E-Commerce and India

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By: Khushbu Bhavnani

Launched by the Government of India, Digital India is campaign to embolden the society digitally. The promotion and accessibility of internet and related services and convenience of electronic commerce facilities in all nook and corner of the society is one of the crucial goals of the Digital India campaign.

According to an article published by India Brand Equity Foundation, online grocery, e-pharmacy and social commerce are anticipated to witness exponential growth in the year 2021.

An important reason for this progression is allowance of 100% Foreign Direct Investment in Business to Business (B2B) in the arena of e-commerce. The official website of the India Brand Equity Foundation also states that policies have been maneuvered in favour of e-commerce expansion by permitting 100% Foreign Direct Investment (FDI) under the automatic route in the market place model of e-commerce.

Reports also inform that the Indian e-commerce market is expected to grow to US $ 200 (two hundred) billion by 2026. This is a tremendous figure considering the position of US $ 38.5 billion in 2017.

A major reason for increase in market size is due to escalating internet connectivity across the nation along with the usage of smart phones by more and more users.

As a matter of fact, post lockdown in 2020, the smart phone shipments reached 150 million units. Amongst the 150 million units, 4 million shipments were of 5G enabled smart phones.

It is interesting to know that the expansion and development of e-commerce is not only limited to urban cities or Tier- I zones but also has penetrated into the rural areas.

In the month of February this year, e-commerce giant Flipkart joint hands with Maharashtra State Khadi and Village Industries Board and Maharashtra Small Scale Industries Development Corporation to rope in local artisans, and small and medium businesses to provide them with a platform to showcase and sell their products.

A much-needed support to the e-commerce business was given by the rapid progression in different modes of digital payments. An array of options became available starting right from Unified Payment Interface (like BHIM UPI), net banking services and mobile wallets (example- Paytm, Phone Pay and Gpay).

Large e-commerce companies such as Amazon, Myntra, Flipkart and Alibaba have made record breaking retail sales since their incorporation in India.

In times of lockdown due to the pandemic, e-commerce is a much preferred option because it provides ease of access and is a safer option in comparison to visiting retail outlets in person. It gives the opportunity to the customer to order anywhere, anytime and through any device that has internet access.

E-commerce websites also let the users compare and research multiple items simultaneously.

Browsing and searching of products by web-portal or mobile app users also lets the e-commerce companies have and idea about consumer tastes and preferences.    

Buying and selling of goods online also breaks the barrier of geographical boundaries and lets the demand from any place in the country be fulfilled through efficient supply mechanism.

Though electronic commerce is often perceived as transaction between business to business (B2B) or business to consumers (B2C), e-commerce also comprises of transactions from one consumer to another (C2C), from consumer to business (C2B), from business to administration (B2A) and lastly from consumer to administration (C2A).

A classic example of C2C transactions is those carried out through web portals like e-bay.

Electronic Commerce has many benefits for the business doers as well as capital requirement is minimum with only requiring staff and web set up. Thus, the running and operational expenses are bare minimum.

For the country as a whole, as e-commerce grows it also increases employment opportunities for localities.

There has also been a huge involvement of food delivery applications like Zomato, Food Panda and Swiggy  in contributing towards the spread and reach of e-commerce.

Zomato entered into an agreement with the Ministry of Housing and Urban Affair (MoHUA) to launch 300 street food providers and local vendors on its portal in February, 2021.

An interesting collaboration that took place in November 2020, was that Amazon India tied Hands with Hindustan Petroleum Corporation Limited , so as to enable customers to book and pay for LPG cylinders.

To boost and support the Aatmanirbhar Bharat Movement , in the month of November, 2020, Amazon India launched a ‘Made in India’, toy store. These toys depict and promote Indian culture, heritage and mythology.

A new concept that is gaining popularity is that of Value E-Commerce, an electronic business model that emphasizes on low cost, good quality and superior products. The value e-commerce comprises not only of branded products, but also local and regional brands.

Snap deal   has come up with a unique term of ‘Jaldi Payments’ which benefits the sellers to receive payment within three days of delivery.

Evidently, e-commerce is an ever evolving space, and has great prospective for job opportunities. Thus, within just five years from its incorporation, the online delivery service, Grofers, raised $535.5 million from renowned investors such as SoftBank, Tiger Global and Sequoia Capital in 2018, as per various reports published online.

By the end of May, 2020, grabbing complete opportunity of the lockdown, Grofers served 4.2 million households.

As per the article published by Privacy Shield Framework, electronics is currently the biggest online retail sales category, with average sales estimated to account for 48% of the share of the market. The apparels industry follows closely with about 29% of the total share.

In fact, there has also been news about Google establishing its presence in India’s e-commerce sector. Google entered into a partnership with Tata Trust and are apparently working on an undertaking named ‘Internet Saathi’. This project specifically targets internet usage, awareness and penetration among rural and underprivileged women in India.

India’s e-commerce orders volume rose by 36% in the terminating quarter of 2020, with personal care, beauty and wellness segment being the leading beneficiary. The country’s festival sales  (October 15, 2020 to November 15, 2020) through the electronic and/ or digital commerce sector  recorded Rs. 58,000 crore worth of  gross sales  for brands and sellers, a growth of 65% from Rs. 35000 crore  (US $ 5 billion ) from last year.

The government has also constantly been on the front foot on promotion of e-commerce and digital India. Following are some of the commendable initiatives undertaken by the Government of India:

  • Launch of e-commerce web portal titled- TRIFED along with a mobile application under the name Tribes of India, that provides market access to tribal artisans and craftsmen.
  • Under the Lucky Grahak, and Digi Dhan Yojna , the government has funded an approximate amount of US$ 23.8 million to one million customers.
  • Through the Digital India Campaign the Government of India is aiming to create a trillion dollar online economy by the year 2025.
  • The Ministry of Commerce is also backing the policy for Open Network for Digital Commerce (ONDC).

 

To conclude with, corresponding to Payoneer report, the Indian e-commerce sector is ranked 9th in cross-border growth in the world.

 

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Narveer Singh

Narveer Singh

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