How real or hyped is the Indian opportunity for Internet Retail [#IRE 2014]

India’s internet base is the third largest in the world after China and the US, and is growing by 40 percent a year. Despite this, Ecommerce continues to under-perform with all major companies bleeding. Is Ecommerce in India actually as big as it appears to be? Are the opportunities in online business a farce or a reality?

At iamWire’s Internet Retail Expo 2014, a discussion was held with industry experts to understand the opportunity available in a more deeper sense.

The panel included Ashish Sharma, Director, Booz and Company; Pawan Gadia, CEO, Ferns and Petals; Anchal jain, MD, IndEU Capital; Prashanth Prakash, Partner, Accel and Satish Kumar, Founder, Chairman and CEO, GLOPORE IMS & geekstree along with Gagandeep Sapra, Contributing Journalist, Hindustan Times who was the moderator for the session.

Till date USD 1.5 billion has been invested in Eretail out of which 1/3rd has been in the last year. With online players valued most over offline counterparts, this progress is certainly not a hype, said Ashish.

Anchal, on the other hand believes that there was hope when Ecommerce was first introduced. “The problem of reach and cost were expected to be solved. Unfortunately, it did not. There are too few brands and shopping centers and thus the price of doing business is crazy,” he added.

Satish is of view that even if its real, there are still some deciding factors such as valuation, model, how one can really aggregate, etc.

Prashanth, on a higher note accepted that India will actually do more business online. There are 50 cities outside metro’s which will do as much commerce as metro cities. ”If access and convenience is what driving commerce, than its the best place to start with,” he added.

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The discussion further moved towards the driving factors in this field. “We have noticed that we have only 15% of customers who would want a discount. Discounts are not that the only way forward for internet retail.”, said Pawan.

The panel however agreed to the fact that if discounts are removed, it would certainly lead to a drop in traffic. To counter that we need more players in the online retail sector, more people who are willing to do business online. So that the we achieve a balance in cost synergies.

Also, they agreed that opportunities in the segment are true, and not a hype anymore. “For Ecommerce to grow in India, the whole ecosystem needs to be healthy and we need a lot of new players for that. What’s visible is only the big successes and big failures. We fail to notice the opportunities where the segment is well defined. Specific segments offer profit and have plenty of opportunities. Crux is that we will see more players come in. Internet Retail is certainly here to stay.”

On being asked if Ecommerce will figure out how to make money online, panel said that one has to go category wise. “Fashion is starting to be a profitable category. In the next 18 months, you will see new companies in fashion eCommerce growing to be profitable.”

As an early-stage Ecommerce market, India faces several development hurdles, right from online payments to order fulfillment to packaging and delivery. Ecommerce is yet to create a sizeable demand or trust amongst consumers. A large number of Indian consumers are still not ready to trust online transactions. 85 % of online users transact online in the US, versus only 8 % in India. Still, the experts believe that with a differentiating concept and achievable goals, one can get all the funding he/she need to reach heights in the Indian Ecommerce space.

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For an overview of the social media discussions around this session, see this Storify. You can also watch this three-minute trailer or the full video.