According to a new report by EY titled ‘India vs BRICs: a comparison of the ecommerce ecosystem’, India lags behind Brazil, Russia and China in online retail, despite having 243 million internet users which is the second highest number of internet users in comparison with the other three countries.
What does the report outline?
- Just 14% of Indian internet users shop online compared to 30-35% in Brazil and Russia, while China has a 55% conversion rate.
- Compared to the other three nations, the ticket size of online transactions in India is nearly 70% lower.
- Indians still preferred to buy higher value items such as jewellery and appliances from the store as they liked to touch and feel the item before purchasing.
- Some of the low ticket items Indians bought more often included gifts and books.
In comparison, in Brazil consumers were comfortable purchasing products such as electronics, furniture, home appliances and even furniture online.
“The online shopper is purchasing low value-items, implying that e-commerce portals are being used primarily for research and not to purchase high ticket items. The consumer is still more comfortable buying higher value items from stores,” the report said.
Indians still utilise internet mainly for:
- social networking
- video streaming
What are the reasons holding back India’s ecommerce story?
Internet penetration in India is still seen in its nascent stage. Apart from slower data speed compared to the other BRIC nations, Indians have to a pay a larger part of their salary to subscribe to internet.
Mode of payment
Indians predominately use the cash on delivery method, while the other countries are a lot more flexible using different methods of payment.
A long way to go in being flawless, logistics has an adverse effect currently with high delivery charges, delayed product deliveries, delivery of wrong products etc.
Absence of regulation
The absence of a set framework of rules and regulations affects the working of the ecommerce space. Also, although FDI is allowed in the B2B ecommerce space, it is still to be allowed in B2C ecommerce segment.
Looking to the future of ecommerce
Localisation could be the key for the required growth in Indian ecommerce considering there are 800 million non-English speaking literate Indians in the country. They would be more responsive to web content in their local language and more inclined to purchase if there were local numbers to contact for customer support.
Logistics also can become enhanced with the improvement of warehouse management, which could even include drones as part of the packaging process. Last mile delivery can also be improved by providing new delivery options, such as allowing the customer to pick the item up from the store or post office.
Analytics can be another key factor for growth in ecommerce. Closer attention needs to be paid to reports can lead to improved conversion rate, better inventory utilisation, more on-site customer engagement and so on.
According to the report, India has the highest number of users under the age of 35 and the lowest percentage of female users out of the Bric nations. If Indian online sellers can find ways to use these statistics to their advantage, than the eco-system is sure to change over the coming years.