There are an estimated 73 million active Internet users as of December 2011 in urban India, according to the “I-Cube 2011” report. Increasing Internet penetration and a growing e-commerce economy are positive trends.
In a conversation with Business Line , Mr Subho Ray , President, Internet and Mobile Association of India, spoke about the trends and challenges of the industry.
How has e-commerce changed over the years?
The total e-commerce market in India is $10 billion and is growing at 70 per cent, year on year. Five years ago, the e-commerce segment used to cater to airline, railway and cinema ticket bookings. We have come a long way from there. Now, newer categories, such as books, and electronic and luxury items have flooded the e-commerce space.
What are the upcoming trends in the e-commerce space in India?
India still has to reach a stage when it will define the day-to-day consumer spending pattern. It will happen in the next five years. Traditional services, such as grocery stores, organic fruit and vegetable stores and similar services are coming up in the online space.
The growth of the online segment depends on its penetration to tier-II and tier-III cities and the depth (the time spent on the Internet). In fact, the e-commerce market has a much larger consumer base in tier-II and III cities and growth has been significant in these regions.
What about private equity funding in this space?
Investors are very opportunistic. The trend observed nowadays is that a small investor parks funds in an e-commerce site and waits to exit once a seasoned PE investor shows interest. Investors judge the company based on the idea and implementation of company's strategy.
What are the challenges that you face as an association?
First, it is important to have a roadmap on policies and taxation for the long term. As an association, we would like to create an environment to ensure that e-commerce grows in a secular way. Growth of the Internet is, of course, a key driver for the industry.