Out of the total number of internet users in the world of 3 billion, India has a total of 259.14 million internet and broadband subscribers. This penetration of internet coupled with the increasing confidence of the internet users to purchase online, has led to an enormous growth in the e-commerce space, with an increasing number of customers registering on e-commerce websites and purchasing products through the use of mobile phones.It is not surprising, therefore, that India is in a prime position for the growth and development of the e-commerce sector
E-commerce presents one of the greatest opportunities in the retail sector since it provides a substantial shift from brick and mortar establishments to virtual shops which could operate at a much lower cost. According to a report by the Internet and Mobile Association of India, India's e-commerce market is expected to grow by 37% to reach USD 20 billion by 2015. Further, as per a report provided by Forrester Research, e-commerce revenues in India will increase by more than five times by 2016, jumping from USD 1.6 billion in 2012 to USD 8.8 billion in 2016.
The e-commerce sector has been on a roller coaster ride over the past five years. Starting slowly, the e-commerce sector picked up full steam in 2011 and a host of e commerce companies have snapped up big ticket investments from various investors in order to expand their operations in the recent past. With close to 250 million internet users, the Indian e-commerce industry has been a land of opportunities for various institutional and private equity investors.
While the growth in this sector excites entrepreneurs and financial investors alike, some serious challenges are beginning to weigh down on the sector including lack of profitability, rationalisation of customer acquisition costs, compliance with evolving regulations etc.
Laws regulating ecommerce in India are still evolving and lack clarity. Favourable regulatory environment would be key towards unleashing the potential of ecommerce and help in efficiency in operations, creation of jobs, growth of the industry, and investments in back-end infrastructure.