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Rediff.com  » Business » E-commerce set to boom in India

E-commerce set to boom in India

By A Correspondent in Mumbai
June 28, 2005 19:23 IST
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The total value of e-commerce activities within India has exceeded Rs 570 crore (Rs 5.70 billion) during 2004-05, according to a research conducted by Internet & Online Association of India, a not-for-profit Industry trade organisation.

The report estimates a 300 per cent plus growth rate during the next couple of years and has targeted a whopping Rs 2,300 crore (Rs 23 billion) worth of e-business conducted within the country by the year 2006-07.

The IOAI research report conducted in association with Cross Tab Marketing Services has tracked Internet user's proclivity for shopping online. The research was undertaken with a view to understand the profile, Internet usage, products purchased along with propensity to buy along with the nuances of shopping online with the shopper's affinity and aversions to online shopping.

A total of 3,099 respondents' views were solicited of which 55% (1,716) had shopped online and 87% (1,493) had shopped more than once forming the base of the report.

Changing lifestyles and shopping habits make this shopping medium impossible to ignore. The report makes actionable recommendations on how online retailers can fill gaps in the online environment as well as how they can utilize unique elements of the online shopping experience to create a competitive advantage over the physical retailing world.

Said Neville Taraporewalla, chairman, IOAI, "The rapid development of e-commerce is forcing companies today to adopt business strategies revolving around the Internet. The report reflects the changing face of business trends in India. Today, The Internet population is 25+ million and is expected to grow at 100 million by 2007 (Source:IOAI). The report can act as a guideline on how online retailers can use this new business environment for their advantage".

Mahendra Swarup, vice chairman, IOAI, added: "This business module is cost effective, easily accessible and profitable in many functional areas. Consumers and retailers both desire a safe, simple and comprehensive online shopping experience that will truly realize the range of power of the Internet.."

According to Preeti Desai, president, IOAI, "E-commerce is coming of age in India. Changing lifestyles and shopping habits will propel e-commerce transactions to Rs 2,300 crore (Rs 23 billion) in 2006-2007."

Some research highlights:

The e-commerce industry: Rs 570 crore worth of e-commerce conducted online in 2004-2005 to grow to Rs 2,300 crore by 2006-2007, an estimated 300%+ growth. (Source: IOAI)

The e-commerce site visitor: 55% of visitors to e-commerce sites have adopted the Internet as a shopping medium.

The 'regular online shopper': Of the 55% of online shoppers [base 1,716], 87% [1,493] of the shoppers have shopped more than once and have been termed 'as regular shoppers'.

Age and gender: 25% of regular shoppers are in the 18-25 age group, 46% in the 26-35 age group and 18% in the 36-45 age group.85% of Online Shoppers are Male even a 15% female audience represents a 15 million strong market by 2007-2008 (IOAI Estimate: 100 million Internet users by 2007-08.

Education and profession: 83% of the user base is educated with a bachelor or a post-graduate degree, it represents an educated audience.54% of online shoppers are at an executive level. 24% of online shoppers are professionals or self-employed, indicating an assured spending power.

Internet access/savvy: 76% of online shoppers access the Internet from their office, 63% from home & 24% from cyber cafes. Shoppers accessing the net through multiple access points represents a dismissal that Internet Penetration is no more only PC dependant.

Purchase history: 62% of shoppers having shopped for more than a year. 37% of online shoppers have started shopping online in the last 12 months.67% of online shoppers have shopped online as recently as 3 months showcasing the growing acceptance of e-commerce.

A top state/city representation: Maharashtra: 29%, (Mumbai 24%); Delhi NCR: 19%; Tamil Nadu: 11%, (Chennai 7%); Karnataka: 10% (Bangalore 6%); Uttar Pradesh 7%, (Lucknow:2%); West Bengal: 6%, (Kolkata 5%); Andhra Pradesh: 5%, (Hyderabad 4%); Rajasthan: 5%; Gujarat 4% (Ahmedabad 2%); and Kerala: 3%.

Top city/product preference: Mumbai (24%) holds the top slot for every category, except jewellery. Delhi (19%) fast competing with Mumbai* in accessories, apparel, gifts, home appliances categories and has pipped Mumbai in jewellery. Chennai (7%) is at rank 3 for railway tickets, airline tickets, magazines, home tools, toys, jewelry, beauty products & sporting goods categories.

Bangalore (6%) is at rank 3 for books, electronic gadgets, accessories, apparel, gifts, computer peripherals, movies, hotel booking, home appliances, movie tickets, health & fitness products and apparel gift certificates.

Kolkata (5%) jumps to rank 3 in online music sales online and is Rank 4 for the movies & the music categories.

20 products bought online: Books (41%), electronic gadgets (40%), railway tickets (39%), accessories apparel (36%), apparel (36%), gifts (35%), computer and peripherals (33%), airline tickets (29%), music (24%), movies (21%), hotel rooms (20%), magazine (19%), home tools and products (16%), home appliances (16%), toys (16%), jewellery (15%), movie tickets (15%), beauty products (12%), health and fitness products (12%), apparel gift certificates( 10%) and sporting goods (7%).

Top 5 reasons to shop online: 70% of online shoppers like 'home delivery' about online shopping, 62% like 'time saving', 60% of online shoppers like the '24x7', 45% like 'ease of use', and 39% of online shoppers like product comparisons.

Frequency of purchase: 67% of online shoppers have shopped online as recently as 3 months showcasing the growing acceptance of e-commerce. 53% of online shoppers have shopped online more than 5 times, 27% of online shoppers have shopped online more than 10 times.

IOAI is registered under the Societies Act, 1896, and is dedicated to presenting a unified voice to the industry and the government.
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