Online Business Surge in India and its Future Prospects

If you study the recent trend in the online business in India, you can easily find out three major market players. Namely: Flipkart, Snapdeal and Amazon. For traditional India where online purchasing was a taboo and thus was limited to few online tickets booking, these companies together have introduced a new culture of online business culture in India. A business that is forecasted to grow from sales of $ 2.3 billion (As of 2014) to $32 billion (as of 2020).

For Flipkart which is largest internet company by its market value of $7 billion, it went through rough ways to arrive at this position to bust the myth that consumers like to see and feel the product before buying. Reluctance of customers to give details of their credit cards, fear about the delivery of the product, suspicion to get exact product etc. were of paramount amount which pioneers like Flipkart had to go through. 

These companies are at the verge of cut-throat competition as they have been going with massive marketing strategy to boost the sales. Recent humongous sales made by e-tailers like Flipkart of $100 million in 10 hours as "Big Billion Sales day" and Snapdeal retaliating the same with sales of a crore per minutes proves this. As such there is a humongous sale that these companies have been able to make. And thus large amount of profit. While the competition is tough over a small profit margin, these companies are also facing challenges. The recent challenge is not because of the competitors in online commerce, but because of the competition/conflict between these e-tailers and brick and mortar models. It should be understood that it is until recently that brick and mortar business have been dominant in doing business in country like India. But this culture is changing rapidly. 

Challenges to Indian e-tailers:

1) Tough competition from competitors who are coming up with innovative strategy to increase sales.

2) Problems from top brands having brick and mortar outlets like: LG, Sony, Samsung etc. who are accusing the e-tailers of making predatory sales (selling below cost), thus damaging their sales and brand names.

3) The customers in Tier-I cities like Mumbai, Delhi, Bangalore etc. who prefer see-feel-buy approach in contrast to online modes. Luring them for online business might be relatively difficult.

4) New entrants in the industry which might reduce the price of product offerings sharply in contrast to the old market leaders. Similarly, it is also more likely that manufacturers and brands might offer product offerings via their own online sites. 

5) Another possible challenge would be large brick and mortar group like: Reliance Industries, Future Group, TATAS group planning to go online to expand. etc

Brighter side:

It can be seen evidently that Indian e-tailers have been inspired from Chinese mega online internet retailer: Alibaba's success, which raised record high of $21.8 billion IPO. The statement of Flipkart CEO and Founder Sachin Bansal to make Flipkart a $100 billion club member in upcoming 5,10 or 15 years provides a hint that they are planning for a rapid growth of company business in near future. 

Now lets us put light on the basic facts that hints us about the brighter aspects of growth of online business in India.

1) Online retailers selling product-offerings in a cheaper price as they save on rent and other infrastructures are sure to attract large untapped customer segment in future.

2) Online markets are growing rapidly in Tier 2 and Tier 3 cities where physical outlet are absent or are few. They will penetrate the market deep enough before physical outlet set-up there and start to attract the customers.

3) Indian is a country with population of 1.2 billion out of which the population of age group of 18-40 is 40% (as of census 2011). And this is the chunk of population on which online retailer have been finding a dip in sales. This trend is supposed to increase even more. 

4) The service that these companies offer is almost flawless. Delivery before the delivery date, free delivery, 30 days replacement period, etc. will lure more customers to try these sites.

5) The online market has moved towards growth phase of business cycle in which the startup has dried up in recent years as investors are focusing more in larger companies. Thus the prospects of larger companies to grow are even more.

6) Proliferation in the use of smartphones in Indian market which have enabled large base of customers to go online regularly and thus have access to these sites will increase the sales even more in near future.