E-commerce Industry in India 2019 Outlook
E-Commerce has revolutionized the way business done. The Indian e-commerce market is expected to grow to the $200 billion by 2026 from the $38.5 billion as of 2017. The growth of the industry has been accelerated due to increasing internet and smartphone users in India. The ongoing digital revolution in the country is expected to increase India’s total internet user base to 829 million by 2021 from 560.01 million as of September 2018. India’s internet economy is expected to double from the $125 billion as of April 2017 to the US $250 billion by 2020, majorly backed by e-commerce. India’s E-commerce revenue is expected to jump from the $39 billion in 2017 to $120 billion in 2020, growing at an annual rate of 51 %, the highest in the world. Market Size Propelled by rising smartphone users, the launch of 4G networks and increasing consumer wealth. Online retail sales in India are expected to grow by 31 % to touch the $32.70 billion in 2018, led by Flipkart, Amazon India, and Paytm Mall. In 2018, electronics is currently the biggest contributor to online retail sales in India with a share of 48 %, followed by apparel section at 29 %. Investments/ Developments Some of the Key developments in the Indian e-commerce sector are as follows: Flipkart, after getting acquired by Walmart for the $16 billion, is expected to launch more offline retail stores in India to promote private labels in segments such as fashion and electronics. In 2018, Flipkart acquired Israel based analytics start-up Upstream Commerce that will help the Flipkart to price and position its products in an efficient way. Paytm has launched its own Payment Bank. Paytm bank has benefits such as zero charges on online transactions, no minimum balance requirement, and free virtual debit card. In 2018, Google is also planning to enter into the E-commerce space by end of 2018. India is expected to be its first market. E-commerce industry in India witnessed 21 private equity and venture capital deals worth $2.1 billion in 2017 and 40 deals worth the $1,129 million in the first half of 2018. Google and Tata Trust have collaborated for a project called ‘Internet Saathi’ to improve internet access among rural women in India Government initiatives from 2014, the Government of India has announced various initiatives namely, Digital India, Make in India, Start-up India, Skill India, and Innovation Fund etc. The timely and effective implementation of these programs will likely support the e-commerce growth in the country. Some of the major initiatives taken by the government to promote the e-commerce sector in India are as follows: In order to increase foreign direct investment in the e-commerce sector, the Indian Government hiked the limit of foreign direct investment (FDI) in the E-commerce marketplace model for up to 100 % in B2B models. In the Union Budget of 2018-19, the government has allocated Rs 8,000 crore (the $1.24 billion) to BharatNet Project, to provide broadband services to 150,000-gram panchayats. The government is preparing the second draft of e-commerce policy, gathering inputs from various industry stakeholders. The accomplishment of the government in the past four years: Under the Digital India movement, the government launched various initiatives like Udaan, Umang, Start-up India Portal etc. Under the project ‘Internet Saathi’, the government has targeted over 16 million women in India and reached 166,000 villages Udaan, a B2B online trade platform that connects small and medium-sized manufacturers and wholesalers with online retailers and also provides the logistics, payments, and technology support, Udaan has sellers in over 80 cities of India and delivers in 500 cities. According to the UN’s governance index, India has jumped 11 positions to 107 in 2016 from 2018 in 2014. The government introduced Bharat Interface for Money (BHIM APP), a simple mobile-based platform for digital payments. Road Ahead The e-commerce industry has been directly impacting the micro, small & medium enterprises (MSME) in India by providing means of financing, technology, and training and has a favorable effect. The Indian e-commerce industry has been on an upward growth trajectory and is expected to surpass the USA to become the second largest e-commerce market in the world by 2034. Technology enabled innovations like digital payments, hyper-local logistics network, analytics-driven customer engagement, and digital advertisements will likely support the growth Indian e-commerce industry. The growth in the e-commerce sector will create large employment opportunities, increase revenues from export, increase tax collection by ex-chequers, and provide better products and services to customers in the long-term.