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  • Writer's pictureDavid Keynan

India's E-Commerce Economy Gaining Momentum, By David Keynan

Updated: Nov 13, 2018

India is going through the fastest revolutionary consumer market change in its history. Just a decade back 95% of the Indian retail market was dominated by small family-owned shops with unstable supply chain, but in the recent years, India has grown into a battleground for the future retail world, with all kinds of consumer goods available throughout the subcontinent.

      Companies like Amazon and Flipkart (recently acquired by the US retail giant Walmart for $17 billion) have captured the hearts of the Indian masses. Being in high demand, these online retailers in India still require enormous financial investment, but when you look at Amazon’s global impact, you can understand where the motivation came from. It is said that in a few years the purchasing power of the Indian market will take over the US market, yet while in the West the models for businessmen are Steve Jobs, Mark Zuckerberg and their like, Indian entrepreneurs look not necessarily at Uncle Sam but at his sworn opponent - Jack Ma, owner of Alibaba.

    Today there are more than 400 million Internet users in India, the second largest market after China, and 50 million being added annually. In terms of volume, the turnover is still relatively low, about $120 billion, but the growth rate is the highest in the world. The Indian E-Commerce market is dominated by several giants and dozens of smaller players:

      Flipkart, which was founded in 2007 to create the Indian Amazon, came across a list of skeptics who doubted the ability of a young company with no backup or technology to deal with the world's giants. But it managed to compete for head-on with Amazon until it was acquired at the beginning of the month for $17 billion by Walmart.

       Head to head with Flipkart, Amazon who invested billions of dollars in India, has both entered the Indian market and cultivated thousands of suppliers that have made India a major source for Amazon customers around the world.

      No less interesting is PayTm, a mobile payment system and digital wallet company. Due to the low penetration rate of bank accounts in the country, PayTm has created an option for millions of Indians to send and receive payments digitally. Today, the company is the second largest in the world in terms of the number of users (after the Chinese WeChat). And its customers range from rickshaw drivers and samosa stalls to airlines.

     Another company that completes the market giants is Ola the taxi-hailing company which is in direct competition with Uber over the Indian market. Today, the Indian market is divided between the two opponents, with Ola having twice the number of drivers, about a million, yet the income of Uber drivers is still higher. An intriguing element is that both the companies enjoy a mutual investor, Softbank of Japan, which routinely raises the rumors about the consolidation of the Indian operations of the two competitors, which will create a monopoly in one of the largest markets in the world.

     Another company, perhaps the most interesting one of all in India, is Bharat Matrimonial which permits matchmaking wide across India and the world, among India's numerous religions and marriage gatherings. About 95% of marriages in India are arranged by the parents, making Bharat Matrimonial the largest matchmaking site in the world.

      After the market giants there exists a long line of specialized companies, from ethnic clothing to canned food to a site that houses tens of thousands of domestic helpers. It is important to mention that according to the Indian law the ownership of the E-Commerce site in India must be fully Indian, which creates a real limit to penetration into the market.

      Ofir Brill, Asia division manager at TUNE, which provides customer acquisition tracking tools for E-Commerce companies and has been active for a decade in India, adds that in the last years there is a clear increase in the number of Israeli digital marketing companies operating in India, from value chain optimization solutions to digital marketing targeting capabilities, where profit margins are very low. Companies such as IronSource, Taboola, and others have set up sales offices here, while smaller companies are trying to hire dedicated salespeople for the Indian market.



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