04 consumer ecommerce potential in india, v8, (corrections in print version) 4 aug 2011_57

7/30/2019 04 Consumer Ecommerce Potential in India, V8, (Corrections in Print Version) 4 Aug 2011_57

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Consumer E-commerce Potential in IndiaOpportunities, Challenges and Roadmap for the Future

Prepared for IAMAI

May 2011

By Intelink Advisors


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IntelinkAdvisors 1

Consumer E-commerce Potential in IndiaOpportunities, Challenges and Roadmap for the Future

May 2011Intelink Advisors

CONTENT

Page

About the Study 2

Executive Summary 3

1. Macroeconomic Assessment and Objective of the Study 9

2. E-commerce in India: An Introduction 13

Consumer E-commerce in India: The Current Scenario 16

3. Consumer E-commerce Potential in India 20

Methodology 20

Key Results 22

Market Hierarchy and Opportunity 28

Consumer E-commerce Potential: The Opportunity 31

4. Challenges: Key Issues and Policy Agenda 34

5. Realising E-commerce Potential: Summary 37End Notes 39

References 40


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About the StudyWithrapideconomicgrowthandincreaseinprosperityinthelast15-20years,Indian

consumermarketshaveseenunprecedentedexpansionininterestandactivityacrossall

productandservicescategories.Adventofinternet,telecommunicationandmediahas

furtherintensifiedthisgrowth,closingmanygapsbetweenurbanandup-countrytastesand

preferencesaswellasconsumptionpatterns.Inthisscenario,consumere-commerceis

becomingincreasinglyrelevantasanefficientalternativedistributionchanneltoreachout

totheconsumers,offeringauniquevaluegeneratingpropositionforallstakeholders.

Inthisbackdrop,thisstudyisanattempttoassessthefundamentalconsumere-commerce

potentialinIndia.Theobjectiveistocharacteriseandquantifythesocio-economic

segmentsthatpresentpotentialfordifferentproductandservicescategories,andforecast

theincreaseinsizeoftheopportunityinthenext10-15years.Apartfromthis,thestudy

alsoevaluatesthemajorconstraintsandchallengescurrentlyfacingthesectorandbuildsa

setofpolicyrecommendationsaimedatrealisingthispotential.

ThereportincludesanExecutiveSummaryandfivemainchapters.Chapter1presentsa

briefmacroeconomicassessmentandChapter2introducesthee-commercesectorinIndia.

Chapter3isthecoreofthestudywhichestimatesthee-commercepotentialinIndia:

currentand2024-25.Chapter4evaluatestheconstraintsandchallengeswhichimpede

growthofthesectorandpreventitfromrealisingthepotentialandoutlinesthepolicy

agendaforfuturegrowthofthesector.Chapter5summarisesthefindingsand

recommendationstobuildaroadmapforrealisingtheopportunity.ThisisfollowedbyEnd

NotesandReferences.


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Executive Summary

Introduction

Withrapideconomicgrowthandincreaseinprosperity,Indianconsumermarketshaveseen

unprecedentedexpansionininterestandactivityinthelast15-20years.Bettersocial

attainmentintermsofeducationcoupledwithadventofinternet,telecommunicationand

mediahasfurtherintensifiedthisgrowth,closingmanygapsbetweenurbanandup-country

tastesandpreferencesaswellasconsumptionpatterns.

Inthisscenario,consumere-commerce1isbecomingincreasinglyrelevantasanefficient

alternativedistributionchanneltoreachouttotheconsumers,acrossgeographiesaswell

asproductsandservicescategories.

Inthisbackdrop,thisstudyevaluatestwoimportantlinksthatexistbetweenthetotal

householdsinIndiaandhouseholdsthatusee-commerce.

Asshowninthechartabove,thefirstlinkistheconsumere-commercepotentiali.e.

householdswithadequatesocio-economicendowmentsthatresultsintheabilitytoengage

ine-commerce.Inessence,thishastodowithhavingtherightincomelevelsandsocial

attainmentintermsofeducationandoccupationthatdefinethedemandforproductsand

services.Thekeyobjectiveofthestudyistocharacteriseandquantifythesocio-economic

segmentsthatpresentpotentialfordifferentproductandservicescategories,and

forecasttheincreaseinsizeoftheopportunityby2025.

Thesecondlinkistheenablingconsumere-commerceecosystemwhichleadstotheeventualadoptionofe-commercebyconvertingthepotentialintoactualusersofe-

commerce.InIndia,thishasmostlytodowithlackofadequateenablinginfrastructurein

theareasofbroadbandconnectivity,digitalpayments,supplychainandregulationswhich

preventfullrealisationofthepotential.

Thestudyalsoevaluatesthemajorconstraintsandchallengescurrentlyfacingthesector

andbuildsasetofpolicyrecommendationsaimedatrealisingthepotential.

1Althoughtheservicesaregenerallyshowcasedontheinternet,forthepurposeofthestudye-commercealso

includesotherelectronicorhybridplatformssuchasE-mailMarketing,Tele-mediaMarketingandevenAssistedE-commercemodelswheretransactionsarecarriedoutthroughinnovativedeliverymodelse.g.

wherephysicalpresenceofserviceagentsofthebusinessisthecustomertouchpoint.


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Opportunity: Consumer E-commerce Potential

Basedonathreedimensionalsocio-economicclassificationofhouseholdsthattakesinto

accountincome,educationandmainoccupationofthehousehold2,theconsumere-

commercepotentialinIndiaisestimatedundertwomaincategories:

Corepotential:Thisincludeshouseholdswithpotentialformostproductsandservices

categoriesmiddletohighincomeaswellasacombinationofmoreproductive

occupationsandgoodeducationattainment.Thesehouseholdsarefurtherdividedinto

fourkeysegmentswhichidentifythesequencingofadoptionandtheirdefining

characteristics.Theseare:

EarlyAdopters:Topincomeearninggraduatehouseholds,engagedinbusiness,salariedemploymentorprofession

PrimaryMarket:Highincomehouseholdswithatleastsecondaryeducation,

engagedinmoreproductiveoccupations

ValueSeekers:Mediumincomehouseholdswithatleastsecondaryeducation,

engagedinmoreproductiveoccupations

AssistanceMarket:Highincomehouseholdsnotincludedinprimarymarketdue

tolowersocialattainmentintermsofeducationand/oroccupation

LowSEC:Thiscategorycompriseshouseholdswithpotentialforlimitedproductand

servicecategoriesowingtopoorsocialattainmentintermsofeducationand/oroccupation.Morespecifically,theLowSEChouseholdsareintheMediumincome

categorywithpooreducationattainmentand/orengagedinlessproductiveoccupations

suchascasualandfarmlabour.

2Forthestudy,householdshavebeenclassifiedonthebasisofincome,educationandoccupationasfollows:

Householdincomehasthreecategories:(1)Highincome,(2)Mediumincome,and(3)Poorincome.

Poorhouseholdsarenotincludedine-commercepotentialatall.

Educationattainmenthasthreecategories:(1)Graduateorequivalent,(2)Childrenwithatleast

secondaryeducation,and(3)Primaryandothers. Householdoccupationhasthreecategories:(1)Business,salaryorprofession,(2)Farming,and(3)Casual

andfarmlabour,includingothersimilarlowincomegeneratingorlessproductiveoccupations.


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During2009-10,theoveralle-commercepotentialisestimatedat146.2millionhouseholds

or61.3percentoftotalconsumerhouseholdsinthecountry.Thisincludes71.4million

householdsintheCorepotentialcategoryi.e.,potentialformostproductsandservices

categoriesand74.9millionhouseholdswithlimitedpotential(LowSEC).

Inlinewithourmethodology,the71.4millionhouseholdsintheCorepotentialarefurther

dividedintofourkeysegmentsbasedontheirsocio-economiccharacteristics:Early

Adopters,PrimaryMarket,ValueSeekersandAssistanceMarket.Thetablebelowprovidesthedetailedestimates.

2009-10 2024-25 CAGR

Households Share Households Share (2009-10 to 2024-25)

A. 'Core' Potential 71.4 29.9% 141.8 47.7% 4.7%

Early Adopters 5.6 2.4% 31.2 10.5% 12.1%

Primary Market 21.2 8.9% 42.9 14.4% 4.8%

Value Seekers 20.2 8.5% 27.4 9.2% 2.1%

Assistance Market 24.4 10.2% 40.3 13.5% 3.4%

B. 'Low SEC' 74.9 31.4% 86.7 29.2% 1.0%

Overall Potential (A+B) 146.2 61.3% 228.6 76.9% 3.0%

Total Households 238.5 - 297.4 - 1.5%

Theoverallconsumerpotentialisestimatedtoincreaseto228.6millionhouseholdsby

2024-25or76.9percentofthetotalconsumerhouseholdsinthecountry.Thisrepresentsa

compoundedannualgrowthrate(CAGR)of3percentinpotentialascomparedto1.5per

centgrowthinthetotalnumberofhouseholdsduringtheperiod.

MostofthegrowthwillbeintheCorepotentialcategory,whichwillalmostdoublefrom71.4millionhouseholdsin2009-10to141.8millionhouseholdsin2024-25,accountingfor


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closeto50percentofthetotalhouseholdsinthecountry.Moreimportantly,thetwo

segmentsatthetopofthehierarchyEarlyAdoptersandPrimaryMarketwillwitness

thehighestgrowthamongthesegmentsinthecategory.

Anotherimportantfeatureofthisgrowthwillbethatruralandup-countrymarketswill

becomemorerelevantforbusinessesacrossproductsandservicescategories.Totheextent

thatalargepartofthisdemandcomesfromgeographicallydispersedlocations,itpresents

exclusiveopportunitiesforspace-neutral,technologyenabledtradeanddistribution

channelssuchase-commerce.

Indiane-commercemarketisgrowingrapidly,andisestimatedtobeworthRs.46,520crore3

orUSD10billionin2011.Thecurrente-commerceuserbaseisestimatedataround10

millionpeople4.Assumingtwousersperhousehold,thecurrentoverallpotentialfore-

commerceinIndiaincludingbothcorepotentialandLowSECis292millionpeople.

Consideringthisasthebase,thecurrentadoptionofe-commerceisonly3.5percent.Ina

business-as-usualcase,theadoptionisexpectedtoincreaseto15percentofoverallpotentialby2024-25.

Thetablebelowprovidesestimatesofthesizeoftheconsumere-commerce2024-25

marketbasedondifferentlevelsofadoptionandtwoscenariosofgrowthofbusinessesand

productcategories5intheconsumere-commercespace,whichwillhaveramificationsfor

theshareofwalletthataconsumerwillspendthroughe-commercechannels.

(USD Billion) 2024-25

Increase in Adoption Scenario 1 Scenario 2

BAU (15%) 70 125

Low (30%) 100 175

Mid (40%) 120 210

High (60%) 150 260

Dependingondifferentlevelsofadoption,themarketsizeofconsumere-commerceby

2024-25isestimatedtobe:

Scenario1:USD70-150billion,ife-commercecontinuestobelargelylimitedtoexisting

productcategoriesandtheshareofincomespentthroughe-commercechannels

remainsthesame

Scenario2:USD125-260billion,ifshareofincomespentthroughe-commerceincreases

asbusinessesacrossnewcategoriesemergewithtime

3Source:OnlineCommerce,March2011,IAMAI-IMRB 4Thisestimateisbasedoninputsfromindustrypublicationsandinterviews.Businessesacrossmostproduct

andservicescategoriespegthenumberoftheiractiveuserbaseat5-15million.Forproductcategoriessuchas

premiumretailandonlineservices,whichareaimedatthehigherendoftheincomespectrum,thenumberof

usersisclosertothelowerlimitof5million. 5Thesecaneitherbenewcategoriessuchashealthcareandeducationorbusinesseswithinexistingcategories

suchasgroceriesandconsumerdurablesintheretailsegment,whichsofarhaveanegligiblepresence


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Thekeytogrowe-commercewouldbetoachievehigherlevelsofadoptionbyremovingthe

challengesfacingthesectorthroughappropriatepolicyaction.Thisisdiscussednext.

Challenges: Consumer E-commerce Ecosystem

Consumere-commerceecosystemcomprisesthetwotransactingparties,businessesand

consumers,andtheenablinginfrastructure:connectivity,payments,deliveryand

regulatory.

Connectivity:Adequateconnectivityinfrastructureisthekeytothegrowthofconsumere-commerce.Themoreimportantissuesarelowbroadbandpenetration,lowownership

ofcomputersandpoordigitalliteracy.

Payments:Digitalpaymentsnecessarytodrivegrowthinconsumere-commerceas

offlinemodesofpaymentssuchascash-on-deliverythatcomplementthesystemcannot

drivevolumesandarenotsuitableforhighvaluetransactions.Thekeyissueshereare

poorpaymentgatewayinfrastructure,lowpenetrationofcredit/debitcardsandwider

scopeandcoverageofmobilepayments.

Delivery:Deliveryinfrastructureincludestheentiresetofsupplychainservices

storage,warehousing,bulktransportationandcourierservices.Specialisedlarge-scale

providerofend-to-endsupplychainsolutionshavebeenthebackboneofsuccessfule-commerceactivitiesindevelopedcountries.Incontrast,Indiahasapoorlydeveloped

supply-chainsectorwithnotop-classcountry-wideserviceprovider.Besides,theIndian

postalsystemwhichhasthewidestreachhaspoorservicelevels.

Regulatory:InIndia,taxesandleviesontradeandcommercearebothunderthe

purviewofcentral,statesandlocalgovernments.Thesetaxesandthedocumentation

requirementsarecomplexandvaryacrossstates.Besides,thereisnorecognitionofe-

commerceasaseparateactivity,whichmakesitverydifficultforfledglingbusinesses

withinnovativemodelstooperate.

Apartfrompoorinfrastructure,anotherfactorwhichinhibitsgrowthofconsumere-commerceisIndiaisthatalargenumberofpeopledonotprefertotransactonlinedueto


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concernsregardingsecurityofonlinefinancialtransactionsandsharingpersonal

informationaswellasapprehensionsregardingthequalityofservice.

Roadmap for the Future

Indiane-commercemarketisgrowingrapidly,andisestimatedtobeworthRs.46,520crore

in2011.Thecurrente-commerceuserbaseisestimatedataround10millionpeople.

Assumingtwousersperhousehold,theoverallpotentialfore-commerceinIndiaincluding

bothcorepotentialandLowSECis292millionpeople.Consideringthisasthebase,the

currentadoptionofe-commerceisonly3.5percent.

Thismeansthatthereisahugegapbetweentheestimatedpotentialandthecurrent

consumerparticipationine-commerce,whichinspiteoffavourablegrowthinthelastfew

years,continuestobelimited.Thisgapcanbeattributedtofourkeyfactors:

Consumere-commerceisstillrelativelynew.Apartfromafewproductcategories,

thereareonlyafewprovidersthatofferastrongvalueproposition,andthereareconcernsregardingtheircredibilityandeffectivenessofservices

Connectivityisstillverycostly.Althoughimprovementsinthissectorarehappening

rapidlywithintroductionofnewandbettertechnologies,connectivityinfrastructure

continuestobepoor,especiallyasonemovesoutoflargetownsandcities

Poorstateoffinancialinclusionthataffectstheabilitytocarryoutdigitalpayments.

Inabilitytoservicelargepartsofthecountryduetolackofpropersupplychain

infrastructureseverelyimpactsbusinessesthatdealinphysicalgoods,especiallybulkyitems.

Essentially,mostofthechallengesandconstraintfacingconsumere-commerceinIndiathat

preventsitfromrealisingitsfullpotentialandrestrictsitsfuturegrowthpertaintolackof

adequateenablinginfrastructureandtheinabilityofbusinesses,eitherindividuallyor

collectivelyasanindustry,toaddresstheconcernsoftheconsumers.

Themediumtermoutlookforimprovementintheseareasispositive,beitintroductionof

3Gservicesorthegovernmentseffortstoimprovefinancialinclusionaswellasachieve

greaterbroadbandconnectivity,digitaleducationandtraining.However,alotmorewillneedtobedone.

Realisingtheconsumere-commercepotentialinIndiareachingouttothelastcustomer

willdependonhowbothindustryandgovernmentworktowardsaddressingthe

challengesfacingthesectorandcreatingane-commerceecosystemwhichrewardstalent,

entrepreneurshipandinnovation.

Fortheindustry,focusshouldbeonintroducinginnovativeservicesanddeliverymodels,

addressingcustomerconcernsbysetting-uphighstandardsofsafetyandqualityofservices.

Forthegovernment,focusshouldbeencouraginggrowthofenablinginfrastructureandcarryingoutfiscalandregulatoryreformsnecessaryforunfetteredgrowthofthesector.


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1. Macroeconomic Assessment and Objective of the Study

Indiahaswitnessedsignificantlyhigheconomicgrowthinthelast15-20years,fuelledbythe

largescaleliberalisationoftheeconomythatstartedintheearly1990s.IfonelooksasGDP

growthoverthelastthreedecades,thestep-upingrowthhasbeenmorepronouncedsince2001.Ascomparedtoagrowthrateof5.4%duringthe1980s,GDPgrewat5.6%duringthe

1990sand7.6%since2000-01.

Table 1: GDP Growth Rate, Constant Prices

Period CAGR6

1980-81 to 1990-91 5.4%

1990-91 to 2000-01 5.6%

2000-01 to 2009-10 7.6%

Besidesthesignificantaccelerationingrowthsince2000-01,whatisperhapsmore

importantisthenatureofthisgrowth.Therecentgrowthexperiencehasbeenmorebroad-

based.Althoughthechangeisimmediatelyvisibleinurbanmetropolisesandlargetowns,

thegrowthhasnotbeenrestrictedtourbanpartsofIndia.Ruralpartsofthecountry,which

accountsfor70percentofIndiaspopulation,havealsobeenanimportantpartofthis

growthandhavecontributedsignificantlytotheperformanceoftheeconomy.Asshownin

ChartA,NetDomesticProduct7(NDP)ofbothruralandurbanpartsoftheeconomygrewat

closeto7percentbetween1999-00and2009-10.Currently,ruraleconomyaccountsfor

aroundone-halfofIndiasGDP,whichalonewouldplaceIndiaamongthetop25economies

bysizeofeconomicactivity.

Chart A: Growth Rate Rural and Urban, Constant Prices

Besides,asinthecaseofurbanareas,therehasbeenamarkedincreaseintheimportance

ofservicesasadriverofgrowthinruralareas.ChartBshowsthegrowthofsectorsofthe

ruraleconomybetween1993-94and1999-00andcomparesitwiththeperiodbetween

1999-00and2009-10.Duringthemorerecentperiod,between1999-00and2009-10,rural

6CAGR:CompoundedAnnualGrowthRate

7

Break-upofgrowthbetweenruralandurbanareasarepublishedbyCSOwhenthebaseyearsarerevised.Thelastthreeinstancesoftheserevisionsare1993-93,1999-00and2004-05.Figuresfor2009-10are

estimatesbasedonsectortrendsandadditionalinformationavailableforthesubsequentyears.


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growthisdrivenbyservicesfollowedbyindustry.Incontrast,growthinagriculturehasbeen

lacklustre.

Chart B: Growth Rate of Rural NDP, Sector-wise

Thissustainedgrowthhasbroughtaboutsignificantincreaseinincomesandlevelofwell

being.Percapitaincome8hasmorethandoubledfromRs.16,700in2000-01toRs.44,300in

2009-10.Besides,asshowninTable2,therehasbeenasignificantincreaseinthe

ownershipofhouseholddurables9.Almost50percentofthehouseholdsinIndiainvestin

basichouseholddurablessuchastelevisionsandpressurecookers.Lifestyleorutilitygoods

suchasdigitalcamerasandairconditionerswhichhavebecomemoreaffordableduringthis

periodhaveseenasignificantincreaseindemandandownership.Similaristhecaseof

computersandinternetconnectivity.HouseholdownershipofPCshasmorethandoubled

duringtheperiodto2.2%andhalfofthemaccessinternetathome.

Table 2: Household Durable Ownership (%)

2005 2010 Multiple

Television 42.2 51.4 1.2

Pressure Cooker 34.5 41.5 1.2

Two Wheeler 13.6 17.8 1.3

Washing Machine 3.5 5.8 1.7

Four Wheeler 1.5 2.3 1.5

Digital Camera 0.1 1.1 11.0

Air Conditioner 0.5 1.1 2.2

Microwave Owen 0.4 0.9 2.3

Computers 1.0 2.2 2.2

Internet at home 0.4 1.1 2.8

8

Figuresforpercapitalnetnationalproduct(NNP)computedatcurrentprices.Respectivefiguresatconstant1999-00pricesareRs.16,000andRs.27,000aCAGRof5.8%duringthelastnineyears.9Source:IndianReadershipSurvey,2005and2010


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Adventoftelecommunicationandmedia,aswellastheinternet,arefacilitatingthe

emergenceofanewIndia.MobiletelephonygrowthinIndiahasbeengame-changingin

thiscontext.AsshowninTable3,telephonepenetrationhasincreasedoverfive-foldinthe

lastfiveyearsto621millionsubscribersattheendof2009-10.Entertainmentandmedia

industryisestimatedtohavegrownfromRs.350billionin2005toRs.670billionin201010

.

TV,witha45%shareoftheindustry,leadsthemediagrowthstory.Inthelastfiveyears,

CableTVpenetrationhasdoubledto103million,ofwhich21.3millionareDTHsubscribers.

Duringthesameperiod,numberoftelevisionchannelshasincreasedsignificantlyfrom

around130toover500.

Table 3: Telecommunication and Media, Subscribers11 (Million)

2004-05 2009-10

Telephone Subscribers 98.6 621.3

Wireline 46.4 37.0Wireless 52.2 584.3

Cable TV Subscribers 51.6 103.0

Similarly,asshowninChartC,therehasbeenasignificantincreaseininternetsubscribers.

Moreimportant,mostofthegrowthafter2004-05hascomefromthebroadbandsegment,

wherethecurrentuptakeisover200,000connectionspermonth.

Chart C: Internet Subscribers12, (Million)

Summary Assessment: Background of the Study

Metropolitanmarketsandlargecitiescontinuetodrivedemandforhigh-enddurablegoods,

lifestyleitemsandtechnologyintensiveproductsandservices.However,increasedlevelsof

socio-economicachievementcoupledwiththeadventoftelecommunicationandmediais

closinggapsbetweenurbanandup-countrytastesandpreferencesaswellasconsumption

patterns.Today,bothofthesemarketssharesimilaraspirations,whichareincreasingly

reflectedintheirchoices.Forinstance,todaythereisverylittledifferencebetween

10

Source:IndianEntertainmentandMediaOutlook2010,PriceWaterhouseCoopers11Source:TelecomRegulatoryAuthorityofIndia.Figuresareasofendofthefinancialyear.

12Source:TelecomRegulatoryAuthorityofIndia.Figuresareasofendofthefinancialyear.


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awarenesslevels,brandpreferencesandexpenditurepatternsamongsocio-economic

consumergroupsacrossgeographies.Similarly,andmorerelevanttothisanalysis,the

purposeforwhichpeopleaccessinternetinruralandurbanareasareverysimilar,withthe

exceptionofneedformorefarmingrelatedinformationinruralareas13

.

Thiscoupledwithamorebroad-basedincreaseinprosperitymeansthatthereisanew-

Indiathatisemerging,whichwillsoonbeaveryimportantmarketforitemclassesthat

havesofarbeenalmostexclusivelyservicedinmetropolitancentresandlargecities.Whatis

requiredtoreach-outtothesenewer,oftendispersedmarkets,withlowerconcentrationor

densityofpotential,areinnovativebusinessanddistributionmodels.Thisiswheree-

commerceholdsalotofpromise.

Objective of the Study

Inthiscontext,theobjectiveofthestudyistomakeanassessmentandquantifythe

consumere-commercepotentialinIndia.Indoingso,thefocuswillbeonquantifyingthe

currente-commercepotentialinIndia,createasegmentationrelevanttovariousproduct

andservicescategories,andforecasttheincreaseinsizeoftheopportunityby2025.Apart

fromthis,thestudyalsoevaluatesthemajorconstraintsandchallengescurrentlyfacingthe

sectorandbuildsasetofpolicyrecommendationsforallstakeholders.

Theremainderofthereportisaccordinglystructuredintofoursections.Chapter2

introducesande-commercesectorinIndiaanddefinesthescopeofconsumere-commerce

inthecurrentcontext.Chapter3isthecoreofthestudywhichestimatesthee-commercepotentialinIndia:currentand2025.Herewealsodiscussthedifferentproductcategories

andbenefitsofe-commerce.Chapter4evaluatestheconstraintsandchallengeswhich

impedegrowthofthesectorandpreventitfromrealisingthepotentialandoutlinesthe

policyagendaforfuturegrowthofthesector.Chapter5summarisesthefindingsand

recommendationsforallstakeholderstobuildaroadmapforrealisingtheopportunity.

13FormoreinformationpleaserefertoIAMAI-IMRBResearchReports:InternetforRuralIndia2009andI-

Cube2009-2010:InternetinIndia.


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2. E-commerce in India: An Introduction

Defining E-commerce

E-commerceistheuseofelectroniccommunicationanddigitalinformationprocessing

technologyintransactionstocreate,transformandredefinerelationsforvaluecreation

betweenoramongorganisationsandindividuals.

Thisallowsfortwopredominantmodels:

Business-to-Business(B2B),wherebusinessesororganisations(including

government)transactamongeachothertocreatevalue.Whatdistinguishesthis

formfromtheothersisthepotentialofusingprivateorlimitednetworks,and

customisedinfrastructuretocarryoutthetransactionse.g.customer-supplierand

intra-governmentnetworks Business-to-Consumer(B2C),wherebusinessesororganisations(including

government)transactwithconsumersorpublicatlargetomarkettheirproductsand

servicesandsatisfyconsumerdemand

OtherformsincludeConsumer-to-Consumer(C2C)andConsumer-to-Business(C2B),where

individualsorgroupsofindividualstransactamongeachotherorwithbusinessesusing

eitherpublicplatforms(sellingtheirproduce)orprivatenetworks(reverseauctions).In

mostcases,thesetransactionscanbelookedatB2CorB2Brespectivelyastheindividual

offeringtheproductorservicesassumestheroleofasupplieri.e.abusiness.

ThisresearchlooksatConsumerE-commerce:B2Cmodelofe-commercewhere

Businessreferstoorganisationsprovidingaproductorserviceforwhichthereisa

demandbackedbyanabilitytopayfromtheConsumerhouseholdsandindividuals.

Consumer E-Commerce: A Closer Look

Consumere-commerce,definedsimply,isatechnologyenabledtransactioningoodsor

servicesoveranelectronicplatform,generallythroughpresenceontheinternet.Inessence,

itservesasanalternativeformofdistributionchannelforbusinesseswhichincludes,amongothercharacteristics,thepotentialforimmediatefinancialclosureofthetransaction

throughdigitalpayments,creatingvalueforboththesupplierandtheultimateconsumerof

theproductorservice.

Thisdefinitionhasfourkeyelements:

1. TechnologyEnabled:Thisreferstotheuseofinformationandcommunication

technology(ICT)whichincludesinternetaswellasuseoftelephoneconnectivityand

otherformsofmediatocarryoutthetransaction.

2. GoodsandServices:Thismayormaynotinvolvephysicaldelivery.Apartfromphysicaldeliveries,itwouldincludedigitalcontentwhichcanbedeliveredthroughtheinternet,


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instanceswheretheconsumerpurchasestherighttoavailaserviceofflinesuchastravel

andmovietickets,ortheconsumertravelstoaspecifiedlocationtotakephysical

deliveryoftheproductorservicepurchasedonline.

3. ElectronicPlatform:Althoughtheservicesaregenerallyshowcasedontheinternet

aimedatthefinalconsumer,itwouldalsoincludeE-mailMarketing,Tele-media

MarketingandevenAssistedE-commercemodelswheretransactionsarecarriedout

throughinnovativedeliverymodelse.g.wherephysicalpresenceofserviceagentsofthe

businessisthecustomertouchpoint.

4. DigitalPayments:Althoughthefocusisincreasinglyondigitalpaymentsthroughcredit

ordebitcards,internetbankingandcashcards,othermoretraditionalformsof

paymentssuchascheque,despatch-on-paymentandcash-on-deliverycontinuetoexist.

Chart D: The Consumer E-Commerce Ecosystem

Consumere-commerceecosystemcomprisesthetwotransactingpartiesbusinessesand

consumersandtheenablinginfrastructure.Weidentifyfourkeytypesofinfrastructure:

ConnectivityInfrastructure:Thisincludestheavailabilityofadequatebandwidthata

reasonablecostforbothbusinessesandconsumerstobeabletoparticipateand

carryoutine-commerceactivities.Forinformationservicesanddigitaldownloads

wherethereisnophysicaldeliveries,connectivityalsoformsapartofthedelivery

infrastructure.

PaymentsInfrastructure:Theabilitytomakesuccessfuldigitalpaymentsisavery

importantprerequisiteforgrowthofconsumere-commerce.Thisincludesboththe

penetrationofdigitalpaymentservicesamongtheconsumersdebitandcredit

cards,internetbankingandcashcardsthatcanbepurchasedofflineaswellas

availabilityofrobustpaymentgatewayinfrastructuretothebusinessescapableofhandlingvolumeswithminimumdowntimeandtransactionfailures.


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DeliveryInfrastructure:Thisisrelevantforbusinessessellingphysicalgoodsand

serviceswhicharedeliveredtotheconsumer.Deliveryinfrastructureincludesthe

entiresetofsupplychainservicesstorage,warehousing,bulktransportationand

courierservices.Specialisedlarge-scaleproviderofend-to-endsupplychain

solutionshavebeenthebackboneofsuccessfule-commerceactivitiesindeveloped

countries.

RegulatoryInfrastructure:Thiscomprisessector-specificregulationswhichcreatea

positiveenvironmentforgrowthandinnovation.Consumere-commercebusiness

models,especiallythoseinvolvingphysicalgoods,arebuiltoncentralisedorregional

warehousingandefficienttransportanddistributionwithinandoutsidethecountry

oforigin.InIndia,wheretaxesandleviesontradeandcommercearebothunderthe

purviewofcentral,statesandlocalgovernments,theseproceduralcomplexities

makeitverydifficultforthefledglinge-commerceindustrytomeettheservice-level

expectationsoftheconsumers.

Chart E: Consumer E-Commerce Value Proposition

Consumere-commercecreatessubstantialvalueforbothconsumersandbusinesses.From

thepointofviewofconsumers,therearethreekeybenefitsofusinge-commerce:

CostSaving:Transparentandcompetitivepricingoftenleadstoadirectcostsaving

fortheconsumers.Apartfromthis,thereareindirectcostsavingssuchasintravelexpensesandarrangingforphysicaldelivery.Thesecostscanbesignificantifthe

pointofpurchaseislocationthatisataconsiderabledistancefromthepointofuse.

Convenience:Thisisaresultof24x7availability,timesavedintravellingandqueues

andtheabilitytocarryouttransactionsfromthecomfortofhome.

Choice:Asthereisnoneedtoshowcaseorstorethecompletesetofofferingsat

multiplelocations,e-commercebusinessescanoffermorevarietytoitsconsumers.

Besides,transparentinformationhelpsineasyandeffectivedecisionmaking.

Therelativeimportanceofthesebenefitsvariesacrossconsumersegmentsandproduct

categories.Forconsumersinthehigherincomesegments,conveniencecanbethedrivingforcebehindadoptionofe-commerce,especiallyforproductcategorieswherethe


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frequencyofpurchaseishighandtheunitcostislow.Incontrast,costsavingscanbethe

mostimportantfactorforproductcategorieswithhighunitcostsandlowfrequencyof

purchase.

Forbusinesses,therearethreekeybenefitsofusinge-commercetodistributetheir

productsandservices:

Markets:Inthecurrenteconomicenvironment,reachingouttonewermarketsata

reasonablecostisoneofthebiggestbenefitsfore-commerceasanalternative

distributionmodel.ThisisespeciallyimportantinthecurrentIndiancontextwhere

broad-basedincreaseinincomeandevolvingconsumptionpatternshascreated

manysmallanddisaggregatedpocketsofdemandacrossthecountry

Efficiency:Thiscomesfromabilitytotrackandincorporateconsumerbehaviourand

feedbacktoeffectchangesandimprovementswithminimaltimelag.Thiscanbea

majorbenefitforproductcategorieswithdwindlingshelflifeasaresultofconstant

innovationsandimprovementssuchasmobilephonesandfashion. ReducedCosts:Lowermanpower,overheadsandefficientdistributionchainwith

fewerintermediariesbringsdowncostsofoperation

Ofcourse,thesebenefitswillvaryforbusinessesoperatingacrossdifferentproductand

servicecategoriesandthemodelchosentocarryoute-commerce.Forinstance,inthecase

ofretailofelectronicitems,themoreimportantbenefitforbusinessesistheaccesstoa

largemarket.Incontrast,theairticketingbusinessmodelhascompletelychangedasa

resultofintroductionofe-commercedrivenbyacombinationofallthesefactors.Themore

importantpointhereisthatthesebenefitsaresostrongthatlargeindependente-

commerceentitieshaveemergedgloballyinthelastfewyearsacrossseveralcategories.

Consumer E-commerce in India: The Current Scenario

Chart F: E-commerce Market Size14 (Rs. crore)

14

Source:OnlineCommerce,March2011,IAMAI-IMRB,+=Forecast


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Consumere-commerceinIndiaisgrowingatasignificantpace.Themarkethasgrownfrom

Rs.8,146crorein2007toRs.19,688crorein2009,andisexpectedtocontinuetogrow

rapidlytooverRs.45,000crorein2011.

Althoughthemarketcontinuestobeskewedinfavourofonlinetravel,whichaccounted

for76percentoftheentireconsumere-commercemarketin2009,othercategorieshave

alsobeengrowingatasignificantrate.

Chart G: E-commerce Market: Sector-wise Performance15

AsshowninChartG,whiletravelgrewat42.4percentbetween2008and2009,non-travel

segment,whichincludesretail,financialservices,onlineservicesanddigitaldownloads,grewatarespectable34.1percentduringtheperiod.Thisgrowthwasdrivenbyan

impressivegrowthof38.4percentintheretailsegment,whichgrewfromRs.1,120crorein

2008toRs.1,550crorein2009.

Animportantelementofthee-commerceecosystemisdigitalpayments.

Chart H: Mode of Payment16 (% of online shoppers)

CurrentlyinIndia,offlinemodesofpaymentcontinuetobepopular,evenasonline

paymentsarehigh.AsshowninChartH,debitcardsorinternetbankingisthemostused

15Source:OnlineCommerce,March2011,IAMAI-IMRB



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formofpaymentwith37percentofonlineshopperspreferringtouseitmostoften.Thisis

followedbycreditcardswith35percentandprepaidcashcardswithanother8percent,

amongthedigitalformsofpayments.

However,itisimportanttonotethatonlyafractionofthecountryspeoplecurrently

engageine-commerce.Fortunately,accesstodigitalpaymentsolutionssuchasdebitand

creditcards,andtheabilitytousethemamongthissectionofpeopleisconsiderablyhigher.

Asfurthergrowthofe-commerceinIndiawillcriticallydependontheabilitytomakedigital

payments,poorpenetrationoftheseinstrumentsamongalargersectionofthesocietywill

beamajorhurdlefore-commercebusinesseslookingtomarkettheirproductsinsmaller

townsandruralareas.

Perhapsthisisalreadythecase,withasmallsizeofactiveinternetusersinIndia

estimatedat50millionin2009.GiventhestrongpenetrationofmobilephonesinIndia,

mobilebaseddigitalpayments,whichiscurrentlythemostpreferredmodeofpayment

amongonlyonepercentoftheonlineshoppers,hashugepotentialinthisregard.

Besides,recenttrendsine-consumerbehaviourareencouraging.Arecentsurveyofactive

internetusersconductedbyIAMAI-IMRBin15Indiancitiesbringsoutthat77.7percentof

theactiveinternetusers17

inthesecitieslookedforinformationacrossvariousproductand

servicescategories.Moreimportant,ofthepeoplewholookedforinformation,54.4per

centshoppedonline.Thismeansthatasignificantproportionofpeoplelookingfor

informationontheinternetareconvertedtoonlinebuyers.Thisconversionofpeoplewho

lookforinformationonlinetoonlinebuyersishighevenhigherat80percentforonline

travelcategory,reflectingtheemergenceofe-commerceasapreferredchannelforbuying

travelservices,atleastinthelargemetropolitancities.

Forfurthergrowthofconsumere-commerceinIndia,concernsofpeoplewhostayaway

fromshoppingonline(SeeChartI)needtobeaddressed.

Chart I: Reasons for Not Shopping Online18

17

Inthestudy,activeinternetusersaredefinedaspeoplewhoaccessedinternetatleastonceduringthelastonemonth.Thenumberofsuchusersinthe15citiessurveyedwasestimatedat17.5million.18

Source:OnlineCommerce,March2011,IAMAI-IMRB


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Theimportantconcernsthatarewithinthecontrolofe-commerceindustryandcanbe

addressedare:

Lackoftrust:Thesepertaintosecurityofpersonalinformation,safetyofonline

financialtransactionsandqualityofmerchandise

Fulfilmentissues:Thisincludesnon-delivery,latedelivery,lackofserviceguarantee

andquickandeffectivesolutionsofconsumergrievances

Thelackoftheseissuesisperhapsthereasonbehindthesuccessofonlinetravelindustry,

especiallyairandrailticketing.Whatthisalsomeansisthatbusinessesinsectorswith

establishedbrandsorproductsandservicescategorieswithestablishedqualitystandards

willbethefirsttoattractvolumesfrome-commerce.

Incontrast,thereareproductcategorieswhereshoppingexperienceandtheneedtolook

attheproductortouchandfeelareimportant.Suchreasonsaremorebehaviouraland

outsidethedirectcontrolofthee-commerceindustry.Theseconcernscanonlybe

addressedovertime,ase-commercebusinesseswithcompellingvaluepropositionemergetomitigatetheimportanceoftheseissuesfirstamongtheexistinge-commerceconsumers

andthenamongotherswiththedemandforsuchproductsandservices.


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3. Consumer E-commerce Potential in India

Methodology

Consumere-commercepotentialisestimatedasnumberofhouseholdswhichhave

adequateincometogeneratethedemandforproductandservicescategoriesandsatisfy

othersocio-economiccharacteristicsimportanttoparticipateinelectronicenvironment.

Themodel19

developedtoidentifythepotentialforconsumere-commerceisbasedona

threedimensionalsocio-economicclassificationofhouseholdsthattakesintoaccountthree

keyfactors:income,educationandoccupation.

Chart J: Consumer E-commerce Potential: Key Determinants

Incomeisthefundamentaldriverofdemandbackedbytheabilitytopay.Social

achievementintermsofeducationandoccupationdefinethenatureofneedsaswellas

abilitytoparticipateinanelectronicenvironment

Theanalysisisbuiltinfivestages:

Stage1,Income:Weestimatethenumberofhouseholdswithaneconomicprofilewhich

createsdemandfordifferentcategoriesofproductsandservices.Intermsofincomeweidentifythreecategories.

HighIncome:HouseholdswithpercapitaincomeoverRs.40,000perannum.In

general,with5members,thisisequivalenttoanannualhouseholdincomeofover

Rs.2lakh.Thisincomesegmentisrelevantforallproductandservicescategories.

Besides,theyhavethefinancialcapabilitytoownapersonalcomputerand

broadbandconnection.

MediumIncome:HouseholdswithpercapitaincomebetweenRs.20,000and

Rs.40,000perannum,i.e.annualhouseholdincomebetweenRs.1lakhandRs.2lakh.

19

TheestimatespresentedinthissectionarebasedonmodellingusinghouseholdsurveysconductedbygovernmentagenciessuchasNSSO,CSOandMoF.Detailedinformationonsourcesusedintheresearchis

presentedattheendofthereport.


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Thissegmentisthemarketforlowvalueproductsandservicecategories.Inthis

case,theabilitytohaveinternetconnectivityathomewillbelimited

PoorIncome:HouseholdswithpercapitaincomelessthanRs.20,000orannual

householdincomelessthanRs.1lakh.Thissegmentwillhavenegligibleorextremely

limitedparticipationinthee-commercemarketanddoesnotformpartofthe

potentialforconsumere-commerce20

Accordingly,thefirsttwosegmentsviz.HighIncomeandMediumIncomeconstitute

potentialforconsumere-commerceinIndia

Stage2,Education:Amongthehouseholdsthatsatisfytheincomecriteria,weestimatethe

educationattainmentofthehouseholds.Basedonthis,weidentifythreemaincategoriesof

households.

Graduate:Householdswithagraduatememberorequivalenttechnicalor

professionaldiploma.Thissegmentisthemostlikelytoadopte-commerce Secondary:Non-graduatehouseholdswithchildreninsecondaryandsenior

secondarylevel.Thissegmentwillalsopresentsignificantscopeforadoptionofe-

commerceactivities

Primaryandilliterate:Householdswherethehighestlevelofeducationisprimaryor

upperprimarylevel.ThissegmentpresentspotentialforAssistedandnon-internet

e-commercebycreatinglimitedinfrastructurecustomertouch-pointsusing

innovativemodelsandagencynetworks,providedtheyhavetherightdemand

backedbyincome

Stage3,Occupation:Aftertakingintoaccountincomeandeducation,welookatthe

occupationofhouseholds.Thisisimportanttoidentifythenatureofdemandemanating

fromthesehouseholdsforthedifferentproductandservicescategories.Weidentifyand

groupthehouseholdsintothreecategoriesonthebasisofoccupation.

Businessmen,SalariedandSelf-employedProfessionals(BSP),willhavethehighest

likelihoodofadoptinge-commerceasafavouredmodeoftransacting

Farmerhouseholds,withadequatedisposableincomewillalsoadopte-commerce

evenastheextentorintensityofuseacrosstheentiresetofservicesmightbe

limited,owingtovariationsinconsumptionpatternandneedhierarchy

Labourersandothersimilarlowincomegeneratingoccupationswillhaveminimal

adoption,andthattooacrossamuchsmallercategoriesofproductsandservices

Stage4,Forecast:Projectthegrowthinconsumere-commercepotentialinIndiafor2025

takingintoaccountexpectedgrowthinincomelevels,educationattainmentandchangesin

occupationstructure.Theexpectationsregardingchangesinthesemodelparametersare

20

Inanenvironmentwheretechnologyenabledsolutionsarebeingdesignedanddeployedforthebenefitof

thepoorestsegmentsofthepopulationviz.ProjectAadhaarofUIDAI,GovernmentofIndiaandseveral

financialinclusioninitiativesintheprivatesector,werecognisethattheyarealsoimportanttargetsegmentforspecifice-commerceinitiativesandhavealsobeenquantified.However,thefocusofthisstudyisto

presentanassessmentofthesizeofsegmentsrelevanttoawidervarietyofproductandservicecategories.


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basedonGDPgrowthof8%anddemographictrendsconsistentwiththeexperienceinthe

last10years.

Stage5,Segmentation:Thefirstthreestagesi.e.analysisofhouseholdonthebasisof

income,educationandoccupationresultsinidentificationofthepotentialmarketfor

consumere-commerceinIndia.Inthisstage,wedevelopaconsumersegmentationofthis

markettodevelopahierarchythatbringsout:

SequencingandNatureofE-commerceAdoption:Whichsegmentswilladopte-

commercefirstandwhatwouldbethescopeandmodeofparticipation

MappingofRelevantPotential:Whichsegmentswillbethemarketfordifferent

productandservicecategories

UnderstandingCharacteristics:Howdothedifferentsegmentstypicallyvaluethe

differentbenefitsofe-commercefromaconsumersperspective

Theprimaryobjectiveofdevelopingthissegmentationistoallowbusinessesandotherstakeholderstounderstandthesizeofdifferenttypesofconsumersbetterandassiststhem

toplananddevisesuccessfulservicesandplatformsthatgenerategreatervalue.

Key Results

Indiacurrentlyhas239millionhouseholds21

.Around72millionofthesehouseholdsi.e.30

percentareinurbanlocations.AsshowninChartK,thenumberofhouseholdswillincrease

to297millionin2024-25.Highergrowthofurbanhouseholdsduringtheperiod,as

comparedtorural,willincreasetheshareofurbanhouseholdsto38.5percentby2024-25.

Chart K: Number of Households (Million)

21

ThefiguresarebasedonofficialpopulationprojectionsofCensusofIndia.Forsimpleinterpretation,we

maintaintheassumptionthateachhouseholdhas5membersin2009-10and4.7membersin2024-25.Tointerpretthepotentialintermsofnumberofusersofe-commerceservices,onecanassumethateach

householdwillhavetwouserswhowillpotentiallytransactusinge-commercechannels.


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Stage1,Income:Inlinewithourmethodology,wehaveidentifiedthreecategoriesof

householdsbasedontheincomelevels:

HighIncome:51millionhouseholdswithpercapitaincomeoverRs.40,000per

annumorincomeoverRs.2lakhforafivememberhousehold.Wehavefurther

estimatedtwosub-segmentswithinthiscategoryhouseholdswithpercapita

incomebetweenRs.40,000andRs.1lakhperannum(Rs.2lakhtoRs.5lakhforafive

memberhousehold)andhouseholdswithpercapitaincomeinexcessofRs.1lakh

(Rs.5lakhforafivememberhousehold).Thesetwosub-segmentshave43.3million

householdsand7.9millionhouseholdsrespectivelyin2009-10.

MediumIncome:95.1millionhouseholdswithpercapitaincomebetweenRs.20,000

andRs.40,000perannum,i.e.annualhouseholdincomebetweenRs.1lakhandRs.2

lakh

PoorIncome:92.3millionhouseholds(38.7%oftotalhouseholds)withpercapitaincomelessthanRs.20,000orannualhouseholdincomelessthanRs.1lakh

Chart L: Results Stage 1, Income

>

Atthisstage,weeliminatePoorincomeorPoorSEChouseholdsaspotentialmarketfor

consumere-commerceinIndia.Accordingly,HighandMediumincomehouseholds

constitutepotentialfore-commerce.Thus,onthebasisofincome,144millionhouseholds

haveeconomicpotentialtoparticipateinconsumere-commerceinIndia.

Stage2and3,EducationandOccupation:Next,takingintoaccounttheeducationlevels

andoccupation,weclassifythe146.2millionhouseholdsthatsatisfytheincomecriteriainto

twoimportantsegments.TheseareCorePotentialandLowSEC.

Corepotentialincludes(a)allhouseholdsintheHighincomecategoryand(b)onlythose

householdsintheMediumincomecategorywhichhaveattainedgraduateorsecondarylevelofeducationandatthesametimeengagedinmoreproductiveoccupationsi.e.either


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business,salaryorprofessionorfarming.Apartfromhavingdemandacrossallproduct

andservicescategories,goodsocio-economicattainmentalsomeansthatmostofthese

householdsarecapableofowningtheirowninternetaccessinfrastructureandarelikelyto

haveorembracethedigitalskillsnecessarytocarryoute-commercetransactions.

LowSEChouseholdsareessentiallyMediumincomehouseholdsthatdonotmeetthe

criteriaforeducationoroccupation.Thesehouseholdsareeitherilliterateorhouseholds

withprimaryeducation,orareengagedasagriculturalorcasuallabourerstoearntheir

livelihood.TheseLowSEChouseholdswillhaveverylimitedpotentialfore-commerce,

restrictedtoaveryfewproductcategoriesandsmallvalueitems.Besides,pooreducation

attainmentalsomeansthattheaccesswouldbeeitherusingmobilephonesorpublic

accessinfrastructure.

Chart M: Results Stage 2 & 3, Education and Occupation

AsshowninChartM,ofthe146.2millionhouseholdsthatmeettheincomecriteria,the

CorePotentialfore-commerceinIndiaisestimatedat71.4millionhouseholds,whereas

theremaining74.9millionhouseholdsbelongtoLowSEC

Chart N: Concentration of Potential, 2009-10, (Households, %)


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Atthisstage,itisimportanttonotethaturbanareashaveamuchhigherconcentrationof

consumere-commercepotentialascomparedtoruralareas.AsshowninChartN,58.1percentoftotalurbanhouseholdsi.e.41.6millionhouseholdshavecorepotentialfor

consumere-commerceandanother27.4percentinLowSECcategoryhavelimited

potentialfore-commerce.

Only14.5%PoorSEC22

householdshavenopotentialfore-commerce.Incontrast,only

17.9%ofruralhouseholdsi.e.29.8millionhouseholdshavecorepotentialforconsumere-

commerce.Althoughanother33%LowSEChouseholdshavelimitedpotential,more

significantly,almosthalfofthehouseholdshavenopotentialfore-commerce.

Stage4,Forecast:Between2009-10and2024-25,numberofhouseholdsinIndiaisestimatedtogrowataCAGR23

of1.5%.However,withgrowthinincomelevelsand

improvementinsocio-economicprofile:

Corepotentialforconsumere-commerceforIndiaisestimatedtogrowat4.7%i.e.

overthreetimesthegrowthofhouseholds

LowSEChouseholdswillgrowat1.3%,aratelowerthanoverallgrowthin

households.Asaresult,althoughthenumberofthesehouseholdswillincrease

marginallyduringtheperiod,itssharewillcomedown

Incontrast,PoorSEChouseholdswillwitnessanegativegrowthduringtheperiod

i.e.thenumberofPoorSEChouseholdswilldeclinebetween2009-10and2024-25

Chart O: Forecast Model Results Projected CAGR (2009-10 to 2024-25)

22HouseholdswithpercapitaincomelessthanRs.20,000perannumeliminatedfromthepotentialinStage1.

23Compoundedannualgrowthrate


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Theoverallpotentialfore-commercewillincreasefrom146millionhouseholdsin2009-10to229millionhouseholdsin2024-25.AsshowninChartP,Corepotentialforconsumere-

commerceinIndiawillincreasefrom71.4millionto141.8millionhouseholds.LowSEC

segmentwillalsoincrease,butatamuchlowerrate,from74.9millionin2009-10to86.7

millionhouseholdsin2024-25.

Chart P: Results Stage 4, Forecast (Million Households)

ChartQsummarisestheconsumere-commercepotentialinIndiaanditsprojectedgrowth

by2024-25.Twothingsareworthnoting.First,althoughthenumberofPoorSEC

householdswilldecline,numberofLowSEChouseholdswillincrease.Second,an

importantchangewillbethatby2024-25,ruralmarketswillbecomeincreasinglymore

relevantforbusinesseswitharound58millionruralhouseholdsasapartoftheCore

potential.

Chart Q: Key Results Consumer E-commerce Potential, Summary


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Stage5,Segmentation:BasedontheireducationandoccupationlevelstheCorepotential

hasbeenfurthercategorisedintofoursegments:

EarlyAdopters:ThissegmentincludeshouseholdswithanincomeofoverRs.5lakh

perannum,havingagraduatememberandengagedineitherbusiness,salaryor

profession.Typically,thissegmentwouldrelativelyvalueconvenienceoverother

benefitsofe-commercesuchascostsavingandbetterchoice

PrimaryMarket:Amongtheremaininghouseholds,thissegmentincludes

householdswithanincomeofoverRs.2lakhperannum,havinganeducationlevel

abovesecondarylevelandengagedineitherbusiness,salaryorprofessionor

farming.Typically,thissegmentwouldrelativelyvalueconvenienceandchoiceover

otherbenefitsofe-commerce,especiallyforproductswithahigherfrequencyof

purchaseandlowunitcost

ValueSeekers:ThissegmentincludeshouseholdswithanincomeofbetweenRs.1

lakhtoRs.2lakhperannum,havinganeducationlevelabovesecondaryleveland

engagedineitherbusiness,salaryorprofessionorfarming.Typically,thissegment

wouldrelativelyvaluecostsavingoverotherbenefitsofe-commerce.Although

choiceisalsogoingtobeimportant,whatsetsapartthissegmentfromtherestis

therelativelylowervalueaccordedtoconvenience.

AssistanceMarket:ThissegmentincludeshouseholdswhichhaveHighincomei.e.

incomeofoverRs.2lakhperannum,butcouldnotqualifyintothePrimaryMarket

segmentonaccountofpooreducationleveloroccupation.Althoughthissegment

willvalueallbenefitsofe-commerce,itsmostimportantconsiderationwillbe

convenienceandchoice,dependingonthenatureofproductsandservicescategory

inquestion.

ThesefoursegmentsofCorepotential,togetherwithLowSEC,formtheconsumere-

commercepotentialinIndia.ChartRsummarisesthesequencingofadoptionofe-

commerceandthedefiningcharacteristicsofthesesegments.

Chart R: Segmentation of Consumer E-commerce Potential, Adoption and Characteristics


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Inasense,thefirsttwosegmentsEarlyAdoptersandPrimaryMarketcanbelooked

atastheprincipalpotentialforconsumere-commerceinIndia.Thisisfollowedbythe

ValueSeekersandtheAssistanceMarketwhichtogetherformthesecondarypotential,

andfinallytheLowSECsegmentwhichofferslimitedpotentialforconsumere-commerce.

Chart S: Key Results Consumer E-commerce Potential, Segmentation

ChartSgivestheestimatesofthepotentialforconsumere-commerceforeachofthe

segmentsidentifiedinStage5.

TheprincipalpotentialEarlyAdoptersandPrimaryMarketwillincreasefrom

26.8millionhouseholdsin2009-10to74.1millionhouseholdsin2024-25.These

segments,especiallyEarlyAdopters,willcontinuetobedominatedbyurbanareas


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ThesecondarypotentialValueSeekersandAssistedMarketwillalsoincrease

significantlyto67.7millionhouseholdsby2024-25.Inthiscase,significant

proportionofthepotentialwillcomefromruralareas

TheLowSECsegmentwillgrowatamuchmoresubduedrate.Thissegmentwill

continuetobelargelyfromruralareas.

Market Hierarchy and Opportunity24

Inthissection,wemapthemajorproductandservicescategoriestotheirtargetsegments

toquantifythesizeoftheopportunityin2009-10and2024-25.Thisillustrativeevaluationis

basedonassumptionsregardingcharacteristicsoftheproductcategoriessuchasunitcost

andfrequencyofpurchase.Ingeneral,highunitcostwillmeanthathouseholdswithHigh

incomearethetypicaltargetsegments,whereasmidtolowunitcostwillalsoattractValue

Seekersprovidedthatthecostsavingpropositionisstrong.Althoughitisdifficultto

generalisethebehaviouroftheAssistanceMarket,oneimportantcharacteristicwouldbe

thatthismarketwillbemorerelevantoractiveforcategorieswithalowfrequencyof

purchaseashighfrequencyofpurchasemightbringdowntheconveniencevalueand

discourageusers.Atthesametime,wealsopresentaqualitativeassessmentofthecurrent

availabilityofe-commerceservicesforthesecategories.

Travel Services

Travelisthemostsuccessfulconsumere-commercecategoriesinIndiawithashareof76

percentofthetotalconsumere-commercemarket.ThesizeofthissegmentisestimatedatRs.15,000crorein2009,mostofwhichisfromairticketingandrailwayticketing.Other

segmentssuchasbusticketing,hotelsbookingsandpackagesarestillverysmall.

Chart T: Mapping Product Categories to Potential: Travel

24Informationonmarketsizeoftheproductcategoriesusedinthissectionisbasedonthereport:Online

Commerce,March2011,IAMAI-IMRB


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Retail

Retailisthesecondlargestconsumere-commercecategoryinIndiawithashareof8per

centofthetotalonlinemarket.ThesizeofthecategoryisestimatedatRs.1,550crorein

2009.Althoughthecategoryhasseenrapidgrowthinrecentpast,mostoftheactivityinthis

segmentisrestrictedtoelectronicitemssuchascomputers,mobilephonesandcameras.

Retailbusinesseshaveaverylimitedpresenceinthecurrente-commercespace.Fromthe

businessespointofview,importantreasonsforthishavebeenpoorsupplychain

infrastructureandproceduralcomplexitiesinvolvedinmakingphysicaldeliveries.Froma

customersperspective,factorswhichimpedethegrowthofthissectorareissuesrelatedto

qualityofmerchandiseandservice,especiallywhentheproductorserviceinquestionis

unbrandedornon-standard.

Thisalsomeansthatthereareadditionalchallengesinrealisingthepotentialinthiscategoryascomparedtotravelservices.Businessesinsegmentswithestablishedbrands

andqualitystandardswillbethefirsttoattractvolumesfrome-commerce.Ingeneral,

demandwillcomefromHighincomesegments,andtheValueSeekersforsegmentswith

establishedneedsofferinggreatchoiceandvalue.Incontrast,thepotentialmarketforhigh

frequency,highconveniencedrivencategorieswhereshoppingexperienceisimportant,

suchasFMCG,GroceriesandApparel,willbelargelylimitedtotheprimarypotentialEarly

AdoptersandPrimaryMarket

Chart U: Mapping Product Categories to Potential: Retail

Financial Services

Onlinefinancialserviceshavebeengrowinginimportanceandadoptioninlastfewyears.

However,unlikeothere-commercecategories,theroleofonlinefinancialserviceshaveso

farbeenlargelyrestrictedtoaofferingalow-costandefficientalternatechannelforcarryingourfinancialtransactionsbythecustomers,mostlyinthebankingsector.The


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abilityofthissectortogeneraterevenuesthroughonlinesaleoffee-basedfinancialservices

suchasinsuranceproducts,retailloansandadvances,orthroughfund-basedtransactions

suchasonlinebillpaymentservicesfortheircustomershasbeenverylimited.Overallsize

ofthemarketisestimatedataroundRs.1,540crorein2009.Ingeneral,unitcostand

frequencyarenotrelevantforfinancialservicesandinmostcasesthesegmentsarehighly

conveniencedriven.This,coupledwiththeoverridingconsiderationsofsecurity,willmean

thatthemarketforonlinebankingtransactionswillbelimitedtoEarlyAdoptersand

PrimaryMarket.Forotherfees-basedproductssuchasinsuranceandconvenienceservices

suchasbillpayments,AssistedMarketwillalsoberelevant.

Chart V: Mapping Product Categories to Potential: Financial Services

Digital Downloads and Online Services

Digitaldownloadsandonlineserviceshavegrownrapidlyintermsoftheirpenetrationand

sizeoverthelastfewyearswithincreasedavailabilityofservicesthataddresstheneedsof

consumers.ThemarketsizeofthiscategoryisestimatedatoverRs.1,600crorein2009.

Chart W: Mapping Product Categories to Potential: Digital Downloads and Online Services


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Thedistinguishingfeatureofthiscategoryistheimmediateonlinedeliveryofserviceor

purchasedcontentandlowtonegligiblecompetitionfromoff-linechannels,makinge-

commerceafavouredmodeloftransactionfortheconsumers.Althoughthepotentialwill

berestrictedtothetopmostsegmentsforurbanconveniencedrivensegmentssuchas

movietickets,DVDrentalsandfooddelivery,thee-commercepotentialwillbemuchhigher

forothercategories.Moresignificantly,LowSEChouseholdswillalsopresenthuge

potentialforlowunitcostservicessuchasonlineclassifiedsandmobileentertainment.

Educationandhealthcare,whichcurrentlydonothavemuchpresenceinthee-commerce

space,alsohaveimmensepotentialforwell-designedvalueofferingsamongalargesection

ofthepopulation.

Consumer E-commerce Potential: The Opportunity

Thecorepotentialforconsumere-commerceisestimatedat71.4millionhouseholds.In

termsofnumberofpeoplewhowillengageine-commercetransactions,thiscorrespondsto

143millionpeopleassumingaroundtwousersperhousehold.Inaddition,thereareanother

75millionhouseholdsthathavepotentialtoengageine-commerceactivitiesinalimitedset

oflow-valueproductandservicescategories.

Thecurrentpotentialfore-commercepredominantlycomesfrommetropolitancitiesand

largetowns.However,thisisgoingtochange.Inthenext10to15years,smallertownsand

up-countrylocationswillhavesignificantpopulationwiththepurchasingpowerandright

socio-economiccharacteristicscoupledwithaspirationsthatmatchtheirurban

counterparts.Asaresult,by2024-25,thecorepotentialfore-commerceisestimatedto

increaseto142millionhouseholdsoraround285millionusers.Inaddition,therewillbeanother87millionhouseholdsthatwillhavelimitedparticipationinthee-commercespace.

Thisisahugeopportunity.Evenbetter,totheextentthatalargepartofthisadditional

demandcomesfromgeographicallydispersedlocations,itpresentsexclusiveopportunities

fortechnologyenabledtradeanddistributionchannelssuchase-commerce.

Market Size Scenarios

Indiane-commercemarketisgrowingrapidly,andisestimatedtobeworthRs.46,500

crore25

orUSD10billionin2011.Thecurrente-commerceuserbaseisestimatedataround10million

26.Assumingtwousersperhousehold,theoverallpotentialfore-commercein

IndiaincludingbothcorepotentialandLowSECis292million.Consideringthisasthe

base,thecurrentadoptionofe-commerceisonly3.5percent.Inabusiness-as-usualcase,

theadoptionisexpectedtoincreaseto15percentofoverallpotentialby2024-25.

Chart X: Market Size Scenarios (USD Billion)


26Thisestimateisbasedoninputsfromindustrypublicationsandinterviews.Businessesacrossmostproduct

andservicescategoriespegthenumberoftheiractiveuserbaseat5-15million.Forproductcategoriessuchaspremiumretailandonlineservices,whichareaimedatthehigherendoftheincomespectrum,thenumberof

usersisclosertothelowerlimitof5million.


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ChartXprovidesestimatesofthesizeoftheconsumere-commercemarketin2024-25

basedondifferentlevelsofadoptionandtwoscenariosofgrowthofbusinessesandproduct

categories27

intheconsumere-commercespace,whichwillhaveramificationsfortheshare

ofwalletthataconsumerwillspendthroughe-commercechannels.

Dependingondifferentlevelsofadoption,themarketsize28

ofconsumere-commerceby

2024-25isestimatedtobe:

Scenario1:USD70-150billion,ife-commercecontinuestobelargelylimitedtoexisting

productcategoriesandtheshareofincomespentthroughe-commercechannels

remainsthesame

Scenario2:USD125-260billion,ifshareofincomespentthroughe-commerceincreases

asbusinessesacrossnewcategoriesemergewithtime

Thekeytogrowinge-commercewouldbetoachievehigherlevelsofadoptionbyremoving

thechallengesfacingthesectorthroughappropriatepolicyaction.Thisisdiscussednext.

27Thesecaneitherbenewcategoriessuchashealthcareandeducationorbusinesseswithinexisting

categoriessuchasgroceriesandconsumerdurablesintheretailsegment,whichsofarhaveanegligible

presence28Theseestimatesofmarketsizearebasedonthefollowingkeyassumptions.Theshareofincomespent

throughe-commercechannelsisassumedtobesameforallsegmentsofthepotential.ForScenario1and

Scenario2,thisshareofincomespentthroughe-commercechannelsisbasedoncurrentpercapita

expenditureofusersofe-commerceandestimatedincreaseinsharewithadditionalcategoriesofexpenditure

respectively.Modelingforincreaseinadoptionhasbeendonebytakingintoaccountsequentialandfaster

saturationforthebetter-offsegmentsinlinewiththestudymethodologyandgreateradoptioninurbanmarketsascomparedtoruralareas.Inflationisassumedat5%between2009-10and2024-25.Exchangerate

usedforRupee-Dollarconversionin2024-25isRs.40/USD.


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4. Challenges: Key Issues and Policy Agenda

Consumere-commerceecosystemcomprisesthetwotransactingparties,businessesand

consumers,andtheenablinginfrastructure:

Connectivity Payments

Delivery

Regulatory

Mostofthechallengesandconstraintfacingconsumere-commerceinIndiathatpreventsit

fromrealisingitsfullpotentialandrestrictsitsfuturegrowthpertaintolackofadequate

enablinginfrastructureandtheinabilityofbusinesses,eitherindividuallyorcollectivelyas

anindustry,toaddresstheconcernsoftheconsumers.

Inthissection,wereviewthesechallengesandconstraintstohighlightthekeyissuesand

setanagendaforindustry,industrybodiesandthegovernment.Itisimportanttorecognise

thattherelevanceofpolicyagendagoesbeyondconsumere-commerce.Manyofthesewill

alsobenefitothersectors,andoverallgrowthoftheeconomy.

Connectivity

Adequateconnectivityinfrastructureisthekeytothegrowthofconsumere-commerce.For

informationservicesanddigitaldownloadsforwhichtherearenophysicaldeliveries,

connectivityalsoformsapartofthedeliveryinfrastructure.InIndia,thecurrent

connectivityinfrastructureavailabletotheconsumersintermsofthequalityandcostisa

majorimpedimentforthegrowthofconsumere-commerce.Inthecurrentenvironment,affordabilityofcomputersandbroadbandconnectivityislimitedtoaround20%of

households.However,duetolackofdigitalliteracy,averysmallproportionofthese

householdsinvestincomputingdevicesandinternetservices.

Digital Payments

Digitalpaymentsarenecessarytodrivegrowthinconsumere-commerceasofflinemodes

ofpaymentcannotdrivevolumes.Besides,paymentmodessuchascash-on-deliverythat

complementdigitalpaymentsarenotsuitableforhighvaluetransactions,especiallywitha

poorsupplychaininfrastructure.Inthecurrentenvironment,theproblemisfromboth

sides.Fromthepointofviewconsumers,theabilitytomakedigitalpaymentsisverylimited

outsidelargecities.Forthebusinesses,poorpaymentgatewayinfrastructureresultsinhightransactionfailuresandpoorcustomersatisfaction.


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Delivery and Supply Chain

Deliveryinfrastructureincludestheentiresetofsupplychainservicesincludingstorage,

warehousing,bulktransportationandcourierservices.Specialisedlarge-scaleproviderof

end-to-endsupplychainsolutionshavebeenthebackboneofsuccessfule-commerce

activitiesindevelopedcountries.Incomparison,Indiadoesnothavesupplychain

companiesthatcanprovidecompetitivepan-IndiaserviceswithacceptableServiceLevelAgreements.Servicesofafewoperatorsthatdoexistarelimitedtoahandfulofcitiesand

largetowns.Infact,poordeliveryinfrastructurehasbeenoneofthebiggestimpedimentsin

thegrowthofe-commercebusinessesinsectorswhichrequirephysicaldeliveryofgoods,

especiallylargeandhigh-valueitems.

Regulatory and Tax Structure

Consumere-commercebusinessmodels,especiallythoseinvolvingphysicaldeliveryof

goods,arebuildoncentralisedwarehousingandefficienttransportanddistribution.In

India,taxesandleviesontradeandcommercearebothunderthepurviewofcentral,states

andlocalgovernments.Thesetaxesandthedocumentationrequirementsvaryacrossstates

leavingaverycomplexproceduralwebforthee-commerceoperatorstotackle.Lackofcountry-wideefficientsupply-chainprovidersmakesmattersevenworse.Apartfromthis,

thereisnorecognitionofe-commerceasaseparateactivity.Developinganenabling

regulatoryframeworkwhichaddressestheseissueswillbeimportantforgrowthof

consumere-commerceasasector.


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Consumers Concerns

Indiane-commercemarketisgrowingrapidly,butiscurrentlyskewedinfavourofahandful

ofservices.However,therearealargenumberofactiveinternetuserswholimittheir

onlinepresencetolookforinformationandchoosetotransactoffline.Apartofthe

problemislackofsufficientbusinessesacrosscategorieswhichservicetheirdemand.Given

thepotential,itisonlyamatteroftimebeforenewbusinessesemergeacrosstheseproduct

andservicecategories.But,moreimportant,alargenumberofpeopledonotpreferto

transactonlineduetopreferenceforofflinemodelsoftransactingaswellasconcerns

regardingsecurity,lowconfidenceinonlinebusinessesandtheirqualityofservice.Evenas

preferencefortraditionalmodesoftransactionsduetofactorssuchasshoppingexperience

andwantingtohavealookattheproductbeforepurchasingwillcontinuetoberelevantfor

someproductcategories,itisimportanttoaddressconcernswhicharewithindirectcontrol

ofthee-commerceindustry.


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5. Realising E-commerce Potential: Summary

Consistenthighlevelofgrowthoverthelast10-15yearshasbroughtaboutsignificant

increaseinthelevelofwell-beingandsocio-economicattainmentinIndia.Althoughthe

changeisimmediatelyvisibleinmetropolitanmarketsandlargecities,thegrowthhasbeenverybroad-basedandbenefitedpeopleacrossthecountry.

Moreimportant,greaterpenetrationoftechnologyandmediaisclosing-upthegapsin

tastesandpreferencesbetweenurbanandup-countrylocations.Withthesechanges,there

hasbeenasignificantincreaseinthepotentialforconsumere-commerceinIndia.Thestudy

estimatesthecorepotentialmarkettobearound71.4millionhouseholdsin2009-10.In

addition,thereareanother75millionhouseholdsthathavelimitedpotentialtoparticipate

ine-commerce.GiventhepositiveoutlookforgrowthofIndianeconomy,thispotentialwill

increasesignificantlyinthefuture.By2024-25,thecorepotentialwillincreaseto142

million.Plus,therewillbeanother87millionhouseholdswithlimitedpotentialforamuch

fewerproductsandservicescategories.

Roadmap for the Future

Indiane-commercemarketisgrowingrapidly,andisestimatedtobeworthRs.46,520

crore29

orUSD10billionin2011.Thecurrente-commerceuserbaseisestimatedataround

10million30

people.Assumingtwousersperhousehold,theoverallpotentialfore-

commerceinIndiaincludingbothcorepotentialandLowSECis292million.Considering

thisasthebase,thecurrentadoptionofe-commerceisonly3.5percent.

Thismeansthatthereisahugegapbetweentheestimatedpotentialandthecurrentconsumerparticipationine-commerce,whichinspiteoffavourablegrowthinthelastfew

years,continuestobelimited.Thisgapcanbeattributedtofourkeyfactors:

Consumere-commerceisstillrelativelynew.Apartfromafewproductcategories,

thereareonlyafewprovidersthatofferastrongvalueproposition,andthereare

concernsregardingtheircredibilityandeffectivenessofservices

Connectivityisstillverycostly.Althoughimprovementsinthissectorarehappening

rapidlywithintroductionofnewandbettertechnologies,connectivityinfrastructure

continuestobepoor,especiallyasonemovesoutoflargetownsandcities

Poorstateoffinancialinclusionthataffectstheabilitytocarryoutdigitalpayments

Inabilitytoservicelargepartsofthecountryduetolackofpropersupplychain

infrastructureseverelyimpactsbusinessesthatdealinphysicalgoods,especially

bulkyitems.


30Thisestimateisbasedoninputsfromindustrypublicationsandinterviews.Businessesacrossmostproduct

andservicescategoriespegthenumberoftheiractiveuserbaseat5-15million.Forproductcategoriessuchaspremiumretailandonlineservices,whichareaimedatthehigherendoftheincomespectrum,thenumberof

usersisclosertothelowerlimitof5million.


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Themediumtermoutlookforimprovementintheseareasispositive,beitintroductionof

3Gservicesorthegovernmentseffortstoimprovefinancialinclusionaswellasachieve

greaterbroadbandconnectivity,digitaleducationandtraining.However,alotmorewill

needtobedone.

Realisingtheconsumere-commercepotentialinIndiareachingouttothelastcustomer

willdependonhowbothindustryandgovernmentworktowardsaddressingthe

challengesfacingthesectorandcreatingane-commerceecosystemwhichrewardstalent,

entrepreneurshipandinnovation.

Fortheindustry,focusshouldbeonintroducinginnovativeservicesanddeliverymodels,

addressingcustomerconcernsbysetting-uphighstandardsofsafetyandqualityofservices.

Forthegovernment,focusshouldbeencouraginggrowthofenablinginfrastructureand

carryingoutfiscalandregulatoryreformsnecessaryforunfetteredgrowthofthesector.


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End Notes

Sources of Information:

Thestudyisbasedonsecondaryresearch.Thisincludesextensivemodellingofsurvey

datasetsandpublishedmaterialonthee-commercesector

Themainsourcesofdataandinformationformacroeconomicassessmentof

potentialandrelevantsocio-economicsegmentsareCensusofIndia(2001),latest

round64(2007-08)ofNationalSampleSurveyOrganisation(NSSO),thelatestlarge

sampleround(2004-05)fromNSSO,andnationalaccountsfromCentralStatistical

Organisation

OthersurveydatasetssuchasReproductiveandChildHealthSurvey,National

FamilyHealthSurvey,NationalDataSurveyonSavingPatternofIndians

(MinistryofFinance,GovernmentofIndia)havebeenusedforvalidations

andfactorgenerationsforthemodel

ImportantsourcesofdataonE-commercesectorinclude

Governmentpublicationsandreports;industrysourcessuchasassociations

andsectorreports,surveyreports;independentresearchreportsonthe

sector.ThesehavebeenlistedintheReferences

Apartfromsecondaryresearchthestudybenefitedfrommeetingsandinterviews

withpeopleintheindustrytounderstandtheopportunitiesandchallenges


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References

RecommendationsofNationalBroadbandPlan,TRAI,2010

AnnualReports,variousissues,TRAI

TheIndianTelecomServicesPerformanceIndicators,variousissues,TRAI

ImplementationofDigitalAddressableCableTVSystemsinIndia,TRAI,2010

PolicyIssuesrelatingtoUplinking/DownlinkingofTelevisionchannelsinIndia,TRAI,2010

IndiaMediaandEntertainmentOutlook2010,PriceWaterhouseCoopers(India)

CybercafUsers:EcommerceActivities,IAMAI,2005

ConsumerE-CommerceMarketinIndia2006-07,IAMAI

Re-ThinkingeCommerceinIndia,IAMAI,2010

I-cube2009-2010InternetinIndia,IAMAI,2010

InternetforRuralIndia:2009,IAMAI

MobileInternetinIndia,2009,IAMAI

ReportonOnlineCommerce,March2011,IAMAI


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ThisreporthasbeenpreparedbyIntelinkAdvisorsforIAMAIonthebasisofinformationbelievedtobereliable,whichisalreadyavailablein

publiclydomainorfromgovernmentagenciesorprivatesources.IntelinkAdvisorsdoesnotrepresentthatthisinformationisaccurateor

complete.Althoughhighdegreeofcarehasbeentakenintheresearch,developingtheanalyticalandforecastingmodels,andpreparation

ofthereport,thesearebasedonassumptionsregardingconsumerbehaviourandchangesinthemacroeconomicenvironment.Further,

anyopinionsorestimatespresentedinthereportaresubjecttochangewithoutnotice,withorwithouttheavailabilityofnewandupdated

information.Readersofthisreportareadvisedtoseektheirownprofessionaladvicebeforetakinganycourseofactionordecision,based

onthecontentsofthisreport,forwhichtheyareentirelyresponsible.IntelinkAdvisorsneitheracceptsorassumesanyresponsibilityor

liabilitytoanyreaderofthisreportinrespectoftheinformationcontainedwithinitorforanydecisionsreadersmayormaynottakeonthebasisofthereport.

04 consumer ecommerce potential in india, v8, (corrections in print version) 4 aug 2011_57

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