The e-commerce market in India is expected to touch Rs 9,210 crore (Rs 92.10 billion) by the end of FY 2007-08.
This segment had an estimated market size of Rs 7,080 crore (Rs 70.80 billion) at the end of 2006-07 and is expected to grow at an average rate of 30 per cent in 2007-08, according to a survey conducted by the Internet and Mobile Association of India (IAMAI) and Indian Market Research Bureau (IMRB).
Among the various businesses, online travel segment leads the pack. It is expected to grow at the rate of 30 per cent and reach Rs 7,000 crore (Rs 70 billion) by the end of 2007-08.
This would be followed by Online Classifieds, which is projected to reach Rs 820 crore (Rs 8.2 billion). eTailing (online retail) stood at Rs 850 crore (Rs 8.5 billion) in the year 2006-07 and is expected to be a Rs 1,105 crore (Rs 11.05 billion) industry at the end of 2007-08. Digital downloads and paid content accounted for the rest.
According to the study, the three major triggers of e-Commerce in India were saving of time, convenience associated with shopping at home and the availability of a range of products. However, the report also highlighted hurdles to growth such as product quality, the ability to bargain and security issues with regard to e-transactions.
Dr Subho Ray, President, IAMAI, said, "Consumer e-commerce is a major driver of the economy and we are happy that it has achieved a very decent size in India. It is perhaps the only sector which has operated under, sometimes, hostile and at all other times indifferent policy environment."
The report further points out that in India, shopping is an experience itself. The recent growth in malls and hypermarkets only corroborates this fact. Thus, e-Commerce has to bank on the convenience and discount platform as there is no way that it can compete with the offline platforms on the experience provided.
By the end of 2007-08, the contribution from the non-metros is expected to increase, said the report. This change would be bought about by higher internet penetration in small towns and limited reach of physical distribution channels of established sellers. These factors, coupled with higher disposable income, would compel the net users in these towns to buy online.
Moving ahead, e-Commerce will be accessed through mobile phones rather than PCs. As the mobile users become familiar with online buying, the purchase of high-involvement products is expected to rise.
