ECommerce – the latest fad?

With eCommerce websites making headlines with their phenomenal growth over the last few years the question everyone is asking is, ‘But, for how long?’.


Although eCommerce in India dates back as far as over 15 years ago, it is now that the optimal ecosystem for online business is gradually shaping up. Several factors, like proliferation of internet users, change in popular sentiment towards online payment transactions, have paved a way for eCommerce to grow in leaps and bounds in the country. Following are the few reasons why the industry with its spectacular growth of 50% YoY for the last 6 years, is here to stay,

1. Increased Internet Penetration: There has been a marked increase in internet users catapulted by the overarching penetration of broadband and declining prices of PCs. Smartphones and tablets coupled with mobile connectivity and 3G has only added to the effect. According to Ernst&Young, it is estimated that internet user base is to increase to 300 million by 2015. The same report says that by 2020, the number 3G subscribers would cross the 300 million mark. This illustrates the huge potential market at the e-marketeer’s disposal.

2. Acceptability of Online Transactions: India has come a long way since the early years of eCommerce in the country introduced by eBay when one of the major deterrents of the online business industry was general sentiments of mistrust towards online transactions. Unlike developed economies like US, use of Credit Cards and Debit Cards has evolved only lately. Ernst&Young estimates 350.4 million debit cards and over 70 million credit cards is used by Indians in 2014, a far cry from 4.2 million credit cards and 0.3 million debit cards in use in 1999. This is mainly due to robust network infrastructure developed to support online payments and secure payment gateways. This has reinforced the growth of eCommerce in the country.

3.Increasing spending power of the average Indian: With the demographic dividend on our side, the disposable income of an average India has been steadily increasing. Annual disposable income per household is expected to increase at a CAGR of 5.1% from 2005 to reach an estimated $ 6,790 by 2025.(Online Travel Industry – India (Part III), ResearchonIndia, February 2012, p.6) With a majority of the population below 25 years, the world second largest nation in terms of population,India constitutes a huge market full of young individuals armed with smartphones and 3G, ready to take on the world.

All the above discussed factors only reiterate why eCommerce is THE BIG THING in the country and is rightfully here to stay. For a while at least.


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