Online Retailing in India Gathers Steam

Online Retailing in India Gathers Steam

The Economist reports that in the next 15 years India will see more people come online than any other country. Last year e-commerce sales were about $16 billion; by 2020, according to Morgan Stanley, a bank, the online retail market could be more than seven times larger. Such sales are expected to grow faster in India than in any other market.

Currently there are three top e-commerce companies in India: Amazon India, Flipkart, and Snapdeal.

Amazon IndiaFlipkartSnapdeal
ExecutivesAmit AgarwalSachin Bansal; Binny BansalKunal Bahl
Investors.Jeff BezosNaspers owns a 17% stake in Flipkart; other investors, including Tiger Global Management, in New York, and DST Global, a Russian fund, have also backed the companyJapan’s SoftBank, a big investor in Alibaba, has backed Snapdeal since 2013
Share of Indian E-Commerce12%45%26%
USPAmazon  lets customers order groceries online and have them delivered from the nearest local grocery storeUses Mumbai’s famous network of dabbawallas, or lunch-delivery men, to drop off packages when they picked up customers’ lunch tinsSnapdeal claims more than 60% of its sales come from outside India’s big cities, and recently launched seven regional-language versions of its website


Indian regulations bar foreign-backed e-commerce firms from owning inventory, and so these companies function as marketplaces which try to boost the number of sellers on the their platform—it is the sellers, after all, who pay commissions and shipping fees.

So companies offer a range of services to draw businesses to their sites: Flipkart has programs to teach sellers how to manage peak sales during festive seasons in India; it also advises fashion brands on trends and production. Amazon India announced a traveling studio-on-wheels, offering training, photography and other services to help shop-owners come online.

By far the most important help they offer is access to credit since small business are not very actively supported by bank loans due to scarce financial statements and limited credit history.

Delivering online orders on a large scale can also be a challenge given the volumes of traffic and vague addresses. E-commerce companies have devised various methods of handling this integral part of the business. A startup named Delhivery headquartered in Gurgaon, has hired more than 15,000 staff, and works with a number of e-commerce firms. The company moves goods to 700 or so small distribution centers overnight to avoid slow-moving traffic on main roads during business hours. Thousands of delivery boys then dash to and from these centers throughout the day, bearing more than 10 pounds on their bikes.

Indian e-commerce has a lot going for it:

  • Income per person, which in 2014 was $1,570, could be twice that by 2025
  • Two-thirds of Indians are younger than 35, and very savvy in using smartphones
  • According to Goldman Sachs smartphones accounted for one in four Indian mobiles
  • Morgan Stanley expects internet penetration to rise from 32% in 2015 to 59% in 2020. By 2030, India is projected to be a one-billion-person digital market

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