Over the past few years, the online retail market has grown significantly across the globe. However, Asian countries, particularly India and China, are emerging as the fastest-growing regions for e-tail.
Factors driving growth of online shopping in India
In India, e-tail represents only a small fraction of the total retail market but holds tremendous business potential. This growth is mainly driven by increasing internet penetration, growing usage of smartphones, cost advantages, and funding by private equity investors.
Other key factors driving the growth of online shopping in India include the popularity of cash-on-delivery (COD), growing acceptance of online payments, favorable demographics, and lack of an organized retail market. E-commerce players are trying various methods to attract customers, including discounts and COD, which have been developed to enhance consumer trust in the e-commerce business model.
Also Read: Smartphone with 6 GB RAM
E-tailing firms and funding in India
In the Indian e-tail market, major players like Flipkart, Amazon, and Snapdeal have adopted the asset-light model and moved away from the inventory-based model to a marketplace model. Private equity players and venture capital firms have shown their faith in the growth of online shopping in India, with Flipkart receiving eight rounds of funding over the last seven years.
Challenges and impact of online shopping in India
While the exponential growth of e-tailers in India is affording relatively easier access to capital, the industry also faces challenges, particularly in terms of logistics services, as timely delivery is key to the success of e-tail. The impact of online retail is most evident in segments where the product specifications are standard and differentiation low, such as electronics, books, and music.
While e-tail is hailed for the level of convenience it brings, it also has a darker side, with increased hacking and illegal activities on the rise on the internet. Customers also face issues such as the delivery of damaged goods, non-delivery of goods, or delivery of a different product, even after payment has been made. This has resulted in the rise of online consumer complaints resolution sites such as www.akosha.com, which helps Indian customers in resolving their problems with companies.
Bottlenecks in growth of online shopping in India
The rise in working women and women entrepreneurs is a big boost for online retail in India. However, administration and infrastructure, the huge maintenance costs of storage houses, and errors in online payments are a few of the bottlenecks in the growth of the industry.
