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IAMAI estimates consumer e-commerce market to cross Rs 9,000 crore by 2007-08

10-October-2007
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IAMAI estimates consumer e-commerce market to cross Rs 9,000 crore by 2007-08

According to the first comprehensive consumer e-commerce survey conducted jointly by the Internet and Mobile Association of India (IAMAI) and IMRB, the consumer Internet market would reach an estimated Rs 9,210 crore by the end of FY 2007-08. At the end of FY 2006-07, the market size of this segment was estimated to be Rs 7,080 crore and the average rate of growth for the year 2007-08 was projected to be 30 per cent.

The unique feature of the study was that for the first time an attempt was made to arrive at a consensual industry definition of consumer e-commerce. The agreed definition of consumer e-commerce, according to the study, was, “Buying and selling of products and services on the Internet or on any other application that relies on the Internet. In other words, it comprises transactions for which Internet acts as a medium for contracting or making payment or for consuming the service or product by the end consumer, who is an individual”.

An official communiqué from IAMAI elaborated the combinations of these three conditions as follows: paying online and consuming online; consuming online and paying offline; and, contracting and paying online, and consuming offline.

Commenting on the report, Dr Subho Ray, President, IAMAI, said, “Consumer e-commerce is a major driver of the economy and we are happy that it has achieved a very decent size in India. It is perhaps the only sector that has operated under sometimes hostile and at all other times, indifferent policy environment. It is the right time for policy makers to extend its support to this industry as it has done for other so-called sunrise industries, and create an environment where this industry feels inspired, secured free to innovate.”

The study covered segments like online travel, e-tailing, classifieds, paid content subscription and digital downloads from the Internet in arriving at the current and projected market size of consumer e-commerce.

The online travel segment lead the pack with Rs 5,500 crore for 2006-07 and an expected growth rate of 30 per cent to reach Rs 7,000 crore by the end of 2007-08. The size of the next large segment, online classifieds, was around Rs 540 crore at the end of 2006-07. It is expected to reach Rs 820 crore by the end of 2007-08. On the other hand, e-tailing stood at Rs 850 crore in the year 2006-07 and is expected to be a Rs 1,105 crore industry by the end of 2007-08. Digital downloads and paid content accounted for the rest.

The current and projected market size of consumer e-commerce:

Market size for the year
2006-07(Figures in Rs crores)
2007-08(Figures in Rs crores)
Online Travel Industry
5,500
7,000
Online Non-Travel Industry
1,580
2,210
e-Tailing
850
1,105
Online Classifieds
540
820
Pain Content Subscription
20
30
Digital Downloads
170
255
Total B2C, C2C e-commerce market
7,080
9,210

According to the study, the major triggers of e-commerce in India were:

Saves time and efforts
1
Convenience of shopping at home
2
Wide variety/range of products are available
3
Good discounts/lower prices
4
Get detailed information of the product
5
You can compare various models/brands
6

And some of the major barriers at present were:

Not sure of product quality
1
Cannot bargain/negotiate
2
Not sure of security of transactions/credit card misuse
3
Need to touch and feel the product
4
Significant discounts are not there
5
Have to wait for delivery
6

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