Challenges of E-Commerce Industry in India Video Lecture | E-Commerce - B Com

hello and welcome to marketing 91 comm
let's look at the challenges in the
Indian e-commerce industry last mile
delivery
despite the emergence of several
logistics companies in India deliveries
to smaller villages and towns is still
an issue most logistic companies have
good connectivity to tier 1 2 & 3 cities
however to deliver to smaller towns and
villages the logistics cost increase by
rupees 200 to 300 cash payments the
manual cash collection is laborious
risky and expensive courier companies
generally hold the money for up to 2
weeks which means that the e-commerce
company has to restock inventory before
the cash from its last sale has arrived
some couriers charge upwards of 3% for
the service but the biggest hit comes
from the much higher return rate
sometimes up to 10% as a company has to
pay for reverse logistics as well high
failure rates in online payments and low
penetration of debit and credit cards
for most ecommerce sites the success of
online payments is around 65% low
success rate along with low penetration
rates of credit cards and debit cards
and the unwillingness of Indian
consumers to put payment information
online are the key challenges with
respect to ecommerce payments high cost
of customer acquisitions the huge
investor funding in this space the
sector is faced with intense pressure to
acquire new customers at irrational
costs and show valuations the focus is
not on repeat sales from the same
customer to increase loyalty and
profitability but discounts and
marketing spends to acquire new
customers regulatory challenges there
are approximately nine regulatory bodies
governing the e-commerce industry this
has led to difficulty in understanding
and following laws related to taxation
foreign direct investment and capital
structure funding issues investors who
fund ecommerce are generally looking for
quick results if the company fails to
meet revenue targets investors are quick
to freeze funds leaving both employees
and customers in a tussle
tiny owl food ordering app and purple
squirrel education travel our prime
examples of investors exiting the
business due to non performance snapshot
of the Indian e-commerce industry
india's ecommerce industry generated a
gross merchandise value of twenty
billion dollars in 2015
currently each travel comprises 70% of
the total ecommerce market detailing
which comprises of online retail and
online marketplaces has become the
fastest growing segment in the larger
market having grown at a CAGR of around
56 percent over two thousand nine and
fourteen the size of the e-tail market
is pegged at six billion USD in 2015
apparel and accessories and electronics
are the largest selling products through
a taling constituting around 80% of
product distribution in 2015 the highest
growth rate was seen in the apparel
segment almost sixty nine point five
percent over last year followed by
electronic items by 62% baby care
products at 53% beauty and personal care
products at 52% and home furnishings at
49% mumbai ranks first in online
shopping followed by Delhi Ahmedabad
Bangalore and Kolkata
approximately 45% of online shoppers
reportedly prefer cash on delivery mode
of payment over credit cards 16% and
debit cards 21% only 10% opted for
internet banking and a scanty 7 percent
prefer cash cards backed by huge
discounts and the rising use of
smartphones the Indian e-commerce market
is poised to grow at 36% during the 2015
and 2020 cycle according to a recent
report by management consulting KPMG 1
to 1.2 million transactions happen daily
in India's ecommerce industry apparel
43% electronics 24% and ebooks 22%
account for most of them according to
the study ecommerce companies are
expected to invest around USD 6 to a
billion in logistics infrastructure and
warehousing over the next few years on
the back of growing popularity of online
shopping in India
as the sector commerce gains traction
and moves to tier 2 and tier 3 cities
there will be increasing demand for
expanding a cargo connectivity to
smaller towns according to Anna sokham
PwC study stay tuned for more videos on
marketing thank you