India: Independence Day and the freedom to shop online

An Indian girl selling miniature Indian tricolour flags in Mumbai.
An Indian girl selling miniature Indian tricolour flags in Mumbai. PHOTO: AFP

A high tide of consumerism is sweeping across India this week. The country's e-commerce portals are battling it out with enticing offers and discounts in their bid for supremacy in the multibillion-dollar sweepstakes.

Shopping enthusiasts are preening themselves for the amazing deals on a wide range of goods and services the portals have on offer in the run-up to India's 68th Independence Day celebrations on Saturday. Among the more prominent, Amazon India has its "Great Indian Freedom Sale"' Flipkart has unveiled its "Freedom Sale", and eBay, its "Aazadi (Independence) Deal".

 Increasing mobile and Internet penetration in India is enticing customers to shop online for books, electronic goods, apparel, kitchen items, consumer durables, high-end jewellery, furniture and even flats, cars and motorcycles.

 E-retailing is fast coming of age in a country where the number of mobile Internet users surged 23 per cent within six months, from 173 million last December to 213 million in June this year.

Consumerism is percolating to the villages as well. Rural mobile Internet users recorded a 33 per cent jump in this period, to 53 million of the overall 213 million.

 India's 243 million-strong Internet user base is third in the world after China's 642 million and the United States' 280 million. China has a dominant 21.97 per cent share of world Internet users. India's share is 8.33 per cent and the US' share is 9.58 per cent.

But with 14 per cent growth over the past year, India is the fastest-growing Internet-user country, with China trailing with a 4 per cent growth rate and the US, with 7 per cent. This is even as Internet penetration is still relatively poor in India, just 19 per cent as compared with 50 per cent in China and 61 per cent in Brazil.

 Thus, while e-commerce is booming in India, it is the means for shopping for only 11 per cent of Internet users, in contrast to China's 50 per cent, Brazil's 34 per cent and Sri Lanka's 63 per cent.

Yet, with a population of 1.27 billion, the numbers add up in India, where the e-commerce marketplace is expected to swell to a worth of US$100 billion (S$140 billion) and above over the next five years. 

Online buyers had deluged the big three e-retailers - Flipkart, Snapdeal and Amazon India - when they went into overdrive to win customers during the Diwali festival of lights last October.

Flipkart claimed to have sold goods worth US$100 million within 10 hours of its "Big Billion Day" on Oct 6. Snapdeal pegged its sales figures to a similar amount. Amazon India did not disclose its sales. Two months later, Google's annual Great Online Shopping Festival maintained the momentum with eight million visitors to its site in three days.

In their report Retail 2020, the Boston Consulting Group and Retailers Association of India expect India to become the world's fastest-growing e-commerce market on the back of robust investment activity in the sector and the rapid increase in Internet users. They project this market to grow to over US$100 billion by 2020. Snapdeal founder Kunal Bahl anticipates India's e-commerce industry to grow to US$250 billion within a decade, outpacing China's growth.

Flipkart, Amazon India and Snapdeal are engaged in a high-stakes battle for dominance.

Market leader Flipkart clocked a then valuation of US$7 billion when it raised US$1 billion in a funding round in July last year. It recently concluded another US$700 million round from investors, including Tiger Global. It has set a target of generating gross merchandise volume, or value of goods sold on its site, of US$8 billion by December.

Amazon India is assured of a US$5 billion investment from its parent - Seattle-headquartered - to grow India into its biggest market outside the US.

Snapdeal recently initiated another round of funding in which it secured US$500 million from investors. One of its investors was China's Alibaba group, which made its first direct investment in India's e-commerce sector.

India's largest conglomerate, the 147-year-old Tata Group, has also entered the fray, starting an omni-channel marketplace that promises to seamlessly integrate store shopping and online buying - offering both Tata and non-Tata brands across lifestyle and electronic categories.

Other Indian majors like Reliance Industries, Aditya Birla Group and Arvind too are planning to tap the country's consumer Internet boom.

 Online shopping in India has been enhanced not only by convenience, range and availability of products, and attractive discounts, but also by prompt service and cash-on-delivery facility.

Buyers also make payments through electronic modes such as electronic wallets, smart cards, software wallets, credit and debit cards, and netbanking.

E-businesses and online retailers rely on e-commerce applications, typically known as payment gateways, which process credit card payments. They get their revenues from the merchants they provide these services to and, in turn, share some of their merchant fees with the banks and payment system companies.

Besides, mobile wallet company MobiKwik has partnered with - an online retailer for clothing and accessories - to provide mobile payment services to Jabong's customers.

DataWind has similarly partnered with HomeShop18, which sells electronic products, home and kitchen appliances, jewellery and fashion and health products.

 As India pays homage to its martyrs and freedom-fighters on Independence Day, the country will also be witness to some new records in shopping frenzy.

•The writer is the executive editor of Business India in Mumbai.

A version of this article appeared in the print edition of The Straits Times on August 13, 2015, with the headline 'India: Independence Day and the freedom to shop online'. Subscribe