In the second online rush, there are many genuine startups and a growing number of real online shoppers. But challenges remain
There seems to be a second dotcom rush in India, with a number of websites targeting rapidly dilating Indian eyeballs. Like before, unfortunately, there are several startups still singularly focused on “playing the valuation game.” But fortunately, this time around there are many genuine players as well, who are betting their shirt on e-commerce taking off in a big way.
Something significant and different is also happening this time: there are real people buying all kinds of real stuff through the virtual medium. At around 120 million Internet users and 20-25 million active online shoppers, the size of India’s e-universe may be quite small against a 300-million-plus middle class. But it’s growing pretty fast.
And that’s precisely the point of the ongoing rush among entrepreneurs. The Indian e-tailing market is wide open for anyone to get a toehold on. A market that, a McKinsey report says, has been growing at an average of 34% annually since 2005. By 2015, it is expected to cross $2 billion in online sales. A tiny speck in the mighty dust of more than half trillion dollars worth of overall retail sales, but significant nevertheless.
In fact, the e-commerce space has much higher potential than what analysts predict currently. But the technical and policy-related challenges might keep Indian e-tailers from achieving its full potential.
On the technical side, websites have to set up robust infrastructure that can be quickly scaled up or scaled down to meet fluctuating demand. They also need to shift more consumers from paying cash on delivery (the existing popular method) to making upfront payments online—if they want to improve margins and sustain the business. And they should reduce their marketing spend on customer acquisition and be able to corral more consumers through better customer experience and word-of-mouse.
On the policy front, they have to be on their toes to comply with the directives and guidelines of RBI (which can change anytime or remain nebulous enough to discourage people from investing in futuristic technologies).
One thing e-entrepreneurs must be cautious of is the tiny but burgeoning segment of mobile commerce. The ecosystem for m-commerce has only begun to evolve, with the existence of multiple payment facilitators, wary consumers and complexity in handsets and connectivity. Some of the telecom biggies (Airtel, for one) are also eying the mobile shopping opportunity with enormous zeal.
There is no bubble this time, but there might be trouble on many counts.
– Sanjay Gupta
Editor, Express Computer
