India and China in E-Commerce: Rise of the New Frontiers

Although the country in focus when one talks about neighbourhood rivalries in the Indian context is generally Pakistan, in terms of economic growth our real competition lies in China. India and China are two of the fastest growing economies in the world, apart from being two of the BRIC nations (Brazil, Russia, India and China) – a group of countries slated to be economic superpowers in the foreseeable future. These two countries are similar in many respects – each is endowed with vast natural resources and geographical and cultural diversity. At the same time, each has been facing a similar set of problems, especially those related to population explosion, political turmoil and economic fluctuations.

In terms of e-commerce, China is already Asia’s largest e-commerce market, surpassing Japan. While India lags behind in terms of scale of operations, the rate at which the e-commerce industry is rising in India is nothing short of meteoric. In this article, we will compare the two countries within the context of their e-commerce industries, in terms of their beginnings, market sizes, government support, growth rates, major players and other important factors.

E-Commerce Scenario in India and China

Beginnings

The idea of e-commerce was first planted in both India and China around the same time. The first B2B marketplace established in India was IndiaMART, established in 1996. It might sound surprising today, but the introduction of e-commerce in India can arguably be attested to IRCTC, a website that is a cause of much chagrin to the Indian consumer today. The Indian government launched the IRCTC ticketing website in 2002, with the aim to provide railway tickets without the hassle of standing in a queue at a reservation counter. In 2003, Air Deccan announced its own online ticketing website, and companies like Yatra.com and MakeMyTrip.com followed suit.

Online retail truly began in India around 2007 with the introduction of eBay, with homegrown companies like ShopClues and Snapdeal entering the market soon afterwards. Amazon launched its subsidiary in India in 2013, the same year when the online retail giant Flipkart set foot in the market. Today, the Indian e-commerce industry is worth $5.3 Billion as of 2014.

The Chinese chapter on e-commerce must begin with Alibaba. Incepted in 1999, Alibaba has grown into the largest online marketplace in the world in a matter of years. In 2003, Bossgoo, a B2B marketplace was established in China. Soon afterwards in 2004, DHGate, China’s first B2B online transaction platform forced other Chinese B2B websites to move away from the yellow pages format.

Markets

http://www.borderfree.com/global-insights/comparing-ecommerce-opportunity-in-china-and-india

Source: Borderfree

Although the Indian and Chinese B2C e-commerce markets are looking at around 30-40% rise every year, they differ vastly in terms of maturity. The Chinese e-commerce market is much more mature as compared to its Indian counterpart. Experts believe that in terms of size, the Chinese market is about 80 times larger than the Indian market. While the Indian market was estimated to be worth $5.3 Billion at the end of 2014, the Chinese market was valued at a whopping $217 Billion.

There are many reasons for this disparity. The lack of penetration of the internet technology in India is a major factor. Most areas in India outside the handful tier 1 and 2 cities experience slow or non-existent internet. China on the other hand boasts some of the largest numbers in terms of internet users. Recent figures indicate that the number of internet users in China is around 600 million, which is around twice the size of those in the USA.

The other factor is the unequal income distribution in the two countries. Although they have roughly the same population size, the Chinese urban middle class accounts for a much higher percentage as compared to India. On the other hand, India has a higher percentage of low income consumers, which becomes an impeding factor for the growth of the e-commerce industry in India.

Major Players

One reason why the Chinese have gained a seemingly unassailable lead in the e-commerce market might be because of the difference in the composition of players in the two economies. Today, there is no one clear market leader in the Indian e-commerce market. Companies like Flipkart, Snapdeal and Amazon are almost neck-to-neck in the race to become the face of Indian online retail. Even with their billion dollar turnovers, the stark reality in India is that the online retail market only comprises of around 30% share in the total e-commerce market in India. The other 70% can be attributed to service and travel related websites.

While India’s Flipkart failed to cling on to its first mover advantage, China’s Alibaba capitalized on it to become one of the top two e-commerce conglomerates in the world. Alibaba alone boasted a market value of $231 Billion in 2014, coming dangerously close to Amazon’s market value of $241 Billion. Apart from Alibaba, the other major players in the Chinese market are JD.com and Amazon China.

As can be seen, the Indian players have a long way to go before they can match themselves with the likes of Alibaba. In fact, venture capitalist and entrepreneur Rehan Yar Khan estimated that the Indian e-commerce market today is where China was in 2007.

Government Regulations

E-Commerce in India is governed by the Information and Technology act of 2000. This blanket act is meant to cover all aspects of cyber law and electronic commerce, including cyber stalking, child pornography, hacking, cracking, network trespassing among other issues. There is no singular, specific law governing e-commerce in India. The Competition Commission of India stands as a sole regulator for all markets in India including the e-commerce market.

The Telecommunications Regulations of the People’s Republic of China stipulated the Ministry of Industry and Information Technology to be the governing body for electronic commerce. Further in 2004, China adopted the Electronic Signature Law, which is widely recognized as the first law in Chinese e-commerce legislation. This law is considered a milestone in the regulation and propagation of Chinese e-commerce, and is one of the reasons for its rapid ascent in the global e-commerce scenario.

It is clear that with governmental support, internet penetration and maturity, the Indian e-commerce market will surely catch up to China. But in how much time remains to be seen.

For more information on this issue or any other query, get in touch with Browntape. We are India’s leading e-commerce solutions experts and we are always happy to help!

Top 5 Online Marketplaces in India compared

If you’re looking to get into online retail, subscribing to an online marketplace is arguably the quickest way to do so. The market for online retail in India has grown by leaps and bounds in the past few years. In fact, this Nasscom report says that the Indian e-commerce industry will touch the $100 billion figure by 2020. It is no wonder that there are innumerable online marketplaces for a retailer to choose from. There are online megamalls that let you sell virtually anything under the sun, and there are niche marketplaces like this one that lets you sell only socks. Each marketplace has its own pros and cons, and in this post we are going to compare the top 5 largest marketplaces in India.

Every retailer has a basic set of queries before subscribing to a marketplace. In fact, we have written about the things you need to consider before subscribing to a marketplace right here. There’s subscription fees, packaging and logistics support, payout periods, popular product categories, size of the marketplace, competition, etc. Here, we’ve done a hands on comparison between Flipkart, Amazon, eBay, Snapdeal and ShopClues. These five online sales channels eat up a lion’s share of the Indian online retail market. So let’s see how they match up against each other.

Indian Online Marketplaces: A Head-to-Head Comparison

  • Basic Comparison

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Although eBay is the oldest player in the Indian market among the ones that we are looking at, it is Flipkart and Amazon that are the most popular marketplaces in terms of the number of sellers. A common trend can be seen while analyzing the most popular product categories – apparel, footwear, mobile and consumer electronics seem to be the most sought after products in the Indian marketplace.

  • Pricing

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Flipkart, Snapdeal and Shopclues do not ask for subscription, listing or payment gateway fees. While eBay looks expensive as compared to its competitors, it makes up for this by offering really low commission rates on sales.

  • Logistics

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All the marketplaces that we are considering offer shipping assistance, although only Amazon and eBay allow self-shipping. While Flipkart does not offer packaging assistance, its shipping charges are slightly lower than the rest of the competition.

  • Miscellaneous

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Flipkart seems to be running the game when it comes to social media presence an m-commerce. With m-commerce slated to be the future of online retail in India, these numbers become extremely important.

To know more about these online sales channels or in case of any other query, get in touch with Browntape. We are India’s leading e-commerce solutions experts, and we are always happy to help!

How to Choose the Right Marketplace for Your Products

Once you decide that you want to sell online, the first question that you have to answer is where. There are a lot of options. You can either go for one or more of the innumerable sales channels that make up the online retail horizon, or fly solo and open up your own online store. Also, if you do go for the sales channels option, which ones do you subscribe to? And how many of them? These are tough decisions, and we are here to help you with them.

Let’s understand first what an online marketplace offers you. An online marketplace is your virtual store – your customers will be able to browse through your products here and make purchases. What online sales channels do is they assist you in this process in the following ways –

  1. They let you create product catalogs and list them on their virtual real estate
  2. They provide you with a customer base
  3. They act as middlemen during the transaction
  4. They assist you with the logistics part of the process

In return, they take a certain percentage commission from each sale. You also have to adhere to their rules and policies, and they have the power to penalise you if you don’t. Essentially, the store might be yours, but it’s their mall. As opposed to this, having your own online store gives you back your sovereignty in the virtual world. Let us look at the pros and cons a little more deeply.

How to Choose Where to Sell Online

  • Analyze Your Product

If you are just a retailer, it does not make much sense for you to open your own online store, especially in popular product categories like electronics and apparel. These are high volume markets, with a massive demand and a supply that just barely matches it. As opposed to that, if you are a manufacturer too, or are selling a niche product, you can really develop your brand from ground up in the online world. Subscribe to a marketplace which is popular for selling products in your category.

  • Logistics Support

Think about logistics before subscribing to marketplaces. If a particular sales channel is inept in providing logistical assistance around the area where your warehouses are situated, you will be in a tight spot. If you plan to start your own marketplace, study logistics providers carefully. We have already written extensively about logistics providers here and here.

  • Marketplace Popularity

Sales channels like Amazon and Flipkart are pretty much synonymous to online retail in today’s market. The top few sales channels generally are the consumers’ first choice when it comes to shopping online. Subscribing with one or more of them means you get access to that big a customer base. Having your own online store means starting from scratch.

  • Competition

The other side of the coin is the immense competition that one finds on these huge online sales channels. There are multiple sellers jostling together for the same product, differentiated only by little things like product descriptions, photographs and seller ratings. It sure is a tough market.

  • Brand Image

Subscribing to an online sales channel doesn’t give you much room in terms of growth. Here, people don’t buy products from ‘seller123’; they buy products from Flipkart or Amazon. You are reduced to a nameless provisioner. This is bad because this way, you cannot grow your brand image. On the other hand, on a dedicated store, you can carefully tailor your brand image by harnessing the power of social media. Amazon recently started allowing sellers to use their dedicated website to funnel transactions through their Amazon accounts. This way, you get all the benefits of subscribing to an online store while preserving your brand image.

  • Subscription Cost

Different sales channels have different subscription costs and commission plans. In return, they also offer different essential and optional services. It is better to shortlist a few channels and then carefully go through their specific plans to choose the ones that you want to go for.

For any more information about sales channels and online retail in general, get in touch with Browntape. We are India’s leading e-commerce solutions experts, and we are always happy to help!

Tier 2, 3 Cities as Potential Markets for Online Retail

India’s online retail market can be subdivided into two parts in terms of the geography – the so called tier 1 cities, which include the metropolises and the highly developed industrial and cultural hubs and the tier 2 and 3 cities which include the so called developing regions around the country.

The disparity between these two parts is pretty blatant – tier 1 cities are prioritized in terms of most amenities, they are valued more within a state since they contribute more to the economy and thus they also tend to be more glamorous. In fact, until recently it was thought that the online retail business wouldn’t have much support outside the tier 1 cities. Turns out this is a gross misconception. Although it is true that the online retail business has a huge market in tier 1 cities, the contribution of tier 2 and 3 cities can scarcely be ignored.

Why Should You Focus on Tier 2, 3 Cities for Online Retail?

  • United They Stand

As of the 2011 census, there are 8 tier 1 cities in India – Ahmedabad, Bangalore, Chennai, Delhi, Hyderabad, Kolkata, Mumbai and Pune. As compared to these, there are as many as 3,133 tier 2 and 3 cities and more than 1,233 rural hubs. While one third of India’s 1.2 billion population lives in tier 1 through 4 cities, only 8% of these reside in tier 1 cities. This means that, an online seller cannot ignore the combined volume of the more than 4,500 cities and hubs that make up the rest of India.

  • Mobile Power

Mobile technology is revolutionizing the tier 2 and 3 markets, according to this Forrester report. Half the shoppers in tier 3 cities are already on mobile, as compared to the one third from tier 1 cities. Cheaper smartphone technology and the growing range of connectivity in Indian towns seem to be the root cause of these figures, and an online retailer must not ignore them. In fact, the m-commerce market in India is slated to reach $19 billion by 2019.

  • Women are the Dominant Force

The same Forrester report further asserts that women are the driving force in tier 2 and 3 online retail markets. In fact, they spend more than twice as much money online as men from the same geographical markets do. This is an important piece of information for online retailers to consider while building a sales and marketing strategy.

  • Indian Online Retail Market Geography

According to this Accel Report, the top three markets for online retail in India are –

  1. Delhi-NCR
  2. Karnataka
  3. Maharashtra

Similarly, the markets with very little e-commerce presence are –

  1. Bihar
  2. Uttarakhand
  3. Chhattisgarh
  • New Buyers

In 2011, the cities of Pune and Ahmedabad were upgraded to receive the tier 1 status. As more and more cities develop, their markets will grow. In fact, many tier 2 and 3 cities are growing at an unprecedented rate. It has been estimated that 70% people from tier 1 and 2 cities who do not currently make online purchases will do so in the next 12 months. As services like internet become more and more available to newer areas around India, tier 2 and 3 markets – unsaturated by over competition and having room to breathe, are the real markets to watch out for.

To know more about tier 2 and 3 markets, or in case of queries, get in touch with Browntape. We are India’s leading e-commerce solution experts and we are always happy to help!

Hottest Product Categories in Indian Online Retail

Online retail profits have been leapfrogging for the past few years in India. Especially with the advent of cheap smartphone technology and the enthusiasm online retail platforms have provided in terms of m-commerce, online sales have truly skyrocketed. The first question every prospective online retailer has in mind is – ‘What do I sell?’ There are differing answers to this question, depending upon various perspectives.

One way is to figure out the most popular product to sell and enter the extremely competitive market. Since a large market base is divided by many suppliers, you are bound to get a small share, but the opportunity for growth is slow. The other way is to create a market base using a niche product. This article makes a good case for this strategy. Also check out Chris Anderson’s Long Tail Phenomenon, which describes this course of action, is detail.

The point is, whichever way you go, you do need to know about the current demand trends in the market. These trends can directly affect you, or they can affect you through a secondary market basis. But it is important to know. Therefore we are providing information about the Indian online retail market in this post, and its current demand trends and hottest product categories. Let’s take a look.

Demand Trends in the Indian Online Retail Market in 2015

Market Description

The total turnover of the e-commerce market in India is supposed to hit $16 billion in 2016. Of this, nearly 31% belongs to online retail and 61% belongs to the travel industry while the rest can be chalked up to wholesale and other services. According to the data gathered by Accel India, the number of internet users in India will grow to more than 400 million by 2016. Of these, more than 60% generally frequent e-commerce websites. The conversion rate from visitors to buyers is expected to jump to 2.9% from 2.7% in 2013. This means that the gross turnover due to online retail will exceed $8.5 billion in 2016.

Hot Product Categories

According to a study by the Internet and Mobile Association of India, or IAMAI, mobile phones and their accessories are the highest selling items on online retail websites like Flipkart and Snapdeal. The online retail industry, growing at the rate of more than 33% currently, favours various product categories in the following order –

  1. Mobile phones and accessories: Mobile phones and accessories hold a 41% market share with sales worth around Rs. 9,936 crore.
  2. Apparel, footwear, etc.: Personal items like apparel, footwear and other accessories come second in the race for the most popular online retail category. They cover around 20% of the market with sales upwards of Rs. 4,699 crore.
  3. Consumer Durables: Consumer durables like kitchen appliances and other accessories account for 14% of the online retail market. The sales in this category have been worth Rs. 3,404 crore.
  4. Laptops/notebooks/other electronic items: Laptops and other electronic items consist of 10% of the market with sales up to Rs. 2,780 crore
  5. Home furnishings: Home furnishings show sales of Rs. 1,059 crore
  6. Books: Books have garnered sales of Rs. 648 crore.

These are some of the sales figures for the year 2014-15. We hope these will help you in your strategy to sell on online platforms.

For any help or queries, get in touch with Browntape. We are India’s leading online retail solutions experts and we are always happy to help!

Want to sell overseas? Here’s 5 online marketplaces to explore!

India has one of the fastest growing e-commerce industries in the world, in terms of both supply and demand. With the total turnover of the Indian e-commerce market slated to cross $16 billion in 2015, its growth can only be described as meteoric. But it is no wonder that an entrepreneur would look at the overseas market for sales. Overseas markets offer some obvious benefits over the Indian e-commerce market. Firstly, the rate of exchange makes a huge difference when it comes to profit markups. Secondly, a product may find itself in a refreshingly unique position in an overseas market as compared to the oversaturation it might face in the domestic one.

The Indian e-commerce market is starting to realize the importance of this foreign investment. Of course, a lot of strategizing is required before making the decision to enter a foreign market. Doing so prematurely may be disastrous for your business. The important factors to consider before entering an overseas market are the trade routes, rates of exchange, recognizing potential markets, shipping costs, customs and taxes, etc. Once you have done these calculations and zeroed in on a potentially lucrative market, you can look for ways to enter it. There are many ways to enter the overseas markets. Having your own website is probably the easiest, although you would have to put in a lot of effort in branding and marketing it for a foreign customer base.

There are a few Indian online marketplaces that let you sell your products overseas. We have compiled a list of the top 5 such marketplaces.

Marketplaces that let You Sell Overseas

  1. Amazon

Amazon.in recently started allowing its third party sellers to sell their products overseas. Amazon is especially tapping the market for ethnic apparel, handcrafted items, shoes, yoga books, etc. for its US and UK customers. As of May 2015, when the service began, over 200 sellers had already started using it to sell their products on the global market. Amazon is especially looking at the 25 million Indians who live outside India as a viable target market.

  1. eBay

eBay India also provides the service of letting its third party sellers sell their products overseas In fact in 2012, eBay rallied so that its online sellers with international sales would get an ‘exporter’ status, thus giving them various tax and customs exemptions. Selling internationally with eBay is quite easy, and the company provides a range of tools and tips for sellers wanting to do so.

  1.  Alibaba

The Chinese e-commerce giant Alibaba also facilitates Indian vendors to sell their wares on the global market. In fact, the number of Indian listings on Alibaba is second only to China. For its Indian venture, Alibaba has partnered with ICICI bank and the Indian logistics provider Mypacco.com.

  1. Etsy

The go to site for everything handmade also lists Indian sellers. Although this is just a one way street – Etsy does not deliver in India. Indian handcrafted products, though, are a hit on the platform, as witnessed by sellers like Everything Indian and Anek. Etsy does not provide shipping and logistics services for its Indian sellers, so these responsibilities have to be borne by the vendors themselves.

  1. Craftsvilla

Craftsvilla is another Indian company that lets you list your products on the global market. Craftsvilla has already garnered a reputation in India and abroad for its tasteful and authentic handcrafted products. To be an internationally listed seller on Craftsvilla, you need to complete the VillaPay seller registration on their website.

These are some of the top online platforms that let Indian vendors sell their products on the global market. To know more about individual procedures or for any other queries, get in touch with Browntape. We are India’s leading e-commerce solutions providers and we are always happy to help!

Top 5 Price Comparison Sites in India

Price comparison sites are the lifeblood of online retail. A good online customer spends as much time on a price comparison site as they spend on the actual online sales platform. It is no wonder that today there are quite a few price comparison sites available for the Indian online market.

Price comparison sites are extremely useful for online sellers too. They provide a detailed database to compare competitor prices and help you strategise accordingly. So it is important even for online sellers to know the good price comparison sites in India. With this aim in mind, we have compiled a list of the top 5 price comparison sites that operate in the Indian market. Take a look!

Top Price Comparison Sites in India

  1. Junglee

Junglee is Amazon’s pet price comparison website for India. It began as a virtual database that was used to acquire information off the internet and provide it to enterprise applications. But it soon grew into a single window source for location, comparison and transaction of millions of products across the internet. You just need to search for the product you are looking for, and Junglee will find all the Indian online marketplaces the product is listed on, along with the pricing.

  1. CompareRaja

CompareRaja was launched in July 2012, and has been one of the leading price comparison sites for the Indian market. Apart from thorough price comparisons and some sweet deals through coupons, the best part about CompareRaja is that you can access it via their website, their iOS/Android apps or their Chrome/Firefox extension.

  1. MySmartPrice

MySmartPrice offers price comparisons chiefly in the categories of electronic gadgets like computers, laptops and mobile phones, men’s’ and women’s’ fashion and home appliances. They offer comprehensive listings and price comparisons and also have a Chrome extension.

  1. PriceDekho

PriceDekho is one of India’s leading price comparison websites with over 1.5 crore products from more than a hundred online sellers. They have been chosen as the best price comparison website in India for two consecutive years in 2013 and 2014 by “Website of the Year India”. They also have Android and iOS apps for price comparison.

  1. 91Mobiles

91Mobiles is a price comparison website that specializes in electronics, particularly in mobile phones. It has a wide array of products and one of the most comprehensive listings when it comes to electronic items. What we really like about this website is that they also have in-house reviews for their products. Check out their website or their app.

Apart from the above, honourable mention should be given to CNN IBN’s CompareIndia, MyPriceIndia and SmartPrix.

If you want to know more about price comparison websites, or anything else related to online retail, don’t hesitate to get in touch with Browntape. We are India’s leading online retail solutions providers, and we are always happy to help!