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December 1, 2013

With E-commerce growing at 50%, why is India not a Happening Market : 3 Numbers that tell the story

Chinese Internet Base and Growth

Indian Internet Base and Growth


List e-Commerce Business Models transactions in India 

    The eCommerce market in India has enjoyed phenomenal growth of almost 50% in the last five years .The number of users making online transactions has been on a rapid growth trajectory, and it is expected to grow from 11 million in 2011 to 38  million in 2015

However Inspite of all the hype  "E-commerce is still at a nascent phase in India. The state of the Indian eCommerce Market can be gauged by Numbers  The Indian Ecommerce market is projected to touch $13 billion in revenues this year, miniscule compared to the United States’ $224 billion market and far below the Chinese ,where the ecommerce market  is expected to reach$265 billion in 2013,with 240million Chinese shopping online

 So whats the reason for  ecommerce not gaining traction very fast. While overall india is certainly going to be one of the biggest market for Online Shopping , why does the market fails to light up apart from a few Home Grown sites like a, Myntra and The Biggest impediment in india is the unreliability of  third party logistics  and complexity of cross border  barriers.

(1)While you can ship to any place in South Korea under 24 hours. In India that is simply not possible due to inaccessibility and transport issues,and logistical nightmares
·       (2While in a large market like US you can build a hub and spoke logistics infrastructure that allows you to stock products across the country.In India taxes differ from state to state which only serve to increase the price defeating the low cost low model eCommerce model

·       (3)Contrast that to India where poor surface transport , accessibility and a myriad of taxes on inter state good transfer makes the logistics” untenable” if not impossible