Dear Sir,
The letter 'e' has come to define our daily lives in the modern era of superfast communication. From e-mail to e-filing, e-challan, e-paper, e-ticket, e-governance and e-commerce — we truly live in a world whose backbone rests on the internet. E-commerce has brought about a revolution in the retail industry in India. Though online retailing, or e-tailing, as it is commonly known, is but a fledgling industry in India, it is quickly picking up pace with a lot of retailers entering or expanding in the extremely competitive market namely eBay, Flipkart, Jabong, Myntra, HomeShop18 and Snapdeal to mention a few and of course, the new entrant, Amazon. Flipkart's successful raising of $200 million and the entry of the world's largest online retailer, Amazon, into the Indian online retail market has further reinforced confidence in e-tailing and many sceptics who questioned the viability of the e-commerce models in India may be forced to consider afresh its potential and accept that its time has finally come.
The beginning of e-businesses in India can be traced back to the late '90s with the first lot, popularly called 'dot.com,' coming to the scene but they collapsed soon by 2001. The most glaring reason for their downfall being the near-absence of a proper revenue model. The 2nd version of e-commerce started around 4-5 years later with Flipkart (2007) and a plethora of other e-tailers starting business at a time global e-tailers were trying to figure out how to grow profitably. What Amazon, eBay, Taobao, 360buy and hundreds of others had successfully done in U.S.A., U.K., China and elsewhere could not be emulated in India because of the unique set of conditions and challenges faced here which included poor penetration (and poorer quality) of internet, poor penetration of plastic money (credit/debit cards, etc.) along with the wide prevalence of a "cash" economy and under-developed supply chains and logistics infrastructure.
The situation of infrastructural development in the country is not particularly rosy even today. Even though India's internet user base grew to about 137 million as on June 2012, e-commerce penetration is quite low compared to markets abroad.The biggest challenge for Indian firms to survive in the hostile situation unfolding now will be to become profitable in spite of high cost of acquisition of new customers, aggressive pricing by the foreign giants with their huge cash reserves and all-out price wars, declining margins and excessive discounting that negates the fundamental cost-advantage that an e-commerce venture could potentially offer, compared to a brick-and-mortar retail business, after achieving a certain scale. In the fast moving consumer goods (FMCG) segment, for example, the margins are as low as 10%. Other problems include the still prevalent lack of trust in buying goods online through credit cards. This is the reason why 80% of Indian e-commerce tends to be Cash on Delivery. Studies have shown a preference for traditional shopping methods among Indians, particularly when an item is pretty expensive. Shopping is still a touch-feel-hear-then pay experience. Online retail still only accounts for a minuscule $600 million, compared with India's $518 billion brick-and-mortar retail industry according to a report published by Technopak, a leading retail consultancy.
Please find the blog post for 2nd week as the body of the mail.
The beginning of e-businesses in India can be traced back to the late '90s with the first lot, popularly called 'dot.com,' coming to the scene but they collapsed soon by 2001. The most glaring reason for their downfall being the near-absence of a proper revenue model. The 2nd version of e-commerce started around 4-5 years later with Flipkart (2007) and a plethora of other e-tailers starting business at a time global e-tailers were trying to figure out how to grow profitably. What Amazon, eBay, Taobao, 360buy and hundreds of others had successfully done in U.S.A., U.K., China and elsewhere could not be emulated in India because of the unique set of conditions and challenges faced here which included poor penetration (and poorer quality) of internet, poor penetration of plastic money (credit/debit cards, etc.) along with the wide prevalence of a "cash" economy and under-developed supply chains and logistics infrastructure.
The situation of infrastructural development in the country is not particularly rosy even today. Even though India's internet user base grew to about 137 million as on June 2012, e-commerce penetration is quite low compared to markets abroad.The biggest challenge for Indian firms to survive in the hostile situation unfolding now will be to become profitable in spite of high cost of acquisition of new customers, aggressive pricing by the foreign giants with their huge cash reserves and all-out price wars, declining margins and excessive discounting that negates the fundamental cost-advantage that an e-commerce venture could potentially offer, compared to a brick-and-mortar retail business, after achieving a certain scale. In the fast moving consumer goods (FMCG) segment, for example, the margins are as low as 10%. Other problems include the still prevalent lack of trust in buying goods online through credit cards. This is the reason why 80% of Indian e-commerce tends to be Cash on Delivery. Studies have shown a preference for traditional shopping methods among Indians, particularly when an item is pretty expensive. Shopping is still a touch-feel-hear-then pay experience. Online retail still only accounts for a minuscule $600 million, compared with India's $518 billion brick-and-mortar retail industry according to a report published by Technopak, a leading retail consultancy.
Regards,
Ayush Tibrewal
12DCP-025
No comments:
Post a Comment
Note: only a member of this blog may post a comment.