Note: This question was answered on 1st May, 2012
E-commerce in India address some needs that are specific to the Indian context:
- Choice: There are quite a few places in India where consumers do not have a wide choice. Companies like http://www.allschoolstuff.com have orders from folks in smaller towns, only because stuff like Ben10 pencil boxes are not available in their town.
- Savings: Indian consumers seek value, and online models allow e-tailers some cost advantages over physical store distributed goods.
- Convenience: In major cities in India, driving or traveling to a market, finding parking space, etc. is quite a stressful experience.
My view is that many more categories will open up to online retailing. People on Quora have already started talking about motor spare parts online, car accessories online, etc. However, the niche categories will start seeing action after the wider appeal categories start becoming saturated. There are 100s of categories that can consider being online.
There will perhaps also be business models wherein the physical store is not to stock and dispense goods, but only to display and try, with the purchase being logged online at the store and delivered from a central warehouse [as this can reduce cost of goods sold due to lower inventory holding costs, lower dead-stock and lower unsold stock situations].
As financial inclusion becomes a reality across India, and as ‘safer’ payment options like virtual credit cards, etc. become more prevalent, electronic commerce can only increase. We are, in my view, seeing only the beginning of the journey.