E-Commerce seems answer to India's retail woes

A lack of infrastructure and an insufficient network of organised brick-and-mortar stores especially in smaller towns, let alone rural areas, are reasons to worry for many Indian retailers. However, e-commerce seems the way to go as internet penetration and online purchases have lots of room to grow.

Even though internet penetration in India is currently only at 34.8 percent (as of July 1 2016) according to Internet Live Stats, this amounts to an impressive 462 million internet users, the second largest in the world after China, where the internet penetration is 52.2 percent with 721 million internet users. In comparison, internet penetration in the US, the world's third largest, is at 88.5 percent and almost 287 million users while it is at 91.1 percent, 88 percent and 92.6 percent in Japan, Germany and the UK, respectively, with 115 million, 71 million and 60 million internet users in those three countries.

In other words, while there are few non-internet users in countries like the United States, Japan, Germany and UK (37 million, 11 million, 9.6 million and 4.8 million, respectively), the potential for growth is almost exhausted, whereas a country like India boasts a huge potential with currently over 864 million non-internet users.

E-commerce could provide millions of jobs to Indian youngsters

China seems the example to look at for India, as the latter is today where China was about seven years ago in terms of internet penetration and online purchases as the recent article "China's e-commerce boom a lesson for creating jobs in India" in Business of Fashion pointed out.

E-commerce could also provide at least some of the much needed jobs for the country's young and striving people: "India needs to add about 80 million jobs by 2025 to ensure enough jobs for its bulging youth population, so its demographic dividend does not become a liability", the article states.

Fortunately, Indian retailers are quick to catch on and to realise their e-tailing potential: "More and more retailers are realising that e-marketing is the best channel to keep customers engaged by creating personalised shopping experiences across various channels," finds new research, the 2016 India Retail e-Marketing Study: A Path to Revolution.

It confirmed that Indian retailers are developing more targeted and personalised digital experiences across channels with mobile devices emerging as the link for omni-channel retail initiatives. “Retail is one of the few sectors in India which has been showing promising signs of digital innovation. One of the key driving factors being the new and evolving digitally savvy consumers,” said Kumar Rajagopalan, CEO of the Retailers Association of India (RAI), which sponsored the study.

Definitely helping is the fact that India is slowly moving away from a cash-based economy with banking initatives for the poor and new technologies like mobile wallets being made available and being accepted.

Predictions are good too: According to industry estimates, India's online retailing volume is expected to reach 1.7 billion US dollars by next year, assuming a compound annual growth rate of 10 percent. And there is always China to look at in terms of potential challenges and pitfalls that should be avoided.

Photo: Tim Reckmann / pixelio.de