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Is E-commerce Profitable in India?

by | Jan 10, 2023

E-commerce is a growing industry and has created a lot of opportunities for the entrepreneurs in the past. Has it been profitable or will it be in 2023?

I also recommend you to go through the previous post first for better understanding if you haven’t yet –

– Introduction to E-commerce – Traditional and Online Commerce, Types of E-commerce, Business Models, and Distribution Channels

E-commerce Market Size – Overview, In India – Growth and Opportunities

Overview (Worldwide)

Today, E-commerce has become an inseparable part of the global retail framework. Like other industries, Retail businesses have also gone leaps ahead with the rapid increase in internet accessibility and progressive digitalization within the economies.

As of Apr 2022, Internet penetration numbers have already hit more than 5 billion users worldwide (which estimates to be 63.1% of the global population) and Social Media users estimates to be 4.7 billion.

And as these numbers are increasing rapidly all over the globe, so are number of online purchases. In 2021, Global retail e-commerce sales crossed 5.2 trillion U.S. dollars worldwide (approximately 19% of the total retail sales worldwide) and are expected to hit 8.1 trillion dollars by 2026 (approximately 24% of the total estimated retail sales worldwide).

Global Leading players in retail e-commerce

Alibaba (a Chinese retail group), is the largest e-commerce retailer worldwide, with online sales valued at over 700 billion U.S. dollars in 2022. However, according to forecasts, the e-commerce giant Amazon (from U.S.) will surpass Alibaba in estimated sales by 2027, when Amazon will generate over 1.2 trillion U.S dollars in online sales.

Leading countries in retail e-commerce

(According to Statista) In 2022, the Chinese e-commerce market is forecast to be the biggest in the world, with internet sales accounting for nearly half of the country’s retail sales. The United Kingdom ranks second with the highest percentage of retail sales taking place online (36 percent), followed by South Korea (32 percent), and Denmark (20 percent). In 2022, the up-and-coming e-commerce markets center around Asia. The fastest growing e-commerce countries based on online sales are the Philippines and India, where e-commerce sales are forecast to increase by more than 25 percent.

E-commerce Market in India

As shared, India has been one of the fastest growing e-commerce countries in terms of online sales owing to the increasing internet users and favorable market conditions. In 2018, market value of the e-commerce industry in India was approximately 22 billion U.S dollars and was estimated to reach 350 billion U.S. dollars by 2030.

Let’s understand a few reasons to how the E-commerce market has experienced an exponential boost in India?

1. When we talk about the Internet peneteration statstics with respect to India, the active Internet users as of Feb 2022 estimates upto 658 million (which is the 2nd largest online market after China). The rise of internet and mobile penetration, along with a growing middle-class population and increasing consumer spending, has helped to drive the growth of e-commerce in India.

The Indian e-commerce market has grown rapidly since the early 2010s. According to a report by the Confederation of Indian Industry (CII) and research firm Grant Thornton, the Indian e-commerce market is expected to reach $200 billion by 2026, driven by increasing internet penetration, improving logistics infrastructure, and growing consumer trust in online transactions.

2. The Indian government has also been taking steps to promote e-commerce in the country, such as by launching the “Digital India” campaign to increase internet penetration and digitize government services. Additionally, the government has also implemented policies to encourage foreign investment in the e-commerce sector.

3. The growth of e-commerce in India has also been driven by the increasing popularity of mobile commerce, as more and more consumers in India are using their smartphones to shop online. According to a report by the Indian Ministry of Electronics and Information Technology, the number of mobile internet users in India is expected to reach 829 million by 2022, up from 462 million in 2018.

Overall, the e-commerce market in India has experienced an exponential boost in recent years, and it is expected to continue to grow in the future. The increasing internet and mobile penetration, along with a growing middle-class population and increasing consumer spending, are driving the e-commerce growth in India.

 

Why E-commerce?

E-commerce is a rapidly growing industry that still has a lot of potential for businesses of all sizes. The popularity of online shopping has been increasing in recent years, and this trend is expected to continue in the future. This has led to a growing demand for e-commerce businesses and has created a lot of opportunities for entrepreneurs.

Advantages of E-commerce over Traditional Commerce

E-commerce, also has a number of advantages over traditional commerce (also known as brick-and-mortar commerce), including:

1. Increased reach: E-commerce allows businesses to reach customers from all over the world, rather than being limited to a specific geographical location. This can help businesses expand their customer base and increase sales.

2. Lower costs: E-commerce can help businesses save money on overhead costs, such as rent and utilities, as well as on marketing and advertising expenses.

3. Convenience: E-commerce allows customers to shop at any time and from any location, which can be especially convenient for customers who live in remote areas or have limited mobility.

4. Personalization: E-commerce businesses can use data and analytics to personalize their offerings and create a more personalized shopping experience for customers.

5. Increased efficiency: E-commerce businesses can automate many of their processes, such as inventory management, order processing, and customer service, which can help to increase efficiency and reduce costs.

6. Increased competition: E-commerce allows businesses to compete on a global scale, which can lead to increased competition and better prices for consumers.

7. Greater flexibility: E-commerce allows businesses to easily update their inventory and offerings, which can be beneficial for businesses that need to change their products or services frequently.

8. Better customer service: E-commerce allows businesses to provide better customer service through online chat and email, which can help to improve customer satisfaction and loyalty.

While traditional commerce has its own advantages such as face-to-face interactions, personal touch, and tangible experiences, e-commerce has become a very popular alternative for its flexibility and convenience, and has been growing rapidly in recent years.

However, it’s also important to note that e-commerce industry is highly competitive, and businesses must work hard to stand out and attract customers. To be successful in e-commerce, it’s important to have a clear plan and strategy in place, including identifying a target market, creating a website or online store, and developing a marketing and advertising plan. It’s also important to have a good understanding of e-commerce laws and regulations, and compliance with them.

Overall, e-commerce can be a good industry to be in if you have a solid plan and strategy in place, and you’re willing to put in the work to succeed. As the e-commerce market continues to grow, it presents many opportunities for businesses to reach new customers, increase sales, and build a profitable business.

Is E-commerce Profitable in India?

E-commerce is a rapidly growing industry in India, and it can be a profitable business opportunity for entrepreneurs. The Indian e-commerce market is expected to reach $200 billion by 2026, driven by increasing internet penetration, improving logistics infrastructure, and growing consumer trust in online transactions.

However, it’s important to note that the e-commerce market in India is highly competitive, and businesses must work hard to stand out and attract customers. To be successful in e-commerce in India, businesses need to have a clear plan and strategy in place, including identifying a target market, creating a website or online store, and developing a marketing and advertising plan.

Additionally, businesses also have to comply with the Indian e-commerce laws and regulations, which can be complex. The government has also implemented policies to encourage foreign investment in the e-commerce sector, but also to protect the domestic companies and small businesses.

To be profitable in the e-commerce industry in India, businesses must focus on building a strong online presence, providing exceptional customer service, and differentiating themselves from the competition by offering unique products and services.

In conclusion, e-commerce has a lot of potential in India, but it’s also a highly competitive market. Businesses that are able to identify a niche market and differentiate themselves can be successful in the e-commerce industry in India.

See you again with some more intriguing facts. And a guide to start your own E-commerce business.

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