THE NUMBERS GAME DELIVERING THE GOODS

E-commerce boomed in 2012. Localised innovations such as cash on delivery will help close to 50 million Indians carry out online transactions in the next three years

CEO OF FLIPKART.COM 2012 will be remembered as the year when e-commerce went mainstream in India

For a year made infamous by the Mayan calendar as the last year ever, 2012 has been rather significant. India’s overall growth in 2012 may have been sluggish, but there are signs of revival with the Lok Sabha vote for FDI in retail. Such investment-friendly reforms have already started in other sectors like aviation, and liberalisation in retail could help boost overall growth further.

I believe 2012 will be remembered as the year when ecommerce went mainstream in India. From a consumer’s point of view, the sheer breadth and range of things that she can order online today is mind-boggling! From ornate solid wood bar units to miniature vintage car models to rare John Coltrane vinyl, to fresh broccoli… you name the item and it is available for you to order from the comfort of your home.

Prior to this year, the range of items on sale via e-commerce was relatively small, predominantly restricted to books, movies and music. As for the fight to win consumers’ attention, someone recently told me, on a lighter note, that at one point during Diwali this year, she saw television advertisements of as many as six e-commerce brands... consecutively, on one channel!

At an operational level, the overall service levels of e-commerce companies have improved dramatically in 2012. The speed of delivery has improved a lot, compared to earlier years. Third-party delivery networks have spruced up their act to cater to demanding e-commerce delivery standards and have become a lot more reliable.

There were fewer doubts in 2012 around the basic pipeline that drives e-commerce — Internet penetration. A recent global report by KPCB lays out the numbers impressively.

One, the speed of mobile internet adoption in India is almost equal to that of desktop/PC-based Internet access.

Two, India has the third highest Internet population among the top 10 Internet-enabled countries, second-highest yearon-year growth and is still the lowest in terms of percentage of population with Internet access. That demonstrates phenomenal opportunity. Add to that, India is yet to fully explore the opportunity presented by regional language content, whether in e-commerce or otherwise.

The result of this impressive range of products available, reliable service standards and exploding Internet penetration is the overall expansion of the e-commerce customer base in India.

Currently, according to various reports, only about 15-20 million of the Internet-enabled Indian population perform online transactions. Cash-on-delivery, as a hybrid transaction method unique to India, and the sheer increase in trust in online transactions using credit cards or netbanking, are expected to increase this figure to around 50 million in the next two to three years.

E-commerce is not an isolated case of an industry expanding and maturing after a period of starting up. Every industry has gone through such a cycle in India. Banking, offline retail and telecom are some of the sectors in India that have seen this kind of evolution and eventual maturity in recent years. 2012 proves that the time is ripe for e-commerce to move into the next level.

(The author is an alumnus of IIT Delhi. He is co-founder of Flipkart.com, an e-commerce venture headquartered in Bangalore)