Growth of eCommerce in India: Boosted by Technology and Government Initiatives

India’s ecommerce is the fastest growing market, and still expected to grow by as much as US$200 billion by 2026. Providing a most dynamic channel for commercial transactions, the sector was able to yield an estimated $48.5 billion in 2018; owing to the broad expansion of Internet and smartphone technology and a number of government initiatives specifically designed to boost local and international ecommerce growth.

Internet innovations such as digital payments, logistics, customer analytics and digital advertisements have made rapid growth and spread of ecommerce in India a reality.

Paytm Bank played a significant role in furthering India’s ecommerce. The bank was the first to launch Paytm Payment, an easy to avail service for online transactions, offered at zero-charge, comes with free virtual debit card, and without requiring minimum balance.

Profile of Internet Users in India

The I-Cube, which is a study recognized by the Industry/Association – Internet and Marketing Association of India (IAMAI), furnishes information about the adoption, penetration and market size of Internet Usage and Behaviour in India.

The 2018 I-Cube Report indicated that the country has been seeing an annual growth of eighteen percent (18%). The report states that the latest number of Internet users in India is estimated to have reached 566 million. Based on the established rate of annual growth, India’s number of netizens will increase to 627 million at the end of 2019.

Of the current 566 million Internet users, eighty-seven percent (87%) are categorized as active users. Ninety-seven percent (97%) of India’s active users access the Internet by way of smartphones. Active users are further classified according to location; 283 million are situated in Urban India, while around 200 million are spread across Rural India.

The rapid pace by which India citizens are provided with means to penetrate the World Wide Web, made it easier for international ecommerce players to reach Indian consumers by way of online stores.

Government Initiatives that Helped Sustain the Growth of eCommerce in India

Government initiatives such as Digital India, Skill India, Startup India, TRIFED and Make in India, spurred participation of India’s local manufacturers and providers of Indian goods and services.

The Reserve Bank of India (RBI) allowed “inter-operability” of Prepaid Payment Instruments (PPIs) to offer digital wallets, prepaid cash vouchers and prepaid top-up cards for smartphones.

In line with the advent of digital payments, the Government of India launched the Lucky Grahak Yojana (consumers) and Digi-Dhan Vyapar Yojana (merchants), which are promotional programs that encouraged both Indian consumers and merchants to embrace the use of digital payments.

The promotion ran from 25th December, 2016 to 14th April 2017, during which the government distributed rewards totalling around US$23.8 million to about one (1) million ecommerce customers and merchants.

On the part of Indian consumers, rising levels of income and heightened awareness about international products encouraged Internet connected Indian shoppers to develop an increasing appetite for foreign brands that offer better-quality. The most popular lifestyle products clamored for online purchases include clothing, footwear, consumer electronics, health and beauty products, household items, jewelry, accessories, art and other collectibles, as well as downloadable music and event tickets.

The Amazon online store has been active in meeting those demands, to which appreciation for the Indian ecommerce market is made through the holding of the annual Amazon Great Indian Sale. This year’s India-centric Amazon bargain deals will be offered from September 04 to 08, 2019.