The digital commerce market in India was valued at INR 47,349 Crores in 2012 and is expected to grow by 33 percent. It is undoubtedly the fastest growing online market in the last 12 months when compared with the other BRIC Countries. According to the latest Digital Commerce Report, by the Internet and Mobile Association of India (IAMAI) and IMRB International.
The report finds that while Online Travel, which includes booking rail, air, bus tickets, hotel accommodations and tour packages comprised a majority 71 percent of the whole Digital-Commerce market in 2012,E-Tailing, which includes purchases of various consumer products/services such as electronics, apparels, footwear, jewellery, home & kitchen appliances, consumer durables, furnishings, constituted only 16 percent of the overall share. This is the segment which all ecommerce companies including Amazon India are trying to target.
Financial Services, which include services such as paying insurance premiums and renewals, paying utility and mobile bills, trading shares and securities amounted to 6 percent of the overall share. B2B and B2C Classifieds (jobs, matrimony, car, real estate etc.) contributed 5 percent, whereas other online services such as online entertainment ticketing, online food delivery, buying discounts/deals/vouchers etc. constituted 2 percent of the overall digital commerce market in 2012.
With more and more people planning their payments and Financial services online, market was valued at INR 2,886 Crores in 2012 and is expected to grow by 25 percent and reach to INR 3,607 Crores by the end of year 2013. According to the report, Classifieds market has seen a significant growth and has reached INR 2,354 Crores in 2012. Classifieds as a category has grown with a CAGR of 45 percent growth from 2009 and is expected to grow by another 30 percent to INR 3,061 Crores by 2013.
Online travel industry in India has on an average grown by 32 percent from INR 14,953 Crores in 2009 to INR 34,544 Crores in 2012 and is estimated to grow by another 30 percent and be valued at INR 44,907 Crores by the end of December 2013. The travel industry also sees interesting fact about the average cart value of goods purchased ranging from 17$ in IRCTC to about 204$ and 166$ in Make my trip and Yatra.com respectively.
The E-Tailing category has grown from INR 1,550 Crores in the year 2009 to INR 6,454 Crores in year 2012. With the entry of the world's largest online retailer, Amazon through the launch of its online marketplace in India, Amazon.in and hundreds of start ups emerging, this category is estimated to grow by 55 percent and cross INR 10,000 crores by the end of 2013 December.
India represents Amazon's tenth marketplace where buyers can browse through a catalogue of 7 million books and 12,000 movies titles initially. The company is planning to expand its product footprint to cameras, mobiles and other electronics devices.
With the Digital commerce market having so much to offer to the country, one could only see internet and Ecommerce reaching not just the metropolitans and the major cities in India but also hitting the Indian Villages soon. Of course, it comes with its humongous set of challenges forcing even Flipkart to follow a marketplace (no-inventory) model. For now, its time to watch the big players battle it out in the ecommerce market
The recent Havell's advertisement "Havaa Badlegi" aptly sums up many of the changes we are seeing in Indian Businesses today. Entire industries are beginning to get disrupted by technology and innovation. While businesses have been doing things the same way for decades, the drastic changes in the landscape, both globally and in India, have prompted many senior executives to relook at their digital strategy. While some industries have already seen massive changes in the last 5 years, for some industries, the next 5 years are going to be even more impactful.
Sectors where we have seen significant impact already
Offline Retailers: Offline Book retailers have been one of the first casualties of the ecommerce space. With a standardised product and ease of shipping, ecommece players have undercut book prices to take away a large chunk of the book market. Similarly, mobiles and small gadget sales are growing significantly online. Apart from sales, pre-purchase research online now plays a decisive role, where one recent survey showed over 80% of urban consumers now look up for research online prior to buying a mobile. Window shopping at stores and then going online to buy has prompted many large players in the US to shut shop. We haven't seen a similar impact in India as yet, but this shift from offline to online is irreversible.
Travel Booking: Travel booking for nearly all segments - flights, trains, buses, taxis and now even Autos in some cities, have seen significant market share being taken by online players. While holiday booking has some strong online players (e.g. SOTC, Thomas Cook and regional players like Raj Travels), online travel companies are now going aggressively after the holiday market. Expect more people to book their holiday packages online in the near future. As per a report by the IAMAI, over 80% of online commerce is travel related, reaching Rs.15000 Crores in 2012 and growing at a staggering 40% annually.
Recruitment / Hiring: Technology has changed the way someone searches for a job. From mass market sites like Naukri to Linkedin and Referring friends for jobs on Facebook, technology disrupted the way the 1990's head hunter worked. The HR agencies adopted to add value on top of these platforms instead of taking them head on, ensuring profitable growth. Due to the smart repositioning by off-line players, Online portals account for only 3% of the $250M market, while still playing a critical role in the ecosystem.
Upcoming sectors where technology will drive change
Education: Elearning has been a buzz word for a while, but there have been no large education companies which have nailed learning in India. Schools have changes, with smart blackboards, digital media lessons and online report cards, but the fundamental way of teaching and learning has not really shifted. On the other hand, globally, there are companies really breaking out. Successful examples include Coursera which allows anyone to take a virtual class from the best universities in the world on a wide range of topics to Codecademy, where one can learn computer programming. These global companies are seeing traction, even from Indian consumers. Some Indian players like Sikkim Manipal University have started initiatives like the EMBA course. It won't be too long before innovations in elearning change the way we learn.
Healthcare: Hospitals and Doctors in India are being swamped by the number of patients. While the leading hospitals and chains have invested a lot in technology, seamless connect with the patients pre-treatment and post-care is missing. New initiatives like booking a doctor appointment online to storage of reports on the cloud are seeing traction amongst the more adaptable medical organisations. Read our Healthcare Digital Marketing Case Study.
In our upcoming blogs, we shall discuss more about the options you have in your industry to adapt and lead the digital revolution.