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Indian e-tailing market dominated by Flipkart

Industry Sector

Retail

Published

4 January 2013

Author

Matt Bodimeade

Type of News

Market

The Indian e-tailing market has been forecast to boom, increasing at a compound annual growth rate (CAGR) of 70.94% over the period 2011-2015.

Key factors contributing to growth within the industry include the increasing penetration of technology in India, and the extensive adoption of e-tailing within non-metro cities.

E-tailing is the selling of retail goods on the Internet. Short for "electronic retailing," and used in Internet discussions as early as 1995, the term seems an almost inevitable addition to e-mail, e-business, and e-commerce. E-tailing is synonymous with business-to-consumer (B2C) transaction.

Retail e-tailing is essentially the selling of retail products and services through the internet. The late 1990's and early 2000's saw the launch of several e-tailing sites such as www.rediff.com and www.indiaplaza.com.

However, the real defining entry in this domain was that of Flipkart in 2007 and since then we have seen an increased urgency in the space with the entry of several new players across categories; highly discounted pricing; better interfaces and delivery; high decibel media campaigns; investments in players at high valuations - all leading to aggressive competition to grow and scale-up as quickly as possible.

Though e-tailing is still a very small part of overall retail in India (0.2%), it is projected to grow at a fast pace (reaching ~2% by 2017) and over the next decade its presence will be even more significant.

While e-tailing forms a small share of sales for multi-channel retailers, it is a strategic tool to ensure customer retention and avoid losing them to online competition as well as to reach out to a wider customer base in smaller cities and towns where is not feasible for retailers to set up stores.Flipkart

Activity in the space has already picked up, with many Indian retailers setting foot in the space through launch of their e-tailing portals e.g. Shoppers Stop, Puma, Bata, GKB Opticals, and Crossword.

The availability of multiple payment options including cash on delivery (COD) is one of the major reasons behind the increasing number of people turning to online purchasing of products and services. It has been observed that buyers in India are generally not comfortable with online payment options that utilise credit cards or debit cards.

Therefore, e-tailing vendors in India have devised multiple payment options including COD and payment through PayPal. In particular, the COD option is generating high returns to vendors. Certain vendors such as Flipkart have also introduced card swiping machines for payment on delivery.

Such techniques have helped e-tailing vendors build trust not only among consumers in metro cities, but also among consumers in small cities.

For more information on the Indian e-tailing market, see the latest research: Indian E-Tailing Market

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