As Flipkart raises a billion dollars, e-commerce is set to explode

Almost 15 years ago Jeff Bezos, founder of US online retail firm Amazon, said e-commerce was going to change the way the world shops. It has and in the process rained billions of dollars into India this year. Investment plans announced this week by homegrown Flipkart — founded by the Bansals who are former Amazon engineers — and Amazon itself show how fast India is changing.

Even as successive governments have agonized over allowing foreign investments in traditional retail, their online counterparts have piggybacked on the recent dramatic increase in access to internet through mobile phones among young Indians. And this is not restricted to metros. Flipkart, which has over 20 million customers, gets around half of its orders from mobile phones — up from just 5% a year ago. A combination of a relatively young population and exploding internet access are bound to attract a mix of money, technology and companies into India — perhaps even leapfrogging the retail stage. Innovative strategies can be designed even for products that customers would like to ‘touch and feel’ prior to purchase. In case of clothes, for example, customers can be given an option where they can try them out in their homes before purchasing them.

As sourcing, retailing and warehousing costs drop due to the Internet platform, this could be a bonanza for Indian consumers who’ve been hit hard by inflation. Indian e-commerce companies have raised foreign money through complicated structures, while Amazon operates in India as an online marketplace connecting local firms and customers. India has turned out to be Amazon’s fastest growing market, while Flipkart displays commendable ambition to take Amazon on. Fears regarding e-commerce are misplaced. They have not hurt local businesses. Instead, they have helped many small firms, geographically restricted on account of limited resources, find a national market for their products.

When developments in India’s e-commerce industry are juxtaposed to improvements in communications technology that will drive India’s plans to bring every household into the formal financial sector, we may be on the cusp of unprecedented boom in this area. This week’s announcements should catalyze NDA government to revisit old bugbears. Change makes its way into India regardless of politicians’ desire to uphold the status quo. Technology on which e-commerce platforms are built has a lot of Indian contribution. It would be a shame to ignore it in India.


This piece appeared as an editorial opinion in the print edition of The Times of India.


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