E-commerce blooms with rising Internet penetration

Dec 28 2013, 09:28 IST
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Having witnessed a 150 per cent growth in the e-commerce in the last three years, the sector is expected to witness a bull run going forward. (Thinkstock) Having witnessed a 150 per cent growth in the e-commerce in the last three years, the sector is expected to witness a bull run going forward. (Thinkstock)
SummaryFrom travel plans to recycling garbage, cities are seeing new entrepreneurs starting innovative businesses.

Deepa Bhatnagar, a teacher at a public school, is an avid traveller. Having travelled across north and west India, she now wants to explore the south.

With no relatives or friends there, Bhatnagar, 46, who so far relied on them for convenience and advice, had been looking for a solution.

Her daughter, Prachi, 13, came to her rescue. She initiated her into the world of Internet-based solutions like tripadvisor.com, and yatra.com which are in the business of facilitating travellers’ journey.

Deepa and Prachi are a part of India’s fast-growing Internet users’ population, relying on it not only for making travel plans, or checking emails but also for buying groceries and high-end products.

Having witnessed a 150 per cent growth in the e-commerce in the last three years, according to a study done by IAMAI and KPMG, the sector is expected to witness a bull run going forward.

Online consumer companies, both in the services and merchandise category, will gain significant amount of traction as Internet penetration increases along with a growing smartphone population and maturing online payment systems.

According to a study conducted by Technopak, a consulting firm for retail, if the current growth trend continues, e-tailing will expand its share of the total retail pie from the current $0.6 billion to $76 billion by 2021.

Arvind Singhal, managing director, Technopak, says that he is extremely bullish about the sector in both the categories. “What is interesting is the addition of newer categories under which people are buying online,” Singhal said adding that the trend is not confined to metro cities.

Customers from far-flung areas are keenly boarding the wagon of online commerce given the ease of access, choices offered, and price difference. With as many as 205 million Internet users as on October, which is likely to reach 213 million by the end of the month, India has become a very lucrative market for entrepreneurs planning to go online. Not only urban India but rural India is also rapidly coming into the fold of Internet, according to IAMAI. Of the 205 million users, 68 million were from rural India.

Ashvin Vellody, partner, KPMG, says that the industry would do well because of the fundamental benefit of convenience it provides to a whole new set of customers.

“In Tier-I cities where commuting is a big problem, the online solution saves a lot of time. In Tier-II and Tier-III cities it is the question

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