For anyone who searches for eCommerce news on a daily basis, they would be hard-pressed to not have noticed a new theme that’s been emerging in the search results: India. Although articles about the U.S. industry typically dominate those results, news from India has been showing up more and more.
The success of Indian eCommerce has risen to such a degree that the country is now reconsidering its ban on foreign investments in its eCommerce sector. Amazon and eBay, which are currently only allowed to function as third-party marketplaces, are anxious for a lift on the ban, which will allow them to sell their own merchandise. But beyond the opportunities soon to be available to the eBays and the Amazons of the world, U.S. retailers should also be hopeful for what the future holds in India, the world’s second most populous country.
To fully understand the eCommerce opportunities happening in India, here are a few statistics to put it into perspective:
1. India’s eCommerce market grew by 88 percent in 2013 to USD $16 billion. [Source: IBNLive.in.com]
2. India’s Internet base, as of August 2013, was at 150 million users, representing about 10 percent of the country’s total population. [Source: IBNLive.in.com]
3. Popular products sold in India include those in tech and fashion categories, such as mobile phones, iPads, accessories, MP3 players, digital cameras and jewelry. [Source: IBNLive.in.com]
4. Indians spend 8 hours per day online according to a study conducted in 2012. [Source: TimesOfIndia.com]
5. Myntra.com just surpassed Flipkart.com as India’s biggest online retailer with 13.17 million unique visitors in the month of June 2013. [Source: ComScore via Trak.in]
6. The mobile audience in India is growing with 78 percent of shoppers preferring to shop on mobiles for deals on purchases and with 60 percent shopping on mobiles to save fuel. [Source: eBay Survey via PitchOnNet.com]
7. About 75 percent of online shoppers in India are 35 years old or younger, although those between the ages of 35 and 44 show the highest usage. [Source: ComScore via SlideShare.net]
8. Medium-term growth for India’s economy is positive due to its young population, low dependency ratio, healthy savings and investment rates, and increasing integration into the global economy. [Source: CIA World Factbook]
Although the opportunities are vast, doing business in India still carries some challenges, such as a reluctance from some of the country’s population to shop online.
“Around 30% of people who buy from retail stores actually research about the product online,” said a reporter for DazeInfo.com. “However, 25% of people are still skeptical about online security and don’t share their financial information online. 20% people, who blamed high shipping costs as the main reason, follow this, while 15% are unsure about the handling of the product during transit and receiving the product in a good condition.”
The difficult shipping situation is primarily due to India’s underdeveloped infrastructure, a common issue shared by many emerging countries. India, however, has initiated several infrastructure improvement projects, which will do much more for the country than just easing the logistics of getting products into online shoppers’ hands.
“The rural roads programme has built more than 300,000km of new roads in rural areas,” explained FTAdviser.com. “This has resulted in a roughly 50-100 per cent increase in household income for those affected. More recently, a plan was announced to build 24 cities along the Delhi-Mumbai Industrial Corridor by 2040, with phase one scheduled for completion by 2019.”
Additionally, U.S. eCommerce companies will be happy to hear that there are no sales taxes assessed on goods shipped into India. Furthermore, some goods, such as laptops and other electronic products, aren’t subject to duty. It’s important, however, to understand that there are indirect taxes like a 1 percent landing charge for all products entering the country. To get an overview of what fees could be tacked onto imports, DutyCalculator.com is a helpful resource.
Finally, U.S. businesses wanting to take advantage of the growing eCommerce opportunities in India must take the language barrier into consideration. To overcome this type of hurdle, refer to NetSphere Strategies’ blog titled “Six ways to speak the international language of eCommerce.”
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