Ecommerce Industry In India Why is it so Lucrative cover

Ecommerce Industry In India – Why is it so Lucrative?

The Ecommerce Industry in India, from $38 bn in 2017 is expected to grow to more than $200 bn by 2026. As of 2034, the Indian E-commerce industry is expected to be the only second-biggest market after that of the US. In today’s article of Market Forensics by Trade Brains, we’ll be discussing Ecommerce Industry in India, and the size of the market, why is the Indian E-commerce market is in a lot of focus, and future expectations from this industry. Let’s get started.

What is E-Commerce?

To put it in simple words, E-commerce would mean any purchase/sell transaction that is done electronically using the Internet. In other words, any buying or selling of goods or services online and any use of money or data to execute these transactions electronically will be under the purview of E-commerce. Even, any commercial transaction done via the Internet will also come under the blanket of E-commerce.

The First-ever E-commerce Transaction

The Ecommerce industry is over 25 years old as of now. The first-ever E-commerce transaction was an online sale on Aug 11, 1994, when a man sold a CD of the band, Sting to his friend by using the platform of NetMarket in the USA.

With the advent of the world of E-commerce, the world has moved to a whole new level of evolutionary buying and selling. The end-user experience, the connection and reach between buyers and sellers, small businesses, freelancers, etc, have all benefitted from the development of e-commerce. The global e-commerce market is expected to be anywhere between $26 to $30 trillion by 2020.

Types of E-commerce Business models

The  Ecommerce business models involve two parties i.e. Businesses and consumers. Here are the different business models possible in ecommerce:

  • Business to Consumers (B2C): When then business sells, goods and services to an individual consumer (Ex- buying a phone form online websites)
  • Business to Business (B2B): When a business sells goods and services to another business (Ex- selling ERP solution software to another business)
  • Consumer to Consumer (C2C): When a consumer sells goods and services to another consumer (Ex -selling your old phone to another consumer using platforms like OLX, eBay, etc.)
  • Consumer to Business (C2B): When a consumer sells their product to another business (Ex- a photographer selling his photos to other magazines or publication house)

Ecommerce Industry In India – How big is it?

The biggest and most influential factor in the growth of E-commerce business in India is the increased use of the Internet and smartphones. From $38 bn in 2017, the Indian E-commerce market is expected to grow to more than $200 bn by 2026. Another important medium towards the growth of the E-commerce market has been the introduction of UPI (Unified Payment Interface). UPI recorded nearly 1.25 bn transactions in March 2020.

Pic: E-commerce business value in India (Source: Statista)

What makes Ecommerce Industry In India so Lucrative?

­India has been garnering constant attention from most of the major retailers and e-commerce players in the world. The Walmart-backed Flipkart is the biggest e-commerce player in the world and it is being closely followed by Amazon at 2nd place. Then we have players like Paytm, Infibeam, etc. And of late we have seen Reliance Industries  (launching Jio Mart), jumping the bandwagon and wanting to be a part of the race towards the supremacy of being the E-commerce leader in India. The following are some of the factors which highlight the attractiveness of the Indian E-commerce market.

  • The Indian E-commerce market is the fastest-growing market in the world. And it is expected to grow at approximately 1200% by 2026
  • The Indian E-commerce market is expected to be around $84 billion by 2021.
  • Government initiatives like the Start-up India and Digital India is a boom for new players in this industry.
  • In B2B E-commerce, 100% FDI is allowed.
  • 100% FDI is permitted via the automatic route in the marketplace model of E-commerce.

(Pic: Top E-commerce websites in India)

Recent Developments in Indian E-commerce Industry

The Ecommerce Industry In India is growing rapidly. Here are a few of the recent Investments/Developments in Ecommerce industry in India:

  • In April 2020, Reliance Industries started deliveries of essentials in Partnership with local Kirana shops in Navi Mumbai.
  • In May 2020, PepsiCo partnered with Dunzo for its snack food brands like Lays, Quaker, Doritos, and Kurkure.
  • In May 2020, Hershey’s partnered with Swiggy and Dunzo to launch their flagship online store.
  • In August 2020, Reliance Industries acquired a 60% stake in NetMeds (online Pharmacy store), for Rs. 620 crores.
  • Reliance will invest around Rs. 20,000 cr (nearly, $2.8 bn) in its telecom business to increase the quality of 5g services.
  • In the Union budget of 2020-21, the government has allocated Rs. 8000 crore to BharatNet projects to provide broadband services to 1,50,000 gram panchayats.

Ecommerce Industry: Expectations from Future

The E-commerce industry has been growing at the rate of knots and the growth is likely to continue in foreseeable future. With the growth in Finance, Technology, and training, the sky is the limit for the E-commerce industry. And by, 2034, the Indian E-commerce industry is expected to be only second to that of the US. The growth of E-commerce also increases employment, increases revenue, increases tax collection, etc.

That’s all for today’s Market Forensics. We’ll be back tomorrow with another interesting market news and analysis. Till then, Take care and Happy investing!!

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