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E-commerce in India gearing to cross Rs 10 billion mark

MUMBAI: The total value of E-commerce activities within India has exceeded Rs 5.7 billion during 2004-05, according to a research conducted by Internet & Online Association of India (IOAI).

The report estimates a 300 per cent plus growth rate during the next couple of years and has targeted a whooping Rs 23 billion worth of e-business conducted within the country by the year 2006-07.

 

The IOAI research report conducted in association with Cross Tab Marketing Services has tracked Internet user's proclivity for shopping online. The research was undertaken with a view to understand the profile, Internet usage, products purchased along with propensity to buy along with the nuances of shopping online with the shopper's affinity and aversions to online shopping.

 

 

A total of 3099 respondent's views were solicited of which 55 per cent (1716) had shopped online and 87 per cent (1493) had shopped more than once forming the base of the report.

Changing lifestyles and shopping habits make this a shopping medium impossible to ignore. The report makes actionable recommendations on how online retailers can fill gaps in the online environment as well as how they can utilise unique elements of the online shopping experience to create a competitive advantage over the physical retailing world.

 

 

IOAI chairman Neville Taraporewalla said, "The rapid development of E-commerce is forcing companies today to adopt business strategies revolving around the Internet. The report reflects the changing face of business trends in India. Today, the Internet population is 25+ million and is expected to grow at 100 million by 2007. The report can act as a guideline on how online retailers can use this new business environment for their advantage."

IOAI vice chairman Mahendra Swarup added, "This business module is cost effective, easily accessible and profitable in many functional areas. Consumers and retailers both desire a safe, simple and comprehensive online shopping experience that will truly realise the range of power of the Internet. The report highlights ground realities of the online shopping environment and shoppers' attitudes and perceptions towards e-commerce."

According to IOAI president Preeti Desai, "E-Commerce is coming of age in India. Changing lifestyles and shopping habits, a similar metro /non metro consumption of media and Internet and multiple Internet access points will propel E-commerce transactions to Rs 23 billion in 2006-2007 from the current Rs 11.8 billion projection for 2005-2006, an over 100 per cent increase. From a business perspective it offers unlimited shelf space, it isn't bound by operational timings and geographical boundaries and an opportunity to cater to country wide city markets (for consumers and suppliers alike) at a comparative minuscule cost to an audience all set to grow to a 100 million by 2007. From a consumers perspective it allows greater access (hence the high response rate by tier two cities) to markets and an opportunity to make informed decisions on purchases."

Some research highlights:

The E-commerce industry: Rs 5.7 billion worth of E-commerce conducted online in 2004-2005 to grow to Rs 230 billion by 2006-2007, an estimated 300 per cent plus growth.

The E-commerce site visitor: 55 per cent of visitors to ecommerce sites have adopted the Internet as a shopping medium.

The 'Regular Online Shopper': Of the 55 per cent of online shoppers [Base 1716] - 87 per cent [1493] of shoppers have shopped more than once and have been termed 'as regular shoppers'. They form the 'base' for this report of users who have transacted online to buy products and services 'more than once'

Age and gender: 25 per cent of regular shoppers are in the 18-25 age group, 46 per cent in the 26-35 age group and 18 per cent in the 36-45 age group. 85 per cent of online shoppers are male even a 15 per cent female audience represents a 15 million strong market by 2007-2008 (IOAI Estimate: 100 million Internet users by 2007-08.)

Education and profession: 83 per cent of the user base is educated with a Bachelor or Post Graduate degree, it represents an educated audience. 54 per cent of online shoppers are at an executive level. 24 per cent of online shoppers are professionals or self-employed, indicating an assured spending power.

Internet access/savvyness: 76 per cent of online shoppers access the Internet from their office, 63 per cent from home and 24 per cent from cyber cafes. Shoppers accessing the net through multiple access points represents a dismissal that Internet Penetration is no more only PC dependent. All Internet activity support e-commerce in an allied or primary capacity.

Purchase history: 62 per cent of shoppers having shopped for more than a year. 37 per cent of online shoppers have started shopping online in the last 12 months. 67 per cent of online shoppers have shopped online as recently as three months showcasing the growing acceptance of ecommerce

Frequency of purchase: 67 per cent of online shoppers have shopped online as recently as three months showcasing the growing acceptance of ecommerce. 53 per cent of online shoppers have shopped online more than five times, 27 per cent of online shoppers have shopped online more than 10 times.

A top state/city representation: Maharashtra: 29 per cent (Mumbai: 24 per cent), Delhi NCR: 19 per cent, Tamil Nadu: 11 per cent (Chennai: 7 per cent), Karnataka: 10 per cent (Bangalore: 6 per cent), Uttar Pradesh: 7 per cent (Lucknow: 2 per cent), West Bengal: 6 per cent (Kolkatta: 5 per cent), Andhra Pradesh: 5 per cent (Hyderabad: 4 per cent), Rajasthan: 5 per cent, Gujarat: 4 per cent (Ahmedabad: 2 per cent) and Kerala: 3 per cent.

Top City/Product Preference: Mumbai (24 per cent) holds the Top Slot for Every Category, except jewelry. Delhi (19 per cent) fast competing with Mumbai in accessories, apparel, gifts, home appliances categories and has piped Mumbai to rank first in jewelry. Chennai (7 per cent) is at rank three for railway tickets, airline tickets, magazines, home tools, toys, jewelry, beauty products and sporting goods categories. Bangalore (6 per cent) is at rank three for books, electronic gadgets, accessories, apparel, gifts, computer peripherals, movies, hotel booking, home appliances, movie tickets, health and fitness products and apparel gift certificates. Kolkata (5 per cent) jumps to rank three in online music sales online and is at rank four for the movies and the music categories.

20 Products Bought Online: Books (41 per cent), Electronic Gadgets (40 per cent), Railway Tickets (39 per cent), Accessories Apparel (36 per cent), Apparel (36 per cent), Gifts (35 per cent), Computer and Peripherals (33 per cent), Airline Tickets (29 per cent), Music (24 per cent), Movies (21 per cent), Hotel Rooms (20 per cent), Magazine (19 per cent), Home Tools and Products (16 per cent), Home Appliances (16 per cent), Toys (16 per cent), Jewelry (15 per cent), Movie Tickets (15 per cent), Beauty Products (12 per cent), Health and Fitness Products (12 per cent), Apparel Gift Certificates (10 per cent) and Sporting Goods (7 per cent).

Satisfaction Index: 18 per cent of online shoppers are 'Highly Satisfied' with online shopping and 62 per cent are 'Satisfied' with their online shopping experience making a case for repeat purchases and peer to peer recommendations on this interactive medium. 17 per cent are 'Neither Satisfied or Dissatisfied' - An opportunity to convert them towards this increasingly high satisfying index. 3 per cent of online shoppers are 'Dissatisfied' with online shopping.

Top 5 Reasons to Shop Online: 70 per cent of online shoppers like 'Home delivery' about online shopping, 62 per cent like 'Time saving', 60 per cent of online shoppers like the '24x7', 45 per cent like the 'Ease of use' and 39 per cent of online shoppers like product comparisons.

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