Electronic commerce or e-commerce is a short term used to denote buying or selling through an electronic medium. It is a convenient mode of transaction for customers who prefer purchasing products from home. On the other hand, businesses can set up a virtual store and start selling products online.
In India, e-commerce is growing at an impressive pace. A recent report by IAMAI (Internet and Mobile Association of India) revealed that Internet commerce industry in India is estimated to grow by 47% and reach Rs. 46,520 crore by the end of the year 2011. The size of e-commerce in the year 2009 was Rs. 19,688 and increased to Rs. 31,598 by the year 2010.
With a market share of over 80%, online travel industry in India is the single biggest contributor to e-commerce market. Ticket sales (railways and Airways) form a major part of the revenue generated by the travel industry. This is in addition to the hotel accommodations, tour packages and travel insurance that fall in the industry.
E-tailing (electronic retailing) which includes sale of consumer durables like electronic appliances, cameras, mobile phones, kitchen appliances etc., holds the second spot with a market share of close to 6.5%. These two sectors contribute nearly 90% of the total e-commerce in the country.
User friendly features
Flipkart.com, which initially started as an online book store added some features to the business which made purchasing more customer friendly. They came up with ‘Cash on Delivery’ plan as an alternative to purchasing through credit cards or debit cards. This move struck well with customers hesitant to reveal their account details online and resulted in more customers buying from Flipkart.com. Encouraged by the response, Flipkart.com has diversified into a generic e-commerce website selling mobile phones, music CDs, software and laptops, etc.
A number of passengers use Indian Railways website, irctc.com to book their tickets online. It forms a major chunk of the market share enjoyed by online travel industry. In July 2011, IRCTC has announced that passengers need not carry print out of their e-tickets anymore; they can travel by showing the SMS confirmation of their ticket on their mobile phone or the e-tickets screen-shot on their laptop. The passenger can thus avoid the hassle of getting a print of his ticket for boarding the train.
Role of payment gateways
Payment gateways like Paypal, Nochex, Worldpay also have a reasonable share in moving customers towards e-commerce. They protect the information that a customer provides online to the seller. This protects customers from online frauds. Payments through these gateways are accepted across a number or countries. So these form a safe mode of transaction for exporters and importers anywhere in the world.
In what is seen as a boost to Indian entrepreneurs, RBI has increased the limit of export related payments from $500 to $3000. This increased transaction limit enables the Indian SMEs to grow their export business further through e-commerce.
Why the growth
The growth of e-commerce in India can be associated with a number of factors. Prominent among them are the increasing Internet user base, accessibility to computer, growing affluence of the middle class, awareness among customers, payment gateways etc. The option of purchasing tickets (rail, air, bus, movie) without waiting in queues has also played its part in growth of e-commerce in India to an extent.
A number of companies in India have made it big in e-commerce. Companies like IRCTC, makemytrip.com, flipkart.com, ebay India, Paypal India are doing well in their domains. Though bulk of the share is concentrated in travel industry alone, segments like e-tailing and digital downloads are doing their part to build stronger e-commerce market in India.