E-commerce Revolution in India

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According to experts, e-commerce is a major business avenue at present for both investors and entrepreneurs. The sector started in India during 1999 with companies such as Firstandsecond.com and Fabmart aspiring to become the Amazon of India - the biggest online provider of books.

Rediff was one of the earliest companies to become a part of the e-commerce wave in India and started operations with knick-knacks. At that point Apnaloan was one of the leading providers of online loans and Sify.com had become a part of the industry as well. Shaadi.com, a leading marriage portal, also started its operations at around that time.

However, the entire situation changed with the crashing of NASDAQ on April 4, 2000. The CEO of Indiaplaza, K Vaitheeswaran, states that the debacle also accounted for several venture funds that were part of India’s nascent e-commerce industry – approximately thousand such companies had to cease their operations.

Things are looking up of late as is evident from the case of Rinkal Shah, a 26 year old web designer based in Triveni Park, Kapadvanj, which is a small area comprising 50 thousand people. He has LCD television, a refrigerator, DTH set top box, a Nikon D500 digital SLR, and a laptop - amenities that can be found at the home of an affluent resident in an urban location in India.

All these goods worth at least INR 2 lakh have been bought online and with privileges like free home delivery and at prices that are economical compared to a physical store. This is testament to the improving performance of the e-commerce establishments of India.

As per statistics, companies such as Letsbuy.com, a leading online marketer of electronics products, have been earning between 75 lakh and 1 crore rupees on a monthly basis. This figure has led 3 venture capital firms to put in 6 million dollars into this organization.

Hitesh Dhingra, the CEO and founder of Letsbuy.com, has stated that his website has expanded more than 10 times between January and June 2011. He expects the sales to cross the 25 crore mark in the near future. He hopes to cross the 2000 crore mark by 2014 itself.

Of late, several venture capital funds have been investing heavily in Indian e-commerce start-ups. Tiger Global, based in New York, has been the leader in this respect with investments of almost $140 million between January and June 2011. This is a significant increase compared to 2010 when it invested only 48 million dollars.

Suvir Sujan, who operates as a partner of Nexus Venture Partners and had earlier established Baazee, states that his organization receives requests for financing from a minimum of one e-commerce entrepreneur on a daily basis.

Rajesh Reddy, the CEO and founder of a Bangalore based mobile solutions organization named July Systems, has said that in the last ten years the investors and entrepreneurs were limited in their ambition but presently they are looking to achieve higher rates of growth.

Reddy is among the few entrepreneurs of India who had been making their best efforts to sustain the e-commerce industry in the country in the past 10 years. However, in the last decade countries such as China, Russia, and Brazil have left India behind.

Following are some of the leading e-commerce sites of Brazil, Russia, and China.

  • China – 360buy, Tencent, and TaoBao
  • Russia – Mail and Yandex
  • Brazil – Buscapo and Mercado Libre

One of the major reasons behind the success of e-commerce in these countries is the continued availability of funding unlike India. However, experts feel that the e-commerce industry of India is witnessing a second coming of sorts, having sustained the tough times between 2000 and 2012 and things could get better in the days ahead.

Popularity of e-commerce in India

The major reason behind the growing popularity of e-commerce sites in India is its hassle free nature. Now the customers do not need to stand in long queues to perform important transactions such as bill payment, hotel reservations, and booking tickets. With the increased availability of such service providers it is now easy for consumers to shop around and find the best possible product.

In addition, they can also visit discussion forums and product review sites to gain better information on a particular product or brand. E-commerce also offers plenty of payment options:

  • credit cards
  • PayPal accounts
  • debit cards
  • direct online money transfer

The convenient and quick delivery of products also makes e-commerce one of the favored modes of shopping for the Indian customers.

Unique e-commerce sites of India

Made-from-India: Made-from-India Trade Link was inaugurated in 2007. This B2B website offers comprehensive information on industrial resources available in India and caters to importers and buyers across the world, playing a major part in promotion of Indian businessmen as sellers.

It focuses on the following services:

  • showroom pages
  • lead on demand
  • catalogue
  • lead generation

Justbill: Justbill caters primarily to small businesses in India and offers cloud based invoicing and billing applications. It assists the traders, services, and manufacturers execute the following operations aside from billing and invoicing:

  • keeping track of orders
  • management of general suppliers and customers
  • management of receivables and payables

The site was started with the precise purpose of making the management processes of daily business and administrative operations simpler.

ePravesh: ePravesh helps with online admissions and assists in the reduction of overall expenses related to admissions. It also makes the process of approaching educational institutions more convenient. Students or parents can use this site to submit application forms of different institutions at one go and making payment for them.

BundleBaazi.com: This e-retail shopping establishment deals in a wide range of products such as:

  • baby care
  • cameras
  • mother care
  • mobile phones
  • books
  • gaming consoles
  • computer accessories

It provides discounts on several categories of products and various stores. It has a bundle pricing idea that is waiting to get patented. This competitive business procedure is the main selling point of the organization and helps it stand out from the vanilla shopping websites. In addition, the customers have the luxury to choose any number of products or stores at BundleBaazi.

GiftcardsIndia.in: GiftcardsIndia (GCI) is a leading web-based collector of gift certificates and vouchers available in India. It has collaborated with more than 130 of the top brands in the country. The website also provides bulk purchasers and resellers with plenty of products that can be conveniently provided to their customers through their own retailing networks.

OLX: Based at Buenos Aires and New York, OLX offers its users classified advertisements that are generated by other users. Its users are from the different urban communities from across the world. The website also presents discussion forums that are categorized according to topics. It became a prominent site after partnering with Friendster, a social networking site.

Snapdeal: This e-commerce organization provides deals on a daily basis and operates in a wide range of lifestyle segments like dining, travel, and health and beauty. It also offers discounts on the following types of products:

  • electronics
  • sunglasses
  • perfumes
  • apparels
  • watches
  • cell phones
  • bags

Flipkart: The head offices of this e-commerce company are at Bangalore. It started operations with books but is now also dealing in a vast range of products such as cameras, computers, electronic products, home appliances, games, mobile, movies, music, personal and healthcare products.

Recent mergers and acquisitions in India e-commerce sector

Snapdeal, the Delhi based e-commerce site and among the most well funded of its kind in 2011, has recently bought eSportsBuy, an online store for sports equipment. After Flipkart’s 25 million dollars acquisition of Letsbuy in February 2012, this is the second biggest M&A deal in this sector.

Media reports state that the deal has been signed for an amount between INR 50 crore and 75 crore. This is the second ever acquisition for Jasper Innovative Marketing Solutions, which owns Snapdeal. In 2010, it had bought Grabbon, a group buying website based in Bangalore.

Flipkart’s acquisition of Letsbuy will help it become a major player in the consumer electronics market where the acquired organization has been performing commendably. This deal will enable both the companies add to their operations. Sachin Bansal, the co-founder and CEO of Flipkart, this deal is part of the organization’s aim to achieve dominant positions in all market segments.

In 2011 Flipkart also acquired the digital catalog of Chakpak, which included 40 thousand filmographies, almost 50 thousand ratings, and 10 thousand movies. Flipkart has however made it clear that the content will not be present on the original site and the brand name will not be used. With this acquisition, it will be able to provide user generated content related to Bollywood for its customers.

Problems of e-transactions

One of the major problems for e-consumers is the over enthusiastic sales strategy adopted by certain service providers. These sites keep disturbing the customers with countless banner ads and pop ups every now and then.

The availability of a large number of options in an e-commerce site can also confuse inexperienced visitors – they might not know How to Choose the best options from ones available.

Irrelevant information like fliers, junk mails, promos, and excessive advertising can also put the consumers off. At times, e-sellers do not have proper data to attract customers for long periods of time.

Future of e-commerce in India

E-commerce for services such as travel ticketing, matrimony, jobs, and events has already become fairly successful in India. An increasing number of customers are now finding it easier to make their payments online or getting agents to do the same for them.

It is expected that this segment will perform as well as it has been doing now and also see greater rates of growth with the corresponding improvement in the Indian ecosystem, increasing consumer awareness, and reduction of issues related to payment mechanisms.

The e-commerce market segment for goods is experiencing a quick rate of growth with start-ups being launched on a regular basis. It is expected that in addition to market leaders such as Indiaplaza, Homeshop18, eBay India, Indiatimes, Flipkart, and Infibeam several vertical and horizontal retailers will be initiating operations.

These new companies are supposed to sell a wide range of products starting from pet food to cell phones. The smaller companies with niche products or delivery systems are expected to do well in the future.

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Last Updated on 4/13/2012