Scoot, click, shop

Vaibhav Sharma

With the cost of owning a smartphone dwindling with each day, a Nasscom and PwC India report suggests that India will have 846 million users online by 2022, 150 million of which are expected to shop online. India presently has an internet penetration of 34 per cent, which translates to 450 million users. With an expected growth rate of 25 per cent in the next five years, India’s e-commerce market is poised to cross $100 billion in revenue.

Such figures will be a result of a number of factors. First, a large of number of users from tier II and tier III cities armed with cheap data and disposable income are beginning to embrace the online ecosystem. Second, a much wider selection of products is now available at the tap of a screen. Third, same and next-day deliveries mean that the ‘immediate availability’ advantage, previously benefitting local retailers, is no longer a major consideration. Fourth is the most obvious — cashbacks and discounts, which while on the decline, still encourage users to at least ‘check online’. The fifth reason is perhaps the most interesting: The fear of buying big-ticket items online has vanished and demonitisation has pushed even the less inclined to embrace digital currency.

While apparel continues to dominate, the sale of consumer electronics like air conditioners, laptops, TVs, and mobile phones have really taken off. A number of companies like Xiaomi and One Plus started with the online only purchase model, and because they were selling budget devices, a new segment of the society was almost forced to order online if they wanted their favourite smartphone. On the extreme end of the spectrum, in recent years the best place to secure an iPhone on launch day has also been online, and users who couldn’t be bothered about standing in line are happy to dish out upwards of Rs1 lakh for the convenience.

It is a myth that Indians only reward the player with the biggest discount with their business. Ease of use, customer service, speed of delivery and reliability are aspects that are just as important. Customer confidence has thus led users to purchase even expensive electronics digitally, and the result is that the average price of a television sold online has jumped 50 per cent compared to last year alone, and while the jump hasn’t been as drastic for other appliances and smartphones, the average price for them has also shot up by 20 per cent. Schemes such as no cost EMIs on credit as well as debit cards, cashbacks, and buyback programmes have also served as a short in the arm for online retail. Cash on delivery remains the king, but incentives such as these encourage users to transact digitally.

Compared to China, where online retail already makes up over 16 per cent of all retail sales, India is really lagging behind. However, intriguingly it isn’t because not enough of our population is online, but because only about 16-18 per cent of those with access to Internet shopped online in India, in China the figure is a solid 61 per cent. We sure have a long way to go.