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<div class="KonaFilter image-container display-table float_right"><div><div class="image on-image">ReutersAmazon CEO Jeff Bezos while on a trip to India</div></div></div>A handful of major US tech companies will be abuzz about India this year. Facebook will persist in <a href="http://www.theverge.com/2016/1/17/10772470/facebooks-indian-free-basics-program-is-stuck-in-limbo">battling net neutrality debates to continue its "Free Basics"</a> internet program there. Google will <a href="http://recode.net/2015/12/14/a-potential-blow-to-googles-project-loon-indian-official-throws-water-on-internet-balloons/">try to convince local officials</a> to let it fly its internet-bearing balloons in its airspace. And, most notably, Amazon will continue to try to conquer its <a href="http://fortune.com/amazon-india-jeff-bezos/">"trillion-dollar" online retail market. </a>In 2016, India will be "the next ecommerce battleground," analysts from Bank of America Merrill Lynch write in a note summarizing all of their new year predictions. Although Amazon made its intentions in Indian known throughout 2015 - <a href="http://fortune.com/amazon-india-jeff-bezos/">participating in</a> <a href="http://www.forbes.com/sites/saritharai/2015/06/04/primed-for-battle/#2715e4857a0b5cef97f21c0e">several profiles</a> and <a href="http://www.businessinsider.com/amazon-growth-in-india-2015-7">commenting on its plans</a> in company earnings calls - this will be a year of increased investments, BofA predicts. Right now there are three big players in Indian ecommerce: Flipkart, Snapdeal, and Amazon's subsidiary there: <div class="KonaFilter image-container display-table click-to-enlarge"><div><div class="image"><a title_source="Bank of America Merrill Lynch" title_caption="" class="zoomin" href="https://static-ssl.businessinsider.com/image/569bd32ae6183ef15b8b6d35-960/screen shot 2016-01-17 at 9.44.19 am.png"></a>Bank of America Merrill Lynch</div></div></div>Collectively, the three companies have received roughly $7 billion in investment, which is close to the size of the country's entire ecommerce gross merchandise volume in 2014. But the rush to establish market share can be attributed to where the country's ecommerce market is going, not where it is now. Right now, only 20% of India's young population is online. Most <keyword id="6354851" type="ORGANIZATION" weightage="60" keywordseo="Retail">retail</keyword> takes place offline at mom-and-pop shops. But as wireless internet access and smartphone adoption spreads, BofA expects the online shopping market in India to reach $220 billion by 2025:<div class="KonaFilter image-container display-table"><div><div class="image on-image">Bank of America Merrill Lynch</div></div></div>But while 2016 will be marked by big investments, profitability will remain a distant goal. <div class="KonaFilter image-container display-table"><div><div class="image on-image">Bank of America Merrill Lynch</div></div></div> Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions. <div class="margin-top"> <h3>NOW WATCH: <a href="http://www.businessinsider.com/south-koreans-tech-watching-people-eat-online-mukbang-2015-12">This 14-year-old makes up to $1,500 a night eating dinner in front of a webcam in South Korea</a></h3> <div> <div> <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="MwMDZkdzr7V54pSPAwMT1JU7p7MqmuY1" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div> </div> </div> </div>

Why India is the next 'ecommerce battleground'

<ul><li>The <keyword id="36208" type="General" weightage="20" keywordseo="festive-season" source="Orion">festive season</keyword> has always been important to brands, especially to e-commerce players who line up big bumper discounts, look for more retail brands to partner and ramp up their product offerings.</li><li>This festive season, e-commerce platforms are focusing on bringing more personalisation and curation to customers shopping online through greater tech and marketing integration.</li><li>More and more e-commerce platforms are also exploring social commerce, turning their apps into super apps by bringing content, products and trends under one roof for consumers to watch and shop at once.</li><li>With increasing internet penetration, e-commerce players are expecting new growth from Tier II, III and beyond this festive, which will cumulatively contribute to $150 billion of e-commerce as per RedSeer Consulting’s report.</li><li>We speak to India’s leading e-commerce players to find out more about their festive plans and revival expectations.</li></ul>The year 2020 accelerated e-commerce industry, perhaps by a decade, revolutionising the way brands operate, run, and grow their businesses, as well as how consumers choose to shop and pay. In the initial months of the lockdown, businesses witnessed a clear shift in consumer behaviour. Historically offline shoppers also came online due to convenience and safety. Consumers are still hesitant to return to in-store shopping completely and audiences from Tier II and Tier III are also preferring to shop online. The pandemic has evidently caused an inflection point for e-commerce in the country. With the second-largest internet user base, India has emerged as one of the most prominent markets globally. Around 480 million people in India have access to the internet out of which 90 million are online shoppers, according to estimates from management consultancy RedSeer. Shoppers from India’s small towns and cities will cumulatively contribute to $150 billion of e-commerce GMV in the coming decade, until 2030, revealed RedSeer. <div type="image" title="redseer - ecomm report" msid="85901903" hostid="261"></div> After spending a glum year and a half, consumers are excited to celebrate the festive season with upcoming shopping sales for Diwali, Dussehra and Christmas. IPL and ICC T-20 World Cup will further improve consumer sentiment this year. According to a survey conducted by The Trade Desk and YouGov, 82% of consumers shopped online at least once a month in the past six months, and nearly one in four made online purchases several times a week or more often. Titled ‘<a href="https://pages.thetradedesk.com/rs/527-INM-364/images/TheFestiveSeasonPulse2021.pdf">The Festive Season Pulse 2021</a>,’ it further said that 91% of Indian consumers are planning a purchase during the upcoming festive season and six in 10 are interested in learning about new brands during festive season sales. To leverage this uptick in consumer sentiment, the e-commerce category is all set to begin its festive marketing blitz and is preparing to line up big discounts for the season in a few weeks. For this 30-day period leading up to the festive season, leading fashion e-commerce platform <keyword id="319719" type="General" weightage="20" keywordseo="myntra" source="Orion">Myntra</keyword> has planned ‘Big Fashion Festival,’ which will be followed up with Myntra Diwali Sale, with a focus on ethnic wear. It will also be focusing on emerging categories like Beauty and Personal care, kidswear and categories such as innerwear and essentials which have experienced tailwinds post-Covid. Myntra’s Chief Business Officer, Ayyappan Rajagopal said, “We are expecting this festive season to be bigger than last year with more customers using online channels to make their purchases. Demand usually peaks in the 30 days leading to Diwali and we expect this year to be no different. In fact, the demand in the 2 months leading to the festive season is expected to be far more than last time (because people have learnt with time to adapt to a pandemic world). We expect high demand from across geographies and markets - metros, Tier 1, Tier 2, T3 cities and beyond. To cater to that, we have built the right ethnic wear, beauty, and home selection, and have partnered with brands on best deals. Hence, to leverage this demand and provide best value to our customers, we are organizing Big Fashion Festival and Myntra Diwali Sale to make this season a resounding success.” Right on the heels of the festive season, Myntra ramped up its marketing game by onboarding Hrithik Roshan, Vijay Deverakonda and Dulquer Salmaan as its newest brand ambassadors, alongside the existing celebrity ambassadors Kiara Advani, and Samantha Akkineni. Now, it is hoping to double its customer base and cater to Gen-Z shoppers with its high-decibel marketing. “With the optimism coming from recovery from Covid and revival in shopping sentiments along with the habitualisation of digital foray across all customer segments, we see a lot of new customers shopping during this festive season. We have also seen trends in Metro/T1 markets where Myntra has been traditionally strong, pointing towards such a revival. With a positive overall sentiment, we will be looking at doubling our customer base during this period. There will also be an added focus towards expanding our footprint in southern markets, deeper penetration into Tier 2 / 3 towns and exploring customer addition through emerging categories like Kids wear, Inner wear, fashion accessories, Beauty and persona care, etc. The greatest focus will be on Gen-Z cohort of shoppers,” shared Rajagopal. E-commerce platforms are also focusing on bringing more personalisation and curation to customers shopping online through greater tech and marketing integration. More and more e-retailers are exploring social commerce, turning their apps into super apps by bringing content, products and trends under one roof for consumers to watch and shop at once. D2C fashion platform Bewakoof.com that recently raised Rs 60 crore in an investment round led by InvestCorp, IvyCap and Spring Marketing Capital, is expecting to Rs 120 crore in brand sales this quarter. It recently rolled out celebrity-led digital campaigns with Rajkummar Rao, Sanya Malhotra and Farhan Akhtar. It plans to further build its market presence by signing more A-list celebrities to its roster and launch a 360-degree campaign by October. On the technology side, the company intends to launch a gamification-led loyalty program as it upgrades its Bewakoof Tribe with new and exclusive launches for the club members. Sharing the platform’s festive plans further, Prabhkiran Singh, Founder CEO, Bewakoof.com said, “Post pandemic, we saw a strong recovery and growth in certain categories like casual wear and leisurewear because of customers staying at home and with the pandemic slowing down, we expect a strong recovery in categories like ethnic wear, bags, accessories, etc in the festive season ahead. We’re also looking to capitalise on winter wear more this year than usual with winter around the corner and have put in investments accordingly. We expect our brand sales to be Rs 120 crore for the festive quarter.” For Bewakoof, the northern and western markets see the highest demand, followed by West Bengal and Assam because of Durga Puja. Currently, over 6 million customers visit Bewakoof.com every month. Singh told us that the festive season serves as a crucial window in the year for new customer acquisition and bringing back customers that haven’t shopped again for a while. The platform is also planning on increasing its marketing spends this festive. “For this year, 15% of our total marketing budget will be spent for the upcoming festive season.” We’re in the process of rebranding Bewakoof in the next 1-2 months and we’ll have a new look, logo, tagline along with a new set of celebrities that will endorse Bewakoof so we’re excited to roll this out and create buzz around it along with backing it up with top-funnel marketing investments. We plan to go heavy on top-funnel marketing investments starting October,” said Singh. E-retail platform OLX has upped its UI to woo its customers, digitising the entire process of online retailing, including verification of all its premium items. OLX Autos launched a verified inventory of cars with a new interface, which provides a detailed history of the car right from the ownership period all the way up to the service history of the car, and access to a host of financing options and after-sales products like insurance and warranty. As a result, OLX has witnessed a surge in demand for pre-owned cars. Sapna Arora, CMO, OLX India said, “Green shoots are already visible in the used car retail segment. The demand for pre-owned cars has been 25% higher than the pre-Covid levels while there has been an 82% plus growth in demand for pre-owned smartphones. Our goods category has also witnessed a strong rebound, as demand and supply have gone up by an average of 68% and 25%, respectively, compared to pre-Covid levels. The upcoming festival season is important for us as we expect the gap to be narrowing down between pre and post-Covid levels. There has been a strong uptake of e-commerce across regions, especially in Tier 2 and Tier 3 cities, with consumers there making the greatest shift to online shopping. We will continue to focus on the pre-owned auto segment and are expecting to surpass the demand this festive season.” At an industry level, Arora told us that e-commerce players are leveraging on hyper-personalisation to create individualised experiences on the platform and AI-powered chatbots are being implemented by the online retailers to bring customers close to an offline retail experience with a high engagement rate. Sharing OLX’s plan, Arora added, “This festive season we plan to use innovative solutions via relevant messaging at different levels of the retail journey. Our consumer base is growing organically. During this year’s lockdown, a lot of people moved online and we saw growth, about 30% more daily active users (DAUs) from our previous pre-Covid peak. In the festive season, our huge inventories across segments will contribute to increasing the DAU’s on the platform.” As per Nielsen India’s E-commerce Consumer Panel (E-Analytics Solution), there was a double-digit increase in average spend of online shoppers for electronics and accessories (39%), mobile and accessories (12%), and fashion, including apparel, footwear, and accessories (10%) after the pandemic. Appliances (e.g.TV, WM, refrigerators, etc.) also saw notable shopper spending increase at 9%. E-commerce giant Amazon is also ramping up its product range for the festive season. “Together with thousands of small &amp; medium business and brand partners, we continue to offer our customers the widest selection, convenience, and fast delivery. We are humbled by how millions of Indian customers have made us a part of their daily lives. Also, customers continue to believe that online shopping is the safest way to shop which has been reflecting in all the recent events of Amazon like Prime Day 2021, Great Freedom Festival, Rakhi Store, Onam store and so on. This festive season is not a normal one for reasons we all know and our success metric would be focused on how we can make our sellers successful. Customers can look forward to shopping from a wide selection of products across categories like Home &amp; Kitchen, Fashion &amp; Beauty, Appliances and Smartphones, Grocery essentials and more from the comfort and safety of their homes," said an Amazon India spokesperson. This growth trajectory of e-commerce platforms in India testifies how customers are increasingly recognising the importance of comfort shopping within closed doors, and after seeing their businesses take a plunge in the first three months of the lockdown, more and more sellers are also coming online.

This festive season, e-commerce platforms are betting big on Tier II and III markets, which are likely to contribute $150 million to e-commerce growth this year

<ul><li>The Indian e-commerce industry is grow to $200 billion by 2026.</li><li>The National e-commerce policy earlier had a deadline of being introduced by the end of 2019.</li><li>A recently released consumer protection draft is waiting for comments from leaders.</li><li>The draft e-commerce policy spelt trouble for <keyword id="6354742" type="COMPANY" weightage="20" keywordseo="Flipkart">Flipkart</keyword>, <keyword id="18635" type="CITY" weightage="20" keywordseo="Amazon">Amazon</keyword>.</li></ul>Indian e-commerce is growing at a fast rate as it moves to reach out to Bharat – the next 200 million internet users in the country. But not all is completely well with this industry which is expected to grow to $200 billion by 2026. From deep discounting to FDI in e-commerce to data protection, there are several concerns that the industry and its consumers have to deal with. Yet, considering the speedy growth of the industry, the Indian government is all set to regulate the sector. It is planning to bring about a National e-commerce policy. A draft policy was introduced in February and recently yet another draft on consumer protection in e-commerce also came in. The government is engaging with industry leaders to include their thoughts in the final policy. The draft e-commerce policy itself opened debate as Walmart-owned Flipkart, Amazon came directly under the government’s line of fire. The draft has not yet been converted into a bill and hence will not be tabled at the winter session of the parliament. However, there could be an overlap with the data protection bill that is a part of the session. The National e-commerce policy was supposed to be introduced by the end of 2019. A recently released consumer protection draft is waiting for comments from leaders The government on November 11 released a draft consumer protection in e-commerce rules. It has been opened up to the public so that e-commerce industry leaders can give their comments on it by December 2, 2019. The draft once again emphasised that e-commerce players cannot directly or indirectly influence the price of the goods or services and must maintain a level playing field. They also cannot falsely represent themselves as consumers or post reviews on their behalf. It also says that every e-commerce player will have to “publish on its website the name of the Grievance Officer and his contact details as well as mechanism by which users can notify their complaints about products and services availed through their web site”. The draft e-commerce policy spelt trouble for Flipkart, Amazon Introduced in February 2019, the draft policy had already gone through multiple rounds of deliberations. While homegrown players like Snapdeal, Paytm Mall have more or less found a safe place in the policy, Flipkart, Amazon and Chinese retailers like Club Factory, Shein are in a tough spot. As the draft, FDI in e-commerce will only be allowed for the marketplace model and not for inventory-based selling. This means that Flipkart and Amazon, will not be allowed to own or sell through any of their entities. Through several meetings over the year, the government has made its intentions clear. In a recent closed door meeting with industry players, Commerce and Industry Minister Piyush Goyal also told Amazon and Flipkart that they must ensure compliance with new foreign investment rules and steer clear of deep discounting. Chinese retailers too will find it difficult to function without having an Indian entity. The policy says that all product shipments from other countries to India must be channelized through customs.. One of the major problems in the e-commerce sector, deep discounting or predatory pricing will be looked into as well. Anti-counterfeiting measures will be taken to curb the growing menace of fake products. Another important point of the policy is the government's insistence that all local data should be stored in India.

India’s e-commerce policy is still in the works – with Flipkart, Amazon on tenterhooks

Ten years ago, my mother severed her years-long allegiance with her local shopkeepers and started buying products online. It felt like a historical moment. All her friends and their friends gradually followed suit too. The material force driving this transformation in India's consumer landscape - that kicked off with <keyword id="6354742" type="COMPANY" weightage="20" keywordseo="Flipkart">Flipkart</keyword> in 2007 deciding to sell books - was <keyword id="112217" type="PERSON" weightage="20" keywordseo="Discounts">discounts</keyword>. Since then, this trail mix of coupons, deals and sales has generated its own feeding frenzy and has become a crucial component on every online retailer's entry strategy in India. Apart from being the major driver of sales, discounts have made annual bumper selloffs a staple Indian tradition. Flipkart’s Big Billion Days and <keyword id="18635" type="CITY" weightage="20" keywordseo="Amazon">Amazon</keyword>’s Great Indian Festival are important for customers, big businesses and small businesses. Millions of products are sold. After Flipkart’s festive sales last year, the gross merchandise value for the industry reached Rs. 9000 crore - approximately $1.3 billion. While a <a href="https://www.bcg.com/en-in/publications/2017/marketing-sales-globalization-new-indian-changing-consumer.aspx">BCG report released last year</a> proclaimed that the price-conscious Indian consumer now prefers convenience over discounts when buying products online, <keyword id="35621" type="PERSON" weightage="20" keywordseo="e-commerce">e-commerce</keyword> firms are still competing in a proverbial race to the bottom. Everyone wants to offer the lowest prices. And what's more, the government has now legitimised this discounting model. The <keyword id="6354751" type="UNKNOWN" weightage="20" keywordseo="income-tax">Income Tax</keyword> Appellate Tribunal, on April 25th, allowed Flipkart to continue recording discounts on its products as marketing and advertising expenses, thereby allowing the e-commerce firm to claim tax deductions on them. Flipkart was appealing a ruling from the Income Tax Department, which said it owed ₹1.1 billion in unpaid taxes for the year ended March 2016. The move will allow India’s e-commerce firms to a sigh of relief while encouraging their loss-leading impulses. On the other hand, it will also ensure that price-conscious consumers keep getting the benefits of heavy discounts on online shopping. The economics of discounts However, there is more to discount policies than meets the eye. The IT Dept, last year, had sought to make e-commerce firms classify these as a “capital expenditure”, which is taxed over a period of 4 to 10 years, as opposed to “revenue expenditure”, which refers to daily expenses that are deductible in the period they are incurred. When Flipkart offers customers discounts, the company absorbs these costs. Its sellers are usually paid in full or charged lower commissions, even though customers don’t pay full amounts for products. Under the IT Department’s proposed classification, Flipkart would not have been allowed to deduct the full value of these costs from its bottom line, which in turn would have increased its tax liability. The IT Dept’s rationale was that since discounts allowed companies to build their brands and retain customers for the long haul, they should be classified as a capital asset - essentially, an asset that provides returns over an extended period of time. However, brand value is largely an intangible cost and hence, it is a subject of confusion. Why it pays to report a loss Flipkart said that it needed to offer discounts on its products in order to achieve greater sales and increase its market share, making these discounts tax-deductible marketing expenses. Under the Income Tax Act, the government does not have the authority to levy taxes on such expenses, which fall under "revenue expenditure". This is precisely why e-commerce firms like Flipkart and Amazon India are reporting losses in the first place - to avoid taxes. These firms offer discounts to consumers in order achieve high sales, and write off these discounts as marketing expenses - leading to a net loss - so that they aren’t liable to pay tax on them. For the year ended March 2017, Flipkart’s net loss reportedly widened by<a href="https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/flipkart-revenues-rise-29-losses-swell-68-in-fy17/articleshow/62761811.cms"> 68% to ₹87.71 billion</a> while sales rose 29% to nearly ₹200 billion. Despite reporting losses, the sales machine keeps on chugging because these firms draw up on the sizeable investments of backers like Softbank Corp, or in Amazon’s case - cash reserves, in order to finance these discounts. If discounts were to be classified as capital expenditure, e-commerce firms would have no reason to offer them and without the discounts, customer demand would plummet,. Under the scanner E-commerce firms have been under the IT Dept’s scanner for a while for availing tax deductions on discounts while reporting high sales. In order to set a precedent for the rest of the industry, India’s income tax authorities had asked Flipkart and Amazon to reclassify their discounts as capital expenses in August 2017. The following December, the IT Dept ordered Flipkart to pay up ₹1.1 billion. Flipkart<a href="https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/income-tax-panel-refuses-to-stay-rs-110-crore-tax-demand-on-flipkart/articleshow/62876893.cms"> unsuccessfully appealed the decision</a> in February 2018, explaining that it couldn’t pay taxes on “fictional” assets, before lodging a renewed appeal with the Income Tax Appellate Tribunal. Flipkart, Amazon and their competitors in the online retail space aren’t only causing headaches for income tax authorities. Physical retailers like the Future Group, Shoppers Stop and members of the Indian Cellular Association (ICA) are finding it hard to navigate India’s retail industry as more and more consumers scour deals online. Earlier this month, the Retailers Association of India (RAI), an industry body that includes Future Group and Reliance Retail, wrote a letter to the Suresh Prabhu, the Union Minister for Commerce and Industry, alleging that online retailer were violating India’s FDI rules by<a href="https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/retailers-seek-action-against-flipkart-amazon-for-violating-fdi-rules/articleshow/63674973.cms"> by lowering prices of products on their websites and illegally funding “abnormal discounts.</a>” Under India’s foreign investment regulations, retailers can only be foreign-owned if they function as marketplaces to connect vendors and buyers, without actually influencing prices. A similar letter was sent by the ICA explaining that e-commerce firms were driving down prices for mobile handsets with direct and indirect discounts, resulting in the closure of mobile retail outlets. The commerce and industry responded by<a href="https://economictimes.indiatimes.com/industry/services/retail/rbi-ed-need-to-look-into-charges-against-e-tailers/articleshow/63839420.cms"> passing the buck on to</a> the Reserve Bank of India and the Enforcement Directorate. A decision is awaited. How long can the party continue? India’s e-commerce industry is relatively young, and growing fast (it is expected to touch<a href="https://www.ibef.org/industry/ecommerce.aspx"> US$188bn by 2025</a>) as more and more consumers get access to the internet and change their buying habits. As a result, e-commerce firms are not focussing on profitability for now. Their overarching purpose is to increase their market share by driving up sales and the number of active monthly customers. However, as opposed to selling everything for cheap, they’re focusing their discounting approach on popular segments like<a href="http://indianexpress.com/article/business/companies/e-commerce-sales-the-economics-of-discounts-amazon-flipkart-snapdeal-big-indian-sale-4651737/"> electronics and clothing</a>. Much like the telecoms industry, where Jio has sparked a price war wherein everyone is trying to undercut each other to hold onto the market, once a number of competitors are forced to leave after burning too much cash, the victor will be in a position to raise prices for everyone. Snapdeal has already become a casualty of the discount war. Now, with Walmart set to<a href="https://www.livemint.com/Industry/YuoY0Iim6xhlBdE7gdz7yL/FlipkartWalmart-deal-on-track-butAmazon-remains-a-contend.html"> purchase a majority stake in Flipkart</a> to take on Amazon, India’s consumers could benefit from lower prices for at least the medium term. Both these entities have a lot of money to spare and are comfortable playing the long game. However, in the event that the Walmart deal doesn’t go through and Amazon ends up joining forces with Flipkart, then the combined company will have<a href="https://www.bloombergquint.com/business/2018/04/08/flipkart-amazon-combine-may-face-close-scrutiny-for-competition-aspects"> a monopoly</a> over the online retail segment- spelling doom for price-conscious consumers. The Indian government is currently in the process of formulating<a href="https://www.livemint.com/Industry/EuTJ9j7Dn4VT5CyrpaZL2J/Framework-for-national-ecommerce-policy-to-be-finalized-soo.html"> a policy framework for the e-commerce sector</a>. It’s goals, however, are conflicting. On one hand, it will try to level the playing field between e-commerce firms and brick-and-mortar retailers and also increase the tax liabilities for online retailers. On the other, it does not want to disincentivise companies from entering the e-commerce space and reduce the industry’s overall competitiveness. It will be a tricky balancing act.

India, your e-commerce discounts are safe

Issues related to data privacy and rising <keyword id="20127272" type="General" weightage="20" keywordseo="online-frauds" source="keywords">online frauds</keyword> are emerging as significant hurdles in the growth of e-commerce in India, said the <keyword id="20613906" type="General" weightage="20" keywordseo="Economic-Survey" source="keywords" meta.keywordsubtype="org" meta.entityname="Economic Survey" meta.hostid="261" meta.entityid="Economic Survey">Economic Survey</keyword> 2023-24 tabled in Parliament on Monday. Citing third-party data, the survey said that the e-commerce industry in India is expected to cross USD 350 billion by 2030 and called for the need to educate users on the safe use of e-commerce platforms. "The rise of e-commerce is constrained by inadequate skills required for online selling, such as cataloguing. <keyword id="22505774" type="General" weightage="20" keywordseo="data-privacy-issues" source="keywords">Data privacy issues</keyword> and increasing online fraud have turned out to be the most significant hurdle in the growth of e-commerce in India. It becomes imperative to educate users on the safe use of e-commerce platforms," the survey said. The survey mentioned that India's e-commerce market has gained significant momentum during the past few years, owing to technological advancements, evolving new-age business models coupled with government initiatives like the Digital India program, UPI, One District - One Product (ODOP), Open Network for Digital Commerce (ONDC), new foreign trade policy, easing of FDI limits and Consumer Protection (E-Commerce) (Amendment) Rules 2021. It has identified data privacy and <keyword id="19906883" type="General" weightage="20" keywordseo="cybersecurity" source="keywords">cybersecurity</keyword> as critical concerns in the <keyword id="22505776" type="General" weightage="20" keywordseo="digitisation-of-services" source="keywords">digitisation of services</keyword> in the country and called for adopting strong security measures, compliance with privacy regulations, and innovation, among others. "Data privacy and cybersecurity have become critical concerns with the increasing digitisation of services," according to the survey. It said that the government is spearheading data protection laws and cybersecurity policies to safeguard consumer data and strengthen cybersecurity measures in the services sector. "To further embrace technology with confidence, ensuring the adoption of strong security measures, compliance with privacy regulations, and fostering innovation in security technologies are essential," the survey noted. It said the future of e-commerce is built on the enhanced <keyword id="20290101" type="General" weightage="20" keywordseo="user-experience" source="keywords">user experience</keyword> through <keyword id="19899640" type="General" weightage="20" keywordseo="AI" source="keywords">AI</keyword>, seamless <keyword id="21332958" type="General" weightage="20" keywordseo="digital-payment-methods" source="keywords">digital payment methods</keyword>, innovations like UPI, and business engineering data analytics for business operations and enhancements. The survey mentioned that the buyer ecosystem in India is evolving at a very sharp rate, and business models will need to innovate to serve the needs of a diverse shopper base regarding service expectations, price sensitivity and language requirements. "Local language platforms are needed as the shopper base expands to tier-2 and tier-3 cities. Growing startups and innovative social media platforms provide an opportunity to test unique business models that might be targeted to specific demographic cohorts," the survey said.

Data privacy issues, online frauds emerging as e-commerce growth hurdles: Eco Survey

E-commerce is growing by <a href="https://www.bigcommerce.com/blog/ecommerce-trends/">30% every year</a>, most notably in one of the world’s largest emerging markets—India. The cities of <a href="https://newsroom.shadowfax.in/exactly-how-broken-is-indias-last-mile-logistics-cbc34af75f7c">Bengaluru, Mumbai, and Delhi</a> are responsible for 40% of all E-commerce orders. Still, E-commerce offers many challenges, and it’s extremely difficult to find creative solutions to the traditional challenges facing E-commerce companies. In the context of Indian businesses finding practical and creative solutions to those challenges, it becomes even harder, but some companies are surging ahead of the competition in a race that could be worth hundreds of billions of dollars in the near future. We asked <keyword id="6515681" type="PERSON" weightage="100" keywordseo="ryan-andreas">Ryan Andreas</keyword>, co-founder of <a href="http://quantifiedcommerce.com/">Quantified Commerce</a> about the biggest challenges for e-commerce in India, “e-commerce is facing a crucial moment as companies expand globally…” said <keyword id="10989" type="PERSON" weightage="20" keywordseo="Andreas">Andreas</keyword>, “not only are we going to have to overcome traditional problems like consumer loyalty and brand identification, but as we move into other parts of the globe there are issues that are relevant to the specific countries we’re expanding into.” One of the issues unique facing E-commerce companies in India is infrastructure. India has the <a href="http://web.worldbank.org/archive/website01291/WEB/0__CO-21.HTM">largest network of roads</a> in the world, but only 2% of them are national highways. Combine this with lax government regulations <a href="https://qz.com/1086057/1-5-million-dead-in-a-decade-just-what-is-wrong-with-indias-roads-and-vehicles/">regarding licensing</a> drivers and any E-commerce company that attempts deliveries in India will face problems with traditional forms of delivery. This difficulty in delivery leads to fewer deliveries made on time, or at all, which leads to <a href="https://econsultancy.com/blog/10052-free-shipping-and-delivery-timing-are-key-for-customer-satisfaction">less satisfied customers</a>, which leads to less customer loyalty, which is the death spiral for any E-commerce company. In order to get around these problems,<a href="https://www.linkedin.com/company/quantifiedcommerce/"> Quantified Commerce</a> is making inroads in India’s last mile and logistics infrastructure, and researching drone delivery, which was <a href="https://qz.com/1118172/dgca-indias-aviation-regulator-has-finally-put-out-draft-regulations-for-flying-drones/">recently recognized by the Indian government</a> as a serious alternative to traditional means of delivery. The infrastructure of the country you’re delivering in isn’t the only infrastructure E-commerce companies need to be concerned about. The infrastructure of a company is just as important. Vertically-integrated brands, such as the ones built by <a href="https://twitter.com/QuantifiedC">Quantified Commerce</a>, are becoming more and more mainstream. <a href="http://www.quickmba.com/strategy/vertical-integration/">The benefits of vertical integration</a> allow companies to cut down on costs, improve supply chain coordination, and increase the entry barriers of potential competitors. Because <a href="http://quantifiedcommerce.com">Quantified Commerce</a> is a vertically-integrated company, it owns all of the manufacturing and warehouses. Because it sells directly to its consumers, it has been able to cut down on costs in a big way, while simultaneously building a dominant presence in one of the world’s biggest emerging markets. However, having the infrastructure in place to deliver products to your customers means nothing if you don’t have customers in the first place. A challenge that E-commerce companies face is finding and targeting not just customers, but the right customers and E-commerce companies in India are no different. As India’s <a href="https://www.forbes.com/sites/edfuller/2015/09/10/india-asias-next-economic-dynamo/#6c8d6b89221f">middle class</a> grows they want to spend money, but they need to know where and what they can spend it on. By taking advantage of new advertising mediums like <keyword id="6354576" type="ORGANIZATION" weightage="20" keywordseo="facebook">Facebook</keyword> and Youtube, <a href="https://www.instagram.com/quantifiedcommerce">Quantified Commerce</a> is able to target and advertise directly to consumers. This type of targeted advertising is recognized as <a href="https://www.forbes.com/2010/03/24/behavioral-targeted-ads-advertising-ftc-privacy-cmo-network-ads.html#16ee69df6042">an extremely effective way of generating clicks</a> and converting customers. Not only is <a href="http://quantifiedcommerce.com">Quantified Commerce</a> leveraging new, effective advertising mediums like Facebook and Youtube, it’s also taking advantage of new, exciting, methods of advertising. By partnering with social media influencers <a href="https://twitter.com/QuantifiedC">Quantified Commerce</a> is able to build and earn trust with potential customers, and take advantage of the concept of social-proofing in order to attract, and ultimately convert customers. This a method of earned advertising, which <a href="http://www.nielsen.com/us/en/press-room/2012/nielsen-global-consumers-trust-in-earned-advertising-grows.html">Nielsen reported 92%</a> of users trust more than traditional forms of advertising. With offices located in Times Square, New York, <a href="https://www.instagram.com/quantifiedcommerce">Quantified Commerce</a> has access to the best talent in the world. While bringing new talent on board, <a href="http://quantifiedcommerce.com">Quantified Commerce</a> also grows talent within. They have an emphasis on leadership and education in order to eliminate <a href="https://wiredandnetworked.com/2015/01/23/doing-business-in-india-learn-the-culture-code/">power distance</a>. By focusing on education and leadership initiatives <a href="https://www.linkedin.com/company/quantifiedcommerce/">Quantified Commerce</a> is allowing the smartest and most forward-thinking members of Indian society to have a fair say in business practices. I don’t have to hyperlink anything here to tell you that better ideas mean better business. As India develops both economically and socially it is important to be on the lookout for companies that understand both the social and economic infrastructure of the country. Companies like <a href="https://twitter.com/QuantifiedC">Quantified Commerce</a> not only have an understanding of India but a mastery of digital advertising, which in the wild west that is the Indian E-commerce market, is a winning combination. We will be tracking their progress over the coming years along with the rest of the e-commerce space.

Quantified Commerce’s Ryan Andreas on e-commerce in India

<ul><li><keyword id="160091" type="COMPANY" weightage="20" keywordseo="USIBC">USIBC</keyword> has urged the Indian government not to tighten e-commerce rules and not to make any more material restrictive changes to e-commerce investment rules.</li><li><keyword id="853920" type="COMPANY" weightage="20" keywordseo="CAIT">CAIT</keyword> has sent a strongly-worded letter to USIBC President Nisha Biswal stating that USIBC's intervention is unwarranted and runs against the interests of the 85 million traders of India.</li><li>CAIT National President B.C. Bhartia and Secretary General Praveen Khandelwal said that the intervention of USIBC shows both <keyword id="18635" type="COMPANY" weightage="20" keywordseo="Amazon">Amazon</keyword> and <keyword id="80487" type="COMPANY" weightage="20" keywordseo="walmart">Walmart</keyword> are trying every route for an embargo over proposed changes in Press Note.</li></ul>New Delhi, The <keyword id="76562" type="ORGANIZATION" weightage="20" keywordseo="Confederation-of-All-India-Traders">Confederation of All India Traders</keyword> (CAIT) has strongly criticised US-based lobby group <keyword id="181958" type="ORGANIZATION" weightage="20" keywordseo="US-India-Business-Council">US-India Business Council</keyword> (USIBC) for objecting to an initiative of DPIIT to reframe the Press Note 2 of <keyword id="44528" type="COMPANY" weightage="20" keywordseo="FDI">FDI</keyword> policy. "The uncalled-for intervention of USIBC shows utter desperation of US companies like Amazon and Walmart and which are part of this lobby group, as they have understood that their sinister game of controlling and dominating e-commerce and retail trade of India will soon be over and they are trying to block initiative of DPIIT for bringing a new Press Note and e-commerce policy," CAIT said. "However, the 85 million-strong business community of India will ensure that reforms in e-commerce landscape should take place as soon as possible," the trader's body said. The CAIT has sent a strongly-worded letter to USIBC President Nisha Biswal stating that without knowing the true facts and under pressure of Amazon, Walmart and others, USIBC's intervention is unwarranted which runs against the interests of the 85 million traders of India. USIBC has urged the Indian government not to tighten e-commerce rules and not to make any more material restrictive changes to e-commerce investment rules as it will limit e-commerce firms from leveraging their scale. CAIT National President B.C. Bhartia and Secretary General Praveen Khandelwal said that at a time when in a recent judgement, the Delhi High Court has found Amazon guilty of violation of FDI policy and FEMA, the intervention of USIBC shows both Amazon and Walmart are trying every route for an embargo over proposed changes in Press Note. Bhartia and Khandelwal said that such a hue and cry is not understandable. CAIT said the government is not bringing any new law or policy and it is just trying to include Dos and Don'ts of the Press Note. Further scaling of any business can't be stopped by law or any policy. However, the scaling or growth in business has to be within the purview and parameters as defined in the policy or the law. "Why any entity should worry when the government is clarifying the policy?" CAIT asked. Bhartia and Khandelwal said that USIBC is mistaken in terming the business of these companies as an investment in India. The capital which these companies are using is meant to operate their business activities whose return in shape of revenue is accrued by these companies as their profit. Therefore, terming such capital as investment is factually wrong. CAIT said they are using this so-called investment as burning of capital to support their unethical business practices and also to violate the FDI policy of the government and the Foreign Exchange Management Act (FEMA). In a recent judgement of Delhi High Court, the court has taken on record that Amazon is violating FDI policy and FEMA, it added. SEE ALSO: <a href="https://www.businessinsider.in/business/news/one-thing-we-now-know-for-sure-is-in-the-budget-proposals-a-new-infra-lending-institution/articleshow/80600438.cms" data-type="tilCustomLink">One thing we now know for sure is in the budget proposals⁠— a new infra lending institution</a> <a href="https://www.businessinsider.in/budget/news/nirmala-sithraman-union-budget-2021-date-time-schedule-and-other-details-you-should-know/articleshow/80598178.cms" data-type="tilCustomLink" target="_blank">Union Budget 2021: Date, time, schedule and other details you should know</a> <a href="https://www.businessinsider.in/business/startups/news/a-golden-chance-for-startups-to-raise-a-funding-of-2-million-in-just-10-minutes-at-iit-bombays-e-summit-2021/articleshow/80598283.cms" data-type="tilCustomLink" target="_blank">A golden chance for startups to raise a funding of ₹2 million in just 10 minutes at IIT Bombay’s E-Summit 2021</a>

CAIT miffed with USIBC for intervening in India's e-commerce policy

<ul><li>According to Morgan Stanley, as online shoppers mature so does their spending capacity. </li><li>49% of total shoppers having been spending online for less than two years. </li><li>In India, a growing number of e-commerce users come from the Tier II and III cities.</li></ul>When a person moves from physical shopping to online, he or she spends very little in the first two years. And more than half of India’s online shoppers are less than two years old. However, the good news for e-tailers is that from the third year onwards there is an exponential jump in purchases made by the same shoppers. Global investment firm Morgan Stanley’s research has shown that it actually doubles. With the average ‘maturity’ of Indian online shoppers standing at 3.3 years today, there’s only scope for growth of Indian e-commerce. According to a <a href="https://www.pwc.in/assets/pdfs/industries/retail-and-consumer/retail-report-300812.pdf">report</a> done by FICCI and PwC on Indian e-commerce, the Indian retail market is expected to cross $1.3 trillion by 2020. The smartphone penetration in the country has led to the increase in <keyword id="6357762" type="UNKNOWN" weightage="20" keywordseo="online-shopping">online shopping</keyword>. A <a href="https://economictimes.indiatimes.com/industry/services/retail/number-of-online-shoppers-to-surpass-120-million-in-2018/articleshow/64718407.cms">study</a> done by ASSOCHAM shows that the increase in Indian e-commerce comes from “phone shoppers” from the country’s Tier II and III cities. It is this market opportunity that has brought in the bigwigs of global retail to set up shop in India. Walmart with its acquisition of Indian unicorn <keyword id="6354742" type="COMPANY" weightage="20" keywordseo="Flipkart">Flipkart</keyword> is finally aiming at success in the online market. But Walmart also has a massive competition from <keyword id="6354743" type="COMPANY" weightage="20" keywordseo="Amazon-India">Amazon India</keyword>. For Amazon, India is one of its biggest markets which is why it has been pumping in money constantly into the country notwithstanding the losses. And all of this is challenged by India’s Mukesh Ambani. Ambani, who hopes to achieve the same success in e-commerce as his telecom project Reliance Jio did, is <a href="https://www.business-standard.com/article/companies/mukesh-ambani-to-make-e-commerce-debut-during-diwali-s-bumper-deal-frenzy-119030601280_1.html">reportedly</a> looking to enter the e-commerce market during Diwali 2019. See Also: <a href="https://www.businessinsider.in/in-india-amazons-fight-is-not-just-with-flipkart-but-with-paytm-google-pay-and-truecaller/articleshow/67456165.cms">In India, Amazon's fight is not just with Flipkart, but with PayTM, Google Pay and Truecaller</a> <a href="https://www.businessinsider.in/e-commerce-wars-amazons-jeff-bezos-vs-mukesh-ambani-in-india/articleshow/67620116.cms">Amazon's newest challenger may be the richest man in Asia</a>

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