Ecommerce in India – Growing Fast But Has Greater Potential

by India Reports on July 26, 2010

in ecommerce, Internet Advantage & Trends

The latest (year 2009) report on Ecommerce in India published by the IAMAI (Internet and Mobile Association of India) indicates a healthy growth rate over the previous years. PC users have increased from 72 million in 2008 to 87 million in 2009. This is primarily due to the penetration of PC into the lower Socio Economic Classes (SEC) spread across smaller towns in India. With increasing literacy rates and growing incomes, people from these classes have readily adopted the Internet for Ecommerce and other uses. Claimed Internet Users (those who have used the Internet at least once in the past) have grown by a substantial 20% in 2009 over 2008. This rate is significantly higher than the growth rates in the previous years.

The Internet penetration level in small towns of rural India has increased from a mere 5% in year 2000 to 36% in 2009. The Internet usage figures of these smaller towns have even overtaken those of the Top 8 Metros indicating the impact of the Internet on the lives of people residing in rural India.

Despite the improved penetration of Internet usage, both in urban and rural India, the actual figures are far short unlike in the US and Europe. India’s economy is pegged at about Rs.1.2 trillion (by 2008 estimates) and its Ecommerce market is approximately Rs.9000 – 10000 crores (nearly US$ 2 billion). In comparison, the US economy is $14.2 trillion and its Ecommerce market (B2C) is estimated at $ 220 billion in year 2008. Thus India’s ecommerce to GDP ratio is disproportionate considering its economy is 7% of the US economy but the size of its ecommerce market being only 1% that of the US.

These figures, though disappointing, indicate the potential for growth of India’s Ecommerce market and that it is getting there – slowly but surely. There is still tremendous scope for investors and entrepreneurs in India’s Ecommerce space.

For more details about India’s Ecommerce scenario and setting up websites, visit http://www.india-reports.com/summary/ecommerce_in_india.aspx

Sources: (www.eMarketer.com; www.IAMAI.com)

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