The Good, the Bad and the Ugly of Indian E-Tail

Image from Flickr by Giuseppe Leto Barone. CC BY ND 2.0

Image from Flickr by Giuseppe Leto Barone. CC BY ND 2.0

The Indian fashion e-tailer just wrapped up its end of season sale, which turned out to be hugely popular amongst buyers, just like its parent brand Flipkart’s ‘Big Billion Day’. The e-tail market in India is hugely promising as the country is all set to surpass the US as the country with the second largest number of Internet users, behind China.

With huge discounts available, a large number of buyers are opting to ditch malls and stores and are shopping increasingly online. Billions of dollars are being pumped into these businesses by investors, yet all is not good with the e-commerce industry.

Consider the case of Laxminarayan Krishnamurthy, who ordered a Samsung Galaxy Core 2 smartphone for his wife from e-retailer The package which was delivered to him in October 2014 contained a brick and a bar of soap without the smartphone he ordered. When he got in touch with the company, he was informed that his phone was stolen by middle-men during transportation. Krishnamurthy took his complaint to Facebook, where his post was shared more than 21,000 times. Bad service is one of the few problems undermining the efforts of online merchants.

Flashback to Flipkart’s ‘Big Billion Day’ sale and sales offered by other players during Diwali season in October. Goods were sold out within seconds, servers kept crashing, shopping carts were unresponsive and irregular pricing throughout were some of the glaring glitches shoppers encountered.

But, all is not wrong from the retailers end. Delivery network is yet another major problem e-tailers are facing. While shopping around these mega offers, packages usually take around two weeks to reach the buyer, which is an absolute shambles and defeats the entire purpose of shopping. This is largely due to shortage of cargo space on airlines resulting in piles of shipments gathered at airports across the country. Building an efficient delivery network is challenge in a country where millions of customers are living in more than 100,000 zip codes.

Government regulations are yet another hurdle for e-retailers in India. To protect local merchants, the government prevents companies with foreign investments to operate as retailers online. Instead, Amazon, Flipkart and Snapdeal all act as online bazaars. This is presenting substantial uncertainties over the operation of these players who are often accused of bypassing the rule by traders. 

GV author and digital strategist Gaurav Mishra writes in his blog about the players in digital market in India:

US/ Global Products Still Dominate in India: Unlike China or Russia, products from US firms like Google, Apple, Amazon, Facebook, Twitter and LinkedIn still dominate most segments, from search to social to messaging to commerce. While the Apple App Store features ‘Made in India’ apps separately, most of them are still challengers at best, except in the more locally relevant media and commerce spaces.

But all is not gloomy in India’s e-commerce. As mentioned earlier, the sales are booming and as the country is bringing enormous number of people online, the industry will see huge growth. Currently, online shopping account for less than 0.5% of India’s retail sales as compared to 6% in US and 5% in China. However, sales through e-tailers is expected to jump 70% reaching to $6 billion by 2015. People are buying everything from groceries to clothes, gadgets to plants, lingerie to books online which is a great sign of things to come.

These highly optimistic and growing numbers have persuaded many foreign investors to pour in some cash. Billionaires Masayoshi Son and Yuri Milner have committed a combined $3.6 billion in investments to Flipkart, Snapdeal and Amazon India. In July, Amazon announced that it plans to spend $2 billion in India to expand operations whereas other players too are attracting huge investments.

It may not be wrong to suggest that Indian e-commerce is booming, but it’s still at a nascent stage. The industry overall has a lot to learn. There are many aspects which needs addressing, but once the e-tailers learn their lessons, there is a huge demand to be catered to. As for Laxminarayan Krishnamurthy, he was gifted the phone he had ordered along with two bottles of dish soap by Unilever.


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