A study on perceived risks of E-Commerce in India

Abstract

The market size of online retail in India is estimated to reach INR 100 billioni in 2014-15. Internet penetration and increase in general income levels of Indian consumers are the major reasons for the growth. Presently, the percentage of online retail in the organized retail is just around 2%. This is primarily because of inhibitions among the Indian consumers for using the Internet as a channel for buying products. Inhibitions mainly arise due to fear of online money transfer, anxiety of the quality of products purchased etc. Online retailers have been constantly finding innovative ways to build the online customer base. One example is the Cash-On-Delivery (COD) scheme, which has improved the number of online customers considerably. With such efforts, even people in tier 2 and tier 3 cities have started buying things online. Technological developments in the Internet and access through many devices like smart phones, tablets, handheld computers etc. have also helped the cause. These opportunities in this field are finding positive responses from venture capitalists and huge amount money is being pumped into online retail businesses. From 2011 onwards, the PE investments in online retail has shot up by as much as 147%ii. Even branded mobile and apparel firms have started getting into the online space through partners or by launching their own portals. In terms of products, online retail is dominated by electronics (mobiles, cameras) followed by lifestyle products. This is because Indian consumers are still not comfortable with buying high-value products online. At the same time, the online retailers are not equipped well enough to provide proper infrastructure to support these sales. But the trend is slowly changing and we could see the percentage contribution of online retail in the organized retail business grow at a faster rate.