Massive online retail growth in India

India is the fastest growing eCommerce market in Asia/Pacific according to a new report by tech research house Gartner.

The nation’s eCommerce market will grow by 70 per cent in 2015 – from US$3.5 billion in 2014 to $6 billion, it says.

Praveen Sengar, research director at Gartner, nevertheless describes India’s digital commerce market as being “at a nascent stage”. Online retailing still represents less than four per cent of the nation’s total retail turnover, with B2C eCommerce leading the growth.

“B2B is limited to organisations that drive online channels to integrate with their partners and distributors,” he said.

Mobile commerce is finding increasing traction in mobile shopping. Marketplaces, consumer product goods and food and beverages companies have started investing in mobile commerce. However less than five per cent of total digital commerce happens through mobile, concludes Gartner.

“Mobile commerce will help organisations skip the desktop wave with increasing penetration of affordable smart devices with connectivity and a rapidly growing ecosystem to engage customers on mobile. Thirty per cent of traffic for eCommerce sites come from mobile and tablets.”

Explains Sengar: “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.

“Vendors are increasingly focused on execution and winning new customers, sometimes at the expense of articulating future vision. Merger and acquisition activity is increasing, resulting in fewer digital commerce platform options in the market, but also serving to extend the commerce platforms of the established vendors.”

Digital companies will expand investments in personalisation, digital marketing, Web analytics and big data in order to stay competitive. India has approximately 200 million users on social networks and it is an important channel to understand and engage with customers.

“Digital business means ‘co-opetition’; reaching new markets will require working with competitors who offer marketplace sites and access to new customers, payment services to acquire global reach, or hosting services to achieve scalability and availability,” says Gartner.

No single deployment or licensing model will dominate the digital commerce market and in Indian organisations will look at SaaS or open source platform- based digital commerce till the market matures and digital commerce revenue stabilise.

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.

“The B2B model is leveraged to drive efficiency in the supply chain,” concludes Gartner. “The biggest challenge is getting the business digital commerce strategy right and adequate investments in people, process and technology to engage with customers across channels, which has been ignored by Indian enterprises so far.”

Gartner will present more detailed findings of its research into the Indian eCommerce market at a series of symposiums, which kicked off in Goa last week.

The Gartner Symposium/ITxpo delivers independent and objective content with the authority of a world leading IT research and advisory organisation.

Further symposiums will be held in October and November in Japan, Brazil, Australia and Spain. Click on the city for further information.

October 27-30, Sao Paulo, Brazil.

October 28-30, Tokyo, Japan.

November 9-13, Barcelona, Spain.

November 17-20, Gold Coast, Australia.

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