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India Wants to Buy. Are You Ready to Sell?

Are you in India yet? If you aren’t, you should be. India’s e-commerce growth is astonishing.

Below Jack Ehlers, Director of Payment Partnerships at PPRO Group, delves into the opportunities available, the risks involved, the rewards, and the steps you can take.

When we think of e-commerce opportunity in Asia, the mind instantly goes to China. With an online market worth over £1billion[1] — representing 42% of global e-commerce[2] — it’s hardly surprising that China is on everyone’s thoughts.

But China is not the whole story. The e-commerce market in South East Asia, for instance, is worth $10 billion and is growing at an astonishing 41% a year[3]. Hong Kong, the Philippines, South Korea and Singapore are just a few of the booming Asian markets, outside China, to which the e-commerce industry needs to start paying more attention.

But the market with the most untapped potential is, without a doubt, India. With over 400 million Internet users and e-commerce sales worth $38 billion, the country is already bigger than most European markets.

Where is the opportunity?

Even today, on some forecasts, India’s e-commerce market is growing by 40-50% a year[4]. And this is based on today’s infrastructure. In August 2018, analysts at Nokia predicted that broadband coverage in India would outpace that in other world markets[5].

In September, the Indian government approved new policies designed to attract $100 billion in telecoms investments[6]. As more consumers come online, the growth of the e-commerce market will accelerate further.

Right now, cross-border sales are significant but still modest for a market of India’s size. The best estimate is that 18% of all online sales, just under $7 billion (around the same size as the Argentinian e-commerce market in its entirety) are cross-border[7].

This need not be an insurmountable barrier to entry for non-Indian merchants. By law, Indian e-commerce platforms can only operate as marketplaces — giving access to a wide range of brands and merchants[8].

Since 2004, the Indian middle class has more than doubled in size to over 600 million people[9]. With growing prosperity comes opportunity, for those companies ready and equipped to rise to the occasion.

Risks, strategies and next steps

To prosper in India now, most merchants should not rely solely on cross-border sales. A local partner, in most cases a marketplace, is a must. According to the analyst Coresight Research, the five largest Indian e-commerce marketplaces, by net revenues, are Flipkart ($3bn), Myntra ($298m), Bigbasket ($183m), Snapdeal ($134m) and Paytm ($120m)[10].

A local partner that understands Indian sales and other relevant taxes is also important. India’s Goods and Services Tax (GST) is applied to different goods at rates varying from 5% right up to 28%. Most e-commerce items fall into the 28% bracket, but this is not always the case.

With a highly varied payment markets (cards only account for 32% of payments today and that number may fall, as more and more less affluent consumers come online)[11] , local payment partners are also vital to success in the Indian market.

The most popular categories in the Indian e-commerce market are travel (16%), clothing (10%) and electrical goods (10%)[12]. Merchants already serving these sectors in other markets, should look for local partners who can help them reach and gain traction with their target demographics.

India is a rapidly growing e-commerce market in a country where online coverage is expanding by the day. With access to the right marketplaces and the right mix of payment methods — in the first instance, cards, bank-transfers and cash-based local payment platforms — merchants have every chance of finding a ready and lucrative market for their goods and services.

[1] Original PPRO research

[3] Matteo Sutto. “The State of eCommerce in Southeast Asia in 2017”, 9 February 2018, Medium.

[4] Chitrangana.com press release on 8 August 2018

[5] Danish Khan. “Nokia expects India to outpace world in wired broadband”, 18 August 2018, The Economic Times.

[6] Press Trust of India. “Cabinet clears new telecom policy to attract $100 billion investments: Report”, 26 September 2018, The Hindustan Times.

[7] DLocal Industry Report, 2018, page 26

[8] John Koetsier. “Report: Amazon India Worth $16B With 30% Market Share, Will Hit $70B GMV In 2027”, 18 May 2018, Forbes.

[9] “India’s Growing Middle Class – Ryan Andreas, Quantified Commerce”, 3 May 2018, The Free Press Journal.

[10] “Deep Dive: Indian E-Commerce Platforms Update”, 11 September 2018, Coresight Research.

[11] Original PPRO research

[12] Original PPRO research

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