulatory Analysis July 2015, Nishith Desai Associates
  • E-commerce in India, Fueling a billion digital dreams, NASSCOM, 2014
  • eCommerce in India Accelerating growth, pWc, 2014
  • e-commerce, IBEF, 2017
  • E-commerce retail logistics in India, Driving the change, KPMG, May 2018
  • Rebirth of e-commerce in India, E & Y pvt. Ltd., 2013
  • Imagining Trillion Dollar Digital India, IBM Kalaari Capital, April 2018
  • https://hbr.org/2016/07/how-amazon-adapted-its-business-model-to-india


  • CAGR: Compound Annual Growth Rate
  • GMV – Gross Merchandise Value
  • FDI: Foreign Direct Investment
  • GOI: Government of India
  • INR: Indian Rupee
  • US$: US Dollar
  • 3PL: Third Party Logistics

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