Factors contributing to the substantial growth of Indian E commerce and impact of E commerce on customer buying behavior’


E-Commerce is not a new buzzword for Indian customers but in the last 4-5 years Indian e-commerce market witnessed exponential growth like never before and this seems to be just a mere beginning. E-Commerce implies sales and purchase of goods and services online, or funds transfer over an electronic network, mainly internet. These transactions could be on any nature:
·         Business-to-business
·         Business-to-consumer
·         Consumer-to-consumer (OLX etc.)
·         Consumer-to-business.
From development of first online selling system developed by Michael Aldrich in 1979 to global e-commerce sales reaching around US$ 2842 million, e-commerce has came so far. Indian Brand Equity Foundation (IBEF) estimates Indian e-commerce to be worth US$ 188 billion by 2026 [An estimated US$ 12 billion market (in terms of Gross Merchandise Value), 2016]. Considering increasing mobile penetration, low internet charges and changing consumer buying patterns this seems to be an achievable figure. Indian e-commerce market sales are lead by consumer electronics followed by apparels segment. Electronics is currently the largest segment in e-commerce in India with a share of 47 per cent and is expected to grow at a CAGR of 43 per cent by 2020. The apparel segment has the second highest share of 31 per cent in the e-commerce retail industry. Products like food and groceries which were not considered a commodity to be traded online has also made their space in the recent past and are expected to grow in future as well and this growth is not confined to metropolitan or tier-1 cities, in fact a whole lot of e-commerce sales come from tier-2 and tier-3 cities. Easy access to information also contributed a lot to the growth of e-commerce market.
Key Factors that contributes positively to the growth of E-Commerce
·         Low acquisition cost
·         Convenience
·         Value added Services: cash on delivery, easy returns, refunds
·         Low data access costs
·         Increasing no. of internet users
In the beginning factors like changing customer dynamics and internet penetration were believed to be the core reason for the emergence and substantial growth of Indian e-commerce. But over the time, e-commerce became so impactful that now it is altering consumer buying behavior. E-commerce seems to grow for sure but the growth factors may not be the same as before. Traditional brick and mortar model seems to be losing the stage. It won’t go away, but its total share in overall sales will fall down for sure. E-commerce, being in its nascent stage grew slowly in the first few years but, both, the growth and pace of growth has been outstanding in the last few years and will only go up.
Morgan Stanley report stated that two third of the e-commerce sales growth happened because of new customer rest happened due to rise in purchases by the existing customers. Currently, there are 1-1.2 million transactions per day in e-commerce retailing and it seems to be only growing in the years to come.

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