India's eCommerce Market To Reach $6 Billion in 2015, Adoption of Mobile Commerce to Accelerate

India's eCommerce Market To Reach $6 Billion in 2015, Adoption of Mobile Commerce to Accelerate Image Credit: Flipcard

India's eCommerce market is poised to generate revenues of USD6 billion in 2015, up from USD3.5 billion this year, an increase of 70% in just one year. Gartner, a leading research firm announced these figures in its recent report, indicating that India is well positioned to be an eCommerce giant given its huge population of more than 1.2 billion and the prevalence of internet culture among its young. As at last year, India had over 220 million mobile internet subscribers and according to Gartner, it currently boasts 200 million social network users. The rise of India in the e-commerce space is driven partly by the proliferation of low cost smart devices, the recent examples being China's Xioami handsets and FireFox OS devices and the popularity of social media networks such as Facebook and Twitter,which saw more and more people accessing the internet via mobile devices and hence, creating a perfect medium for e-commerce transactions which include payment services, ticket booking and purchasing, online purchases, paid downloads, online banking and others.  

The rapid growth of India's eCommerce market is also pushed by certain niche services, an example being social networks-based mobile payment facility. Oxigen, a provider of online payment services this year launched the Social m-Wallet Service, the 'first' of such service in India to enable the transfer of money using social media networks such as Facebook, G+, WhatsApp and Twitter. The ease of making payments using mobile wallet services, and the convenience and safety it provides from not having to carry a lot of cash is attracting more users to start trying out this and other mobile commerce services.

Even huge brands are capitalizing on eCommerce stores to market and sell their products. Makers of smart mobile devices in particular have found that putting their devices on eCommerce stores takes away the costs and inconveniences of running brick-and-mortar stores, letting them reach out to potential buyers from all over India and saves them from having to spend huge marketing dollars to reach these buyers. The recent launch the Firefox OS powered Cloud FX low cost smartphones saw the phones being sold exclusively on, India's largest e-marketplace.

Gartner said that with mobile commerce becoming an increasingly important channel within the ecommerce to drive revenues, consumer products as well as food and beverages companies have started investing in this segment. According to Gartner, although mobile commerce only accounts for less than 5 percent of total digital commerce, thirty percent of traffic for eCommerce sites come from mobile phones and tablets.

Given these trends, Gartner expects digital companies in the Ecommerce space to expand their investments, especially in personalization and digital market, web analytics and big data to build the necessary capacity to serve their online and mobile customers and to retain their competitive edge. Gartner however cautioned that the current limited internet penetration, low digital commerce volume, multiple payment models (e.g., cash on delivery, credit card and wire transfers), logistics and fulfillment challenges, higher return rates and low average order value is putting pressure on the profitability and viability of B2C eCommerce businesses in this region. 

Digital commerce is at a nascent stage in India. However, India is one of the fastest-growing eCommerce markets in Asia/Pacific. India represents a $3.5 billion market, growing at approximately 60-70 percent every year. It represents less than 4 percent of the total retail market. B2C eCommerce leads the market in India, while B2B is limited to organizations that drive online channels to integrate with their partners and distributors. The digital commerce platform market is maturing; incumbent vendors are investing in building out their commerce platforms, and those in adjacent areas, such as search, order management and marketing — both through organic development and acquisition.

-             Praveen Sengar, research director at Gartner


Executive Editor of The Fast Mode | 5G | IoT/M2M | Telecom Strategy | Mobile Data Innovations 

Tara Neal covers stories on strategies and initiatives in the Digital Telco space, and anchors the 5G and IoT/M2M verticals on the publication. Tara holds a First Class Honours in BSc Accounting and Finance from The London School of Economics, UK and is a CFA charterholder from the CFA Institute, United States. Tara has over 20 years experience in technology and business strategy.

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