By Tanuj Gupta

Edited by Nandita Singh,Senior editor,The Indian Economist

What started with a mere collection of books has quickly transformed to become one of the biggest retail chains in India. With more and more people willing to make purchases on the internet, e-commerce has seen a massive upsurge in all respects. From a time when any online purchase was considered fraught with risk and Indians in general wouldn’t touch any online retailer with a barge-pole, today online retail occupies almost 10% of the Indian retail market, and this is expected to grow to a massive 15% over the next five years.

So what are the reasons for this change?

Firstly, Flipkart, unlike various other online retailers, introduced the concept of Cash on Delivery. This changed the rules of the game. While in the beginning it was the cause of a significant cash burn, it later proved to be the reason because of which Flipkart, and later other online retailers, were able to establish a hold in the market. Not only this, Flipkart also maintained one of the largest inventories in order to ensure that products they claimed to sell were always available, thereby significantly reducing cost of procurement and time taken to deliver. They also set up their very own logistics management and supply, ensuring that reliance on any third party delivery was kept to a minimum. Not only did this help keep costs in check, but it also ensured that there were significantly lower hassles in terms of distribution of goods.

These three pillars were the basis on which e-commerce was established in India, annd all of these point in the same direction – towards maximum customer satisfaction. By ensuring that customers felt safe and secure in purchasing products online and giving them the option of doorstep refusal, Flipkart took a huge gamble, which obviously paid off; simultaneously changing the way online retail worked in India. Everyone wanted to be a part of it, and more and more investment began to pour in.

With the entry of the biggest retailer of them all, Amazon, into the mainstream of Indian retail, this segment has become even bigger. With Amazon’s entry there was now an online retailer offering sufficient competition to Flipkart, and this was best for customers. With both e-retailers being forced to innovate, this has sparked what can be referred to as the “smartphone war,” with Flipkart launching exclusive lines of various phones that have done amazingly well in the market.

With growth in e-commerce and Internet penetration in India rising at the pace that it is, the day is not far away when e-commerce becomes a major player in the retailing segment. It has already overtaken a large share of the books, as well as electronics, market, and is looking to spread towards clothing and many other sectors as well. While it is still early to label e-commerce as the primary mode of purchasing in India, it is fair to say that this has been a sector which has shown immense potential, and given that the regulatory system allows it, can grow much further.

Tanuj is a final year student of B.Com (Hons.) at St. Xavier’s College, Kolkata. Simultaneously pursuing CA and doing his Articleship, the remaining time that he gets he spends debating, reading, writing and procrastinating. Not usually in that order. With a keen interest and opinion on practically everything under the sun, he is always more than enthusiastic to share it with others and can be contacted on tanujgupta10@gmail.com for any sort of lively discussion.
 

Posted by The Indian Economist | For the Curious Mind