India set for ecommerce boom

19 October 2011

NEW DELHI: Ecommerce sales are due to rise rapidly in India during the next few years, boosting global players like eBay and local firms such as Flipkart and Dealite.

Muralikrishnan B, country manager of eBay India, predicted the Asian nation would become one of the top ten online retail markets worldwide by 2015, thanks to improving internet penetration and changing shopper preferences.

"The huge proliferation of retail malls has increased awareness of the latest brands and products," he told the BBC. "As a result, the Indian e-commerce market is growing rapidly; in fact it's exploding."

Muralikrishnan estimated the Indian ecommerce category is now worth $500m and should achieve returns of $750m in 2012. In keeping with this process, eBay's growth rate is soon likely to reach triple figures, he added.

It has been rumoured that Amazon is considering entering India, and while the organisation might constitute the most formidable competitor imaginable, it could equally help fuel the expansion of the sector, Muralikrishnan suggested.

ASSOCHAM, the trade group, anticipates that Indian online retail sales will hit $9.5bn by the end of 2011, but product purchases may take just 6% of the overall amount, with travel on 81%.

"India is poised to be one of the top ecommerce hubs in the near future as number of internet users boom. This will bring in a new revolution in retail industry," DS Rawat, ASSOCHAM's secretary general, said.

One indigenous operator attracting attention is Flipkart, recently valued at $1bn, and currently receiving 8m visitors a month. Last week, Flipkart acquired Mime360, a digital content specialist, to help move into areas like digital music and books.

Binny Bansal, Flipkart's COO, said: "What separates one publisher from another is the combination of business model, UI [user interface] and on-site features such as search, recommendation etc."

Research firm Juxt pegged India's contemporary online audience at 65m people, a figure Google has placed closer to 100m, climbing to 300m in 2014., founded by Vijayanand Shekokar, formerly of PayPal and eBay, is a fledgling start-up trying to tap this trend, employing social media to promote sales and deals.

"Everybody is a deal seeker here," said Shekokar. "If you're able to give Indians the right kind of price point, that's what makes the market click, and you can taste the success of it."

Data sourced from BBC, AlooTechi, Media Nama; additional content by Warc staff