Global Trade: INDIA TO BE THE FASTEST GROWING B2C ECOMMERCE MARKET IN THE BRIC COUNTRIES
Underdeveloped Logistics and Low Credit Card Penetration Are the Main Challenges
India is projected to be the fastest growing business-to-consumer (B2C) ecommerce market in the BRIC countries—Brazil, Russia, India, and China–in the next five years. This conclusion is drawn in a new publication by Germany-based secondary market research expert yStats.com.
The main challenges faced by online retail in India, the report also concludes, are underdeveloped logistics and low credit card penetration.
B2C ecommerce in India is driven by its vast population, increasing Internet penetration, and the scarcity of organized retail especially in small towns and rural areas. India is predicted to top the United States next year to become the second largest country in the number of internet users, behind China. While China has been the leader among the BRIC markets in online retail growth in the five years to 2014, during the next five-year period India is predicted to take over this position.
Online retail in India has much room for growth. The B2C ecommerce share of total retail sales in India was estimated at less than one percent in 2014, while the share of internet users making purchases online was below 25 percent. Another sign of immaturity is the high share of online travel purchases, close to two-thirds, of total ecommerce sales. Internet penetration within the 1.3 billion population in India was relatively low in 2014, although showing an improvement from a one-digit figure in 2010. The spread of the mobile internet is expected to especially benefit the state of connectivity in this country, while also driving up mobile commerce sales.
Apart from low internet penetration, some major challenges faced by B2C ecommerce in India, according to the yStats report, include underdeveloped logistics infrastructure and low credit card penetration. Profitability suffers from the necessity of accepting cash on delivery and offering free shipping. The top three ecommerce companies in the country, Flipkart, Snapdeal, and Amazon India, have recruited investments to develop their own logistics capabilities.