E-commerce blooms with rising Internet penetration

Her daughter,Prachi,13,came to her rescue. She initiated her into the world of Internet-based solutions like tripadvisor.com,and yatra.com which are in the business of facilitating travellers journey.

Deepa and Prachi are a part of Indias fast-growing Internet users population,relying on it not only for making travel plans,or checking emails but also for buying groceries and high-end products.

Having witnessed a 150 per cent growth in the e-commerce in the last three years,according to a study done by IAMAI and KPMG,the sector is expected to witness a bull run going forward.

Online consumer companies,both in the services and merchandise category,will gain significant amount of traction as Internet penetration increases along with a growing smartphone population and maturing online payment systems.

According to a study conducted by Technopak,a consulting firm for retail,if the current growth trend continues,e-tailing will expand its share of the total retail pie from the current 0.6 billion to 76 billion by 2021.

Arvind Singhal,managing director,Technopak,says that he is extremely bullish about the sector in both the categories. What is interesting is the addition of newer categories under which people are buying online, Singhal said adding that the trend is not confined to metro cities.

Customers from far-flung areas are keenly boarding the wagon of online commerce given the ease of access,choices offered,and price difference. With as many as 205 million Internet users as on October,which is likely to reach 213 million by the end of the month,India has become a very lucrative market for entrepreneurs planning to go online. Not only urban India but rural India is also rapidly coming into the fold of Internet,according to IAMAI. Of the 205 million users,68 million were from rural India.

Ashvin Vellody,partner,KPMG,says that the industry would do well because of the fundamental benefit of convenience it provides to a whole new set of customers.

In Tier-I cities where commuting is a big problem,the online solution saves a lot of time. In Tier-II and Tier-III cities it is the question of access to particular products8230; However,none of these companies are very profitable. If business is executed well,it will turn the corner and do well, Vellody said.

Due to immense and unexplored opportunities,people are risking venturing into unheard of territories. Take the example of kuppathotti.com.

Kuppathotti or garbage bin in Tamil,was started by Joseph Jegan,along with his wife Sujatha last year. It is a website where residents of Chennai can register and report non-degradable garbage,especially polythene materials,and get them picked up from home without any effort. Jegan,an MCA graduate,said that though it was initially very difficult to attract people,the company now boasts of 15,000 customers.

This was a new concept with no players. The local raddiwalas though gave people a better deal for their scrap,they were cheating while weighing. We told them we cant match that rate but we dont cheat. They slowly started believing us, he said.

Kuppathotti.com hasnt made profits,but he is in no hurry. Its a new business model,we are waiting.

Going forward,FDI in e-commerce is being touted as a game changer. Som Mittal,president,Nasscom,says that this will further boost the sector. Technopak estimates e-tailing to employ 1.45 million by 2021. It can also provide a platform to local artisans and small and medium enterprises SMEs.

While the department of industrial policy and promotion DIPP works towards relaxing norms for FDI in e-commerce,Deepa is holidaying in Munnar,with her family.