Indian E-commerce market

Indian E-commerce market at 47k cr by 2011 – Online Travel Bookings dominate!

The internet reach has grown beyond being an enabling communication medium. E-commerce has been a new buzz word over the last decade and is likely to grow exponentially year on year in an under-penetrated country like India.

In fact, e-commerce is expected to fast catch-up with the growth in overall trade market. This can be gauged from the fact that e-commerce penetration is still quite lower even amongst active internet users who look for information regarding products.

So, gradually, the conversion ratio of these users – which currently stands at around 40% – from being mere on-lookers to having brought any product over internet, could only rise from here.

Net Commerce Market Size from 2007 to 2011

Surprisingly, the IAMAI report on online commerce indicates that almost 80% market share of current online commerce industry is dominated by travel business and remaining 20% share is constituted of non-travel businesses such as eTailing (electronic retailing), digital download, paid content subscription, financial services, online classifieds, etc.

Take this! The above ratio of e-commerce market share has been skewed not just recently. It’s almost the same since last 5 years. The survey also indicates that there won’t be any drastic changes in the trend until the end of the year. However, online users in India have exhibited willingness to make purchases over the internet, which is evident from the increasing awareness and growth of net commerce industry.

The online travel industry has grown smartly from Rs.6250 crore in 2007 to Rs.25258 crore until Dec 2010 on the back of conveniences of paying online. Currently, domestic air travel segment constitutes 63% of online travel industry followed by 28% share from online Railway tickets.

E-tailing – which comprises buying consumer items including electronic products, Home appliances, personal products such as apparels and jewellery and other accessories – is currently worth Rs.2050 crore, and is expected to grow by 32% to Rs.2700 crore by next year.

Another segment that could witness humungous growth opportunity is online financial services including Net Banking, utility bills payment, insurance and other services. The financial service segment is estimated to be worth Rs.2000 crore currently, but is expected to log 34% growth by Dec 2011.

Lastly, India has witnessed breathtaking growth in the mobile segment thanks to low-cost smartphones. The digital download segment has grown at the fastest pace of over 50% year on year growth since Dec 2008. Majority of the mobile transactions through Ringtone / Wallpapers / Pictures downloads is said to be worth Rs.140 crore.

To the same extent as mobile downloads, even mobile recharge for pre-paid connections or paying post-paid bills forms a significant 34% market share of current digital downloads market size of Rs.680 crore.