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Home > Business > Special

How far for e-commerce in India?

Govindraj Ethiraj | June 19, 2007

I walked into a neighbourhood grocery store last week to find there was more than just groceries being sold. A few people had line up to pay their electricity and mobile bills. Interestingly, most were paying cash and getting a printout, which at one level looked quite deceptive but at another, seemed to work fine. Guess the grocery store was not running away.

"Would you like to buy a railway ticket ?" asked the store owner, pointing a small hand-written notice hanging on the wall saying he was an IRCTC agent - it stands for the Indian Railway Catering & Tourism Corporation and is yet the front end for the e-commerce side of Indian Railways.

Amazing, I thought. Actually, it's the cash part of this transaction that amazed me. Because online ticketing and bill payments have been around for a while. The problem with them is that they have been accessible only to those of us with credit cards and the courage to use them online.

In most transactions (in India), there is a physical gap between the supplier of the product or service and the eventual consumer. That gap could be related to the mode of financing, let's say product/service has to be paid for in cash and I have only credit cards or cash-cards. Or vice-a-versa. Or it could be the location of the supplier. Only in some cases, like my using a credit card to buy an airline ticket is the transaction (upto printout of ticket) completed at one go.

The grocery store seems to bridge some of these gaps, particularly for those who will mostly transact in cash and yet want the convenience of close-to-home delivery. The cash market, as most of us would reckon, is huge, particularly for smaller amounts, whether for payment of bills, re-charging mobile prepaids or buying of railway tickets.

The point here is a little larger and to do with the larger success of e-commerce go in India. Before I elaborate, let me point to a New York Times article two weeks ago, which asked, somewhat ominously, if online retailing had entered the Dot Calm era.

The article said how after growing 25 per cent annually since the inception of the web, online e-commerce growth had slowed sharply, particularly in important sectors like books, tickets and office supplies. So much so that Dell is apparently putting its PCs in Wal-Mart stores, Expedia has tripled the number of travel ticketing kiosks and most big stores with online marts are encouraging 'in-store' pick ups � bear in mind that online sales are still under 4 per cent in the US.

India meanwhile is a Rs 2,300 crore (Rs 23 billion) online (US is expected to do $116 billion this year and 5 per cent of all sales) in commerce market and growing. Travel-related products are a big driver. And yet, end-to-end Internet transactions are unlikely to happen in the way we perhaps envisage them - for various reasons, ranging from infrastructural to cultural.

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