E-commerce may vault to Rs 9,500 crore in 2007

E-commerce in India has almost touched the Rs 5,000 crore mark and is expected to garner around Rs 9,500 crore by 2007.

This is despite the infrastructure constraints the country's online community faces and the recent figures put out by the Internet and Mobile Association of India that estimate the Indian e-commerce market to touch Rs 2,300 crore (around 10 per cent of the organised Indian retail market) by 2006-2007, which itself is a 95 per cent rise over last year's figure of Rs 1,180 crore and an over-300 per cent rise over the figure for 2004-05.

The discrepancy in figures arises from the fact that online travel alone, which accounted for $800 million (a little over Rs 3,600 crore) in 2006, has not been accounted for, says Deep Kalra, founder and CEO, MakeMyTrip.com.

This figure itself is poised to double next year. Do the maths for "all services that are being bought online" and you get a figure of around Rs 9,500 crore.

Further, the figures are credible if you consider the following facts: An estimated Rs 30 crore of air and rail tickets are sold online in India every day; a jewellery piece sells every 5 minutes, a mobile handset every 8 minutes and a car every 9 hours on eBay; over Rs 5,000 crore worth of business (domestic and international) materialised through leads generated by Indiamart.com during the last one year.

ICICI Bank alone conducted 17,000 online transactions a day, which is projected to rise to 70,000 transactions a day by 2007, says a source.

Net banking transactions with ICICI Bank account for a little less than Rs 100 crore per month and credit card transactions account for Rs 300 crore per month.

Last year, business-to-customer transactions with the bank accounted for Rs 2,400 crore. This figure is expected to double by March 2007.

Online shopping is now prevalent in nearly 2,000 towns and cities, including Tier-II cities like Surat, Ankleshwar, Sholapur, Kottayam, Faridabad and Bhopal.

Services like Net banking (32 per cent), bill payments (18 per cent), stock trading (15 per cent), job search (51 per cent), and matrimonial search (15 per cent) have seen tremendous rises.

Over 60 per cent of e-commerce transactions are being done by 20- and 40-year-olds in India, constituting a considerable buying mass, suggests the Internet and Mobile Association of India data.

On the downside, the country has only around 40 million Internet users (expected to rise to 150-200 million by 2008, depending on whose numbers one follows), around 15 million personal computers, and 12,000 cybercafes (other estimates, though, peg them at around 90,000 to 100,000).

Besides, the country does not have a very healthy broadband pipe (around 2 million subscribers, slated to rise to 20 million by 2010).

Currently, around 800,000 people transact on the Internet every month. To make a successful e-commerce transaction, both payment and delivery services must be made efficient. Current encryption is offering a safer online environment.

More importantly, delivery of goods to consumers by couriers and postal services is not very reliable in smaller cities, towns and rural areas, says K Vaiteeswaran, chief operating officer, FabMall.

The main speed-breakers include a long-pending requirement of clarification on issues like sales tax and service tax for online transactions, he avers.

If these hurdles are cleared, the figures will zoom further.