2016 is a great time to be part of the e-commerce digital revolution and India is one of the top players in the Asian market. With a growing population in the sprawling urban areas of the country, a digital revolution has steadily been taking place. According to research, e-commerce has been growing for the past 15 years in India but only in the last five years has it seen a major increase, a staggering 50% increase in e-commerce activity to be exact. A few factors that have contributed to the growth of e-commerce in India are:
- Sharp increase in internet users: India has surpassed even the United States in the number of users that are using the internet. According to a new report, India has seen a consistent yearly increase of 43% in internet usage as compared with other nations around the world. Only China now has more users on the internet than India.
Source: Indian Express
- Online payments increasingly acceptable: payments using mobile wallets surpassed mobile banking, with this method being increasingly used to pay for online taxi services, shopping online or simply recharging a phone. In fact, between April and November 2015, payments using mobile wallets rose to 400 million transactions, a figure that is triple that of the previous year. Digital payment company Paytm has seen its business flourish and its founder Vijay Shekhar Sharma attributed the rise of smartphones to the use of digital payments by the mainstream Indian population. Mobile-based transactions are expected to soon overtake payments made by cheque. Paytm is one of India’s biggest mobile-based financial transaction platforms and in 2015, it has 80 million users on the platform and by 2020, it aims to have acquired at least 500 million users. Since 2014, online payments platform PayPal saw a rise of 68% in the number of online payments taking place.
Source: Times Group e-paper
- A rise of smartphones: Smartphones and other devices with ease of access to the internet helped immensely with the rise of e-commerce in India, making the digital revolution that is seen today, inevitable. The cashless transactions that are a result of mobile wallets have come at the same time as the rise of smartphones. According to research by Morgan Stanley, by 2017 India will overtake the US to become the second-largest smartphone market in the world. Despite the potential growth of the country, currently the 225 million smartphone users represent only 18 percent of the total Indian population. India clearly has immense potential.
So why has e-commerce been so popular with the Indian population? Several factors have led to the increased adoption of digital practices in India including:
- Urbanization and changing lifestyle: In recent years urbanization has significantly increased in India and this is a necessary step for economic growth. According to McKinsey Global Institute, the rapid urbanization taking place in India is 3000 times that of the UK industrial revolution. A few factors unique to India come together to aid urbanization. Firstly, it is estimated that by 2030 over 1 billion Indians will be online. Secondly, India is the country with the world’s largest millennial population aged 20 to 35 and lastly, it is the world’s fastest growing economy. These three points, in part at least, will ensure that rapid urbanization is a definite part of India’s future.
Shopping online increasingly more convenient: Shopping online is more convenient for many online shoppers and is often cited as the main reason for going on the internet to shop. Currently, brick and mortar shopping malls form only one-tenth of total retail sales. The Indian consumer is spoilt for choice in the online space and a recent survey found that 54% of Indians won’t shop online if there are no discounts. With approximately 60 million customers online today, the Indian e-commerce market is estimated to be worth USD 28 billion by 2020.
E-commerce in Southeast-Asia also on the rise
Research has shown that Southeast Asia is going to become the world’s fastest-growing region for e-commerce, with revenues expected to exceed $25 billion by the year 2020. According to research, Southeast Asia made earnings in excess of $11 billion in 2015. According to Cris Duy Tran, an analyst on the revealing report, “Despite being relatively young, the e-commerce market in Southeast Asia is developing quickly, thanks to the astounding rate of digital adoption in the region.
Malaysia and Thailand were the largest markets for e-commerce in Asia in 2015, each generating revenues of $2.3 billion and $2.1 billion respectively. However, by 2020 it is expected that Vietnam and Indonesia, two of the biggest emerging markets in the region will eclipse everyone else. Several factors have led to this increased growth in the Asian e-commerce market.
E-commerce in Southeast Asia is fast growing with 100 million consumers making a digital purchase and 150 million consumers researching products online, which could include engaging with a seller online.
How to do well in the Asian E-commerce market
- Partner Up: The e-commerce market in Asia is a varied one and it’s imperative to find the correct partner for your brand. It’s advisable to choose partners to serve different purposes such as category, geography, and segment. In a constantly evolving market such as the Asian e-commerce market, it’s best to diversify your bets to maximize the chances of success.
- Don’t wait: With a rapidly evolving market such as the Asian e-commerce sector, it won’t be a good idea to wait around and see what works and what doesn’t work. Decide on a vision for your company and pick the right partners to make your company flourish.
- It Takes Time: Taking a company online requires time and talent. In a rapidly changing market, every company will likely need to make changes to their operating model to suit any new digital environment changes. Changes rarely happen in a day and so, entering this market requires resilience and plenty of time.
India’s economy is seeing growth through the digital revolution with several factors coming together including urbanization, increased use of mobile wallets and a rapidly growing, young population that is connected to the internet. The rest of Asia’s e-commerce market has also seen plenty of growth in recent years and the next coming years will prove to the world where this market stands in terms of growth. Only time will tell whether the e-commerce boom that is currently being predicted for the region is correct or not.