Icra sees b2b e-commerce boom, but says b2c can only crawl

Prachi Verma in New Delhi

E-Commerce transactions are likely to increase by almost 150 per cent from Rs 2,000 crore in 2001 to Rs Rs 5,000 crore in 2002, according to a report conducted by ICRA. Of the total e-commerce transactions in 2002, the business-to-business (b2b) transactions are forecasted to contribute about 90 per cent (Rs 4,512 crore), with the business-to-consumer (b2c) transactions contributing the rest 10 per cent (Rs 433 crore).

B2b transactions contributed almost 92 per cent to the total e-commerce in 2000.

Higher growth is expected in FY2002 following the availability of Internet through broadband and improvements in connectivity infrastructure. There may be a marginal increase in the revenues from e-business projected earlier by Icra at Rs 25,200 crore in FY 2005, according to the report.

On the whole, b2c has experienced low levels of activity and growth.
Most companies offering online sales have identified non-resident Indians (NRIs) as their target segment. Although the volume in such cases is small, such transactions offer higher margins due to lower customer acquisition costs.

According to a survey conducted by Nasscom, the volume of online transactions in the e-tailing segment in India stood at Rs 50-60 crore in financial year 2001.

Logistics issues, sales tax in case of inter-state delivery, reluctance of customers to use the credit card on the Internet and psychological barriers, are all factors contributing to a low level of Indian consumer interest in online transactions, although there are some of the products that have generated consumer interest like books, gifts and travel services, Icra said.

The total volume of e-commerce transactions in India in FY 2000 was Rs 450 crore, of which Rs 400 crore was accounted by business-to-business transactions, with b2c contributing the rest.

According to various estimates, the volume of transactions in FY 2001 stood in the range of Rs 2300-2500 crore driven mainly by the b2b segment, in line with Icra’s projections. Various factors that have impeded the growth of e-commerce in the country are poor telecommunications infrastructure, low level of PC and Internet penetration, etc.