The Impact of Ecommerce On India’s Retail Industry

Online shopping is now fast picking up as the leading shopping trend among Indians. This is why e-commerce retail industry is getting a foothold in the Indian market. Much of the credit for this shopping revolution goes to smartphones and the development of compatible e-commerce mobile apps. Honestly, facts speak and prove it!

 > India was home to 404.1 million smartphone users in 2017. This number is expected to reach 829 by 2022, says an INC42 report.

> According to the same report, Indians consumed 108 petabytes of data in 2017. This is likely to cross the milestone of 540 petabytes by 2022. It is mainly because Indians now spend most of their time using the mobile applications of popular and active e-commerce players in the Indian e-commerce retail industry. 

> If a report published in this regard on IndiaTimes is to be believed, India has already crossed the milestone of 120 million online shoppers in 2018.

> The number of online shoppers in India is expected to increase up to 329 million by 2020, says a Statista report.

This is something that the e-commerce retail industry in India is going to feed on for growth. At the same time, this is something that all e-commerce players in India are currently utilizing to outcompete their offline retail competitors.

The impact of E-commerce on India’s offline retail industry:

E-commerce app development has been the key in this battle between the two types of retail markets in India. Popular Indian Online retail industry players like Paytm, Flipkart, IndiaMart, Amazon, eBay and many more have has leveraged the potential of mobile apps to reach their customers and give them positive online shopping experience in many ways.

Coming to the point, taking all this into consideration, the development of e-commerce mobile apps has helped the online retail industry in India grow effectively. But their growth using this form of digital revolution has impacted the offline retailers’ business significantly.

How? Let’s know:

The overall annual turnover of offline retail market players has reduced significantly. Even their profit margin has reduced to peanuts. The government of India does not allow them to have their own inventory to ensure healthy competition. But these online retail industry players in India are still acting as the retailers. This is something that has affected offline retail market players’ profit margin to peanuts, says the published report.

Taking this into consideration, RAI (Retailers Association of India) AIFMRA (All India Footwear Manufacturers Retailers Association) filed a petition claiming that online retailers are clearly violating current FDI (Foreign Direct Investment). In simple words, they are acting as retailers.

Even CAIT (Confederation of All India Traders) also filed a petition in Delhi High Court in this regard. This petition questions the way online retail industry players in India act as retailers since they handle payment, delivery, returns, refunds etc. by them.

Even Kerala High Court received a similar petition through the MRA (Mobile Retailers Association) accusing popular e-commerce retail industry firms like Amazon, Flipkart, and Snapdeal of clearly violating current FDI norms to enter into exclusive partnership with manufacturer for exclusive bulk deals for selling mobile phones only on their website instead of selling anywhere else, says a report published on YouthKiAwaaz.

According to the same report, the number of offline retailers affected negatively by such practices of online retailers was 10% 2014-15, without a doubt, it has increased up to 20%. But most of the negatively affected retailers are either those that do not want to partner with an online retailer or those that want to have a mobile application for their business.

Therefore, it is important that the offline retailers realize the value-seeking mobile app development could add to their business. In this way, their business will, first of all, get online. Secondly, they will be able to provide a positive online shopping experience to help their business survive e-commerce competition from their online rivals. More importantly, their profit margin will increase as their customers will remain loyal to their brand. It is because they want to shop on the go using mobile apps. In case you are also one of them, it is now time for you to do some thinking about it.