The E-commerce market has a steady hold over India. Does it not? In fact, it’s not even some breaking news kind of story. It’s been the way it is for, at least, the last decade or so. It’s a market, that experts have long suggested would require a lot of challenges to be met, but once captured, it can turn into a golden-egg laying goose.
Apart from the other things, what strikes one the most about the promise and potency of the E-commerce market in India is the sheer revenue figure it holds. Wondering how? Very well then!
According to the India Brand Equity Foundation, the revenue from the sector is expected to increase from USD 39 billion in 2017 to a massive USD 120 billion in 2020.
Does this tell us something? Well, do the math and you realize that the overall revenue from the E-commerce sector in India is expected to grow by around 51 percent. If that’s not encouraging enough for a country that currently has around 627 million internet users (quoting- Economic Times), then perhaps it helps to know that the growth rate of revenue is the highest in the world.
Over the course of the past few years, there’s been a major factor that is driving change in the realm of E-commerce. So what is it? Well, in India, 100 percent FDI is allowed in B2B commerce and around 100 percent FDI under the automatic route. Fact!
But well, while that’s a rosy and certainly promising picture, what the World Bank has had to say in a recent observation tells a slightly different story, one would think.
According to the latest report published by the Economic Times, the World Bank has made some observations with reference to the contribution of online sales to India’s overall retail sales.
So one wonders what has the World Bank shared? Well, surprising as it may appear, the fact is that the overall contribution of online sales to India’s total retail sales is around 1.6 percent.
Now in a country where much of the urban focus- in major metropolitan cities like Delhi, Mumbai, Hyderabad, Bangalore, Chennai et cetera- seems to have, for a while, been toward renowned online platforms for shopping- doesn’t the finding come as a bit of a surprise?
In addition to the above, the World Bank also shared the following in the Economic Times report, and we quote:
The World Bank said a survey of more than 2,200 firms showed that most of the cross border e-commerce was conducted with extra-regional partners, such as China, the UK and the US. Referring to various studies, it said mobile phones, electronic and computer accessories, clothing, footwear, fashion accessories and consumer durables were most traded in India. The bank said that while Indians and Pakistanis transact online significantly, the likes of Bangladesh and Nepal fare worse than many African countries on most e-commerce indicators. In addition, the pervasive lack of trust between countries in the region hurts the trade.
Furthermore, the following was revealed:
Firm choice is distorted by existing regulations in South Asia. For example, in countries such as India and Sri Lanka, foreign multi-brand retailers cannot have their own inventory, and international giants like Amazon, Flipkart and Daraz must only operate as pure marketplaces.
That said, one reckons the relatively easy norms that seem to favor the E-commerce giants may be one of the reasons that may have curtailed the rise of other multi-brand retailers, thus restricting that ease of functioning with which they would give competition to the mega retailers.