e commerce in india: IRCTC still contributes 1/3rd – Something to worry about?

IRCTC contributes 1/3rd to India’s ecommerce industry – sold 38.7 million tickets (as of Feb 09) and estimated gross sales stands at Rs 3,400 crore (while India’s ecommerce industry stands at ~9,000 crores)

While this does sound great for IRCTC (in a way, they own ~30% of ecommerce market share), it’s also a cause of worry.

Here is why!

Travel as an ecommerce category is big in India (rather the biggest – if you add up numbers from other travel players – ~50% contribute to ecommerce comes from travel!) and is the only segment that’s growing rapidly – it still means that Indian consumers aren’t buying ‘other’ things online (note that the rate of growth of ecommerce in India isn’t something great to talk about).

Essentially, Indian consumers’ online shopping behavior is still need-driven – and are buying standard items (even though they were exposed to online shopping 5-6 years back?).

That’s the real cause of worry. Growth of non-travel category just doesn’t seem to be happening at the rate expected – surely means lack of maturity in this space.

If an industry is dependent on 1 category, it surely means something needs to be corrected.

If Internet has to go mainstream in India (oh well! majority of Indian Internet users aren’t sure of Internet’s utility!), it does need to involve more real-life transactions and the same level of trust one gets in real world.

Internet needs to be more ‘realistic’ and ‘exploratory’ than what it is today – the business model needs to shift from transaction based (fight for the lowest price) to relationship based (how do I get repeat customers? how do I generate more demand?).

We need more niche category sites (look at what sells at eBay India?)– more community participation. There are fewer ecommerce brands in India compared to other emerging markets.

Barriers to ecommerce in India

Some of the major barriers at present are:

  • Not sure of product quality
  • Cannot bargain/negotiate
  • Not sure of security of transactions / Credit card misuse
  • Need to touch and feel the product
  • Significant discounts are not there
  • Have to wait for delivery
  • Goofups like these adds to one’s fear of trusting things online.

Do you see interesting new business models/opportunities rising out of these constraints?

What’s your opinion? What can drive the growth of ecommerce in India?

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