E-commerce : Is it just a bubble which is gonna burst?



Recent years have seen a remarkable transformation in the way India shops and trades. In a country like India having an internet user base of  more than 243 million, E-commerce has become the new and trendy platform for businesses. Over the last two decades, rising internet and mobile phone penetration have changed the way we communicate and do business. E-commerce stands for electronic commerce. This is basically an arrangement whereby the prospective customers can buy products online instead of physically  visiting the market. Given the lifestyle and busy schedule of people, they now-a-days prefer shopping online as such arrangements these days provide free home delivery services to their customers and easy exchange policies.



The last few years have seen tremendous growth in the number of online users and their shopping demands. In India, e-commerce can be considered as the fastest growing sector which is likely to record a 70% revenue growth in 2015. If you observe any television program, more than 50% of the advertisements are related to digital sales. It may be e-commerce giants like Amazon, Flipkart etc., or service related websites like Magicbricks, 99acres etc. This strongly establishes the fact that e-commerce growth is tremendous in countries like India. This is definitely not the case 5 years ago. People are getting more inclined towards the best and easy way of buying goods.

Now let’s have a look at India’s ecommerce success story and essential facts that points to its future growth:

  • The Indian E-commerce market scale was evaluated around $16 Billion in 2013 and is expected to reach $56 Billion by the fall of 2023.
  • The growth rate has touched 85% mark till now and in next ten years, it is projected to acquire 6.5% of the total retail market if India.
  • More than 7.6 million people are found visiting deals and discounts based websites, which is a proof itself of their growing fad for online shopping.

This tremendous growth and trending shopping habits have brought a surge of new online companies that have created a competitive atmosphere. The attention grabbing ads, tempting offers and discounts, free gifts, endless deals sites, easy return & exchange and many such feats are the result of this brewing competition.


<Image Courtesy: CouponRani>


There are multifarious factors, which have led to this massive ecommerce boom in India. Various economists, analysts and researchers trace back its root to the internet fruition in India but there are many other factors too, like increase in spending power, the influx of more payment options with debit & credit cards, Smartphone penetration etc. Lets have a look at those factors that have actually influenced the Indian consumer.

  • Time saver – Online market place is looked upon as a convenient option when it comes to save time. There is no need to take special time out of a busy schedule and run from shop to shop to find the best. Everything is just a click away and that suits the metro culture of India.
  • Cash on Delivery (COD) – The COD availability is a stirring factor that gave steep push to online selling. It is not available in most of other countries as there debit/credit cards are more in use. In India many people still feel hesitant to share their credit card information online; so cash on delivery is a must here.
  • Delivery and return policies – The availability of home delivery and numerous options attached for return and exchange have extended the consumer base in India.
  • Endless options – Indian consumers are made wonted by plethora of options served by various Ecommerce owners. These choices have spoilt them profusely and made them reliant on online shopping websites.


The market is going to rise with more specific sellers joining the industry and more buyers expecting online services. Targeting the smaller towns and creating a definite market for varied products and new services will increase the number of online consumers. From 5-7 years from now, I won’t be surprised to find a housewife selling homemade pickles online and making a respectable income.

In India, a lot of things have changed. People have started spending real money online. If you look at the travel companies today, they are selling several billion dollars worth of products online. Three or four years ago, the number used to be practically one-fifth or one-sixth of what it is today. With mere internet user base of 11% of which meagre 18% are online buyers and with only concentration in tier-1 cities e-commerce players reaching $100 billions club is in itself a big success story but still there lies more in remaining 89% and tier 2
and 3 cities.


The changes that are happening with the market size will continue to happen as our economy grows, growth in middle class with higher spending power, more people getting connected to the internet and becoming accustomed to buying online and it is up to the entrepreneurs, traders, investors and businesses to choose the right business model and domain that will make it possible to tap into that market and here lies one of the biggest opportunities of this decade in our country.

All in all, the e-commerce industry will reach its peak and definitely grow into a big bubble. However, this bubble will not burst but deflate gradually into a smaller bubble if it stands the test of time.

This article was written and compiled by Nihar Gupta, an Associate Member of Entrepreneurship Cell, IIT Kharagpur!


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