Meaning of E-Commerce

Simply put, e-commerce refers to commercial transactions that take place over the internet. Any buying and selling that uses internet come under the bracket of e-commerce. It can involve buying and selling of goods and services or transfer of funds or data exchange. These transactions can be Business-to-business (B2B), business-to-consumer (B2C), consumer-to-consumer (C2C) and consumer-to-business (C2B) in nature.

Benefits of E-Commerce

  • 24*7 presence
  • Allows quick access
  • Global penetration
  • Fewer costs
  • Personalized offerings

E-Commerce – The new age commerce

The e-commerce industry has totally transformed the way business is done throughout the globe. Online shopping has become one of the most popular online activities worldwide. eMarketer expects steady growth through 2021 when sales will total USD 4.97 Trillion.

E-Commerce in India

The Indian e-commerce industry is growing by leaps and bounds and is expected to surpass the US e-commerce industry to become the second largest e-commerce market in the world by 2034. Online shoppers in India are expected to reach 220 million by 2025 (Source: The Indian E-commerce market is expected to grow to USD 200 billion by 2027. India’s internet economy is expected to double to USD 250 billion by 2020 majorly backed by e-commerce.

Market size

With the strong retail and consumer outlook India continues to hold a strong position as far as it's market potential is concerned and is on its way to becoming the third-largest consumer market in the world, poised to grow close to USD 1.2 trillion by 2021.
India is expected to witness the redefining trends in the consumer market which will shape the future of the retail industry.

Key drivers of the E-Commerce industry

Young demographic profile, rising internet penetration, and relative better economic performance are the key drivers of the e-commerce sector. As of December 2018, overall internet penetration in India was 46.13 percent. The number of internet users in India is expected to increase from 604.21 million as of December 2018 to 829 million by 2021. The internet penetration in the rural area is expected to grow as high as 45 percent by 2021. The e-commerce retail is expected to grow at a 36 percent CAGR over the next five years.

The Government of India's policies and regulatory frameworks such as 100 percent foreign direct investment (FDI) in B2B e-commerce and 100 percent FDI under automatic route under the market place model of B2C e-commerce are expected to further propel growth in the e-commerce sector.

Challenges for the E-Commerce sector in India

The phenomenal growth in e-commerce is not without the following hurdles:-

  • Rapidly changing business models
  • Urban phenomenon
  • Absence of e-commerce laws
  • Customer loyalty