Challenges Faced by e-Commerce in India: Discussing the Pain Points of the Industry.
Indian e-commerce industry has amplified since past few years and aiming to grow giant in years to come. Market experts see huge potential and growth opportunity hidden in vast Indian terrain.
Campaigns like digital India and increased penetration of internet in Indian semi-urban, and rural places have opened arms to online shopping. The increasing number of internet users is also attributed to the increasing awareness and digital literacy in Indian masses.
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More and more people are being informed and taking serious strides to break the barriers and connect as well as keep up with the pacing world.
Inspire of all the above the fact remains harsh and clear. Indian e-commerce Industry is facing challenges as it has not been experienced elsewhere in such a high potential terrain.
The challenges are not allowing the startups cope up with them. It is killing profits and hindering smooth growth. The path is rugged, the walk is tough but since the potential is much, all giants are eyeing the Indian e-commerce industry and ready to fight the challenges at their cost for the benefits they aim to reap.
1. Investment
While the startup cost for e-commerce remains low and doesn’t burn the pockets, the marketing cost is killing startups. The giants have been pumped up so much money from their investors that it has lead to an increase per customer acquisition cost in the Indian market.
Two major players Flipkart and Snapdeal are heavily advertising and promoting themselves which leaves very less scope for the small fishes. The top few have captured the majority of the active market.
However, it is not the end as the users are increasing many new ideas seems promising and investors are further backing them up.
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2. Logistics
Logistics in India is giving some serious pains to not just the startups but the biggies as well. Indian terrain with its kind of demographic does not allow smooth logistics and supply chain.Reverse logistics is a big challenge for Companies. People return more than they buy And it is scary to the companies as every return means a loss.
Many biggies have stopped time bound deliveries to many Indian cities. They have also put a cap on the purchase limit for the fear of loss. Many players including the giant Flipkart is not shipping anything worth more than 5000 Rs to many cities for the fear of reverse logistics cost and other losses.
3. Retention
Confused by the new trend and dazzled by the selection choice and price parameters, customers have so much to explore in the online space. With so many choices and lucrative deals and even with quality products it is so difficult to retain the customers.
This adds to the customer acquisition cost as repeat purchase is low. It means every time you make a sale you are spending to attract it. The expenses are rising with the rise in the number of operators and details in the online selling space.
4. Payments
Cash is an old friend of conventional Indian market. They are too comfortable with paying cash on delivery that even if they have credit and debit cards they chose the former. The statistics are so astonishing that it reveals about 75% of e-commerce transactions are through cash on delivery mode.
5. Demographics
India with 1.3 Billion people accounts for about 1/6 the of world’s population. About 50% of the population is below 25 years and 65% below 35 years of age. While this stats highlights the underlying opportunities but such demography still poses a challenge.
The ethnicity, religion, language, culture, is so much varied that the amount of investment required to bring them all under e-commerce umbrella is huge.Moreover, the socio-economic status, education, awareness, income and other parameters are also varied and difficult to streamline with ease.
6. Awareness
When compared to the size of population the digital literacy among the Indian masses is still far behind. They are not aware of modern technology and resources.
Many don’t realise the need and shun to growth. The barriers to growth and learn are deep rooted. Age-old cultural practices and methods have become more than satisfactory for them. Most of the population is struggling with basic needs, hunger, shelter and clothing. They will tend to catch up the trend once they are well fed and protected under a roof.The plastic money users are also too low when compared in proportion to the population of the country.
7. Security Issues
Secure online transactions have many a times been muddled with by many organizations which have lost trust in the masses about the security of online transactions. They have been questioning the security of the online transaction technology as they would not mind going to a physical store if they at all don’t feel safe with online transaction.
8. Conventional Shopping
The Sense of touch is dear to any shopper be it anywhere but with other hindrances the tendency to continue with conventional shopping continues. They find it hassle free who are skeptical about technology. They love shopping the conventional ways by going to a physical store and getting the physical product in their hand as soon as they pay for it.
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