By Manish Kumar.
Ecommerce in India has been growing at a rapid pace and has given a new dimension to how the people shop in India. Statistics show that it will continue to grow; the growth rate one day will be more realistic and become stable eventually. It is very difficult to predict at this point in time when the growth rate would stabilize.
Currently, this growth rate is being accelerated using levers like deep product discounts, coupons, cash backs, etc. This model would slowly go down because companies one day have to focus on the bottom line and not just top lines for long run sustainability and profitability.
Besides that, big brick & mortar giants like Birla, Reliance, Tata, etc have launched, and are still launching, their ecommerce businesses to compete with pure-play tech driven giants like Amazon, Flipkart, Snapdeal, and other online shopping giants.
But the big question being, is this another bubble which is going to burst?
As per a recent survey by Deloitte’s state of media democracy only 15% of users who log into e-commerce websites in India actually end up buying something. The main problem e-commerce websites are facing in India is generating organic traffic.
India being a highly price sensitive market, customer retention is another major issue. A typical Indian user will visit all the possible e-commerce websites and end up buying from a source where he will be offered the lowest price and that is how some of the big price comparison websites make money.
Flipkart has been able to make quite some success when it comes to Indian space of e-tailing mainly because they have been able to offer products on a price much lesser than their competitors and brick and mortar stores. Amazon. In, of late has given a very stiff competition to other major players by providing great customer service.
Having said that, the winner in this segment is still decided by GMV (Gross Merchandize Value) and not the real profit on papers.
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By Manish Kumar.