HTLS Column by Amit Agarwal: E-retail, a breakout opportunity for all
E-commerce, which has a potential to grow at 50 %, can attract impressive FDIs, create jobs and promote entrepreneurship in the country.HTLS2016 Updated: Dec 02, 2016 01:32 IST
It was the dream of Rakesh Ramrakhani, owner of Lali Prints, to reach every Indian home with his bed and bath products. But from his modest beginnings at Jaipur, it would have been next to impossible to do that. Ramrakhani, however, achieved this in a few months, adorning households from Jamshedpur to Japan, thanks to e-commerce. Today, Lali Prints’ products are available across the world, through many e-commerce portals, including Amazon.
Electronic retail is growing by leaps & bounds, emerging as a game-changing opportunity and a large employment generator for India over the last few years.
According to several industry surveys, the e-commerce industry, currently valued at $23.39 billion with 39 million buyers, would touch $ 119 billion with 215 million buyers by 2020. This surge would generate one million or more employment opportunities, boost ancillary sectors such as logistics and warehousing while creating e-retail business-related activities.
Prospects of credit cards and other online and digital payment methods are even more exciting. For example, the pace of Internet penetration (users in India may touch 730 million by 2020 as against 400 million in 2016), greater adoption of mobile telephony and digital payment services and fast-changing consumer purchase behaviour and tastes. With the government aggressively pushing for a cashless economy, the adoption of digital payment would gain further pace.
Positive impact on job creation, rural livelihood
According to Credit Suisse, over 32% of Indian Internet users now shop online due to the ‘changing economic dynamics, wider product choice, better shopping formats and an unparalleled access to information’.
Besides, a vast fleet of trucks moving goods across the country, massive warehousing and order-processing capacity will generate employment for over 1, 60,000 people by 2020. This is over and above the one million direct employment in this sector in the same period. However, the biggest contribution of this sector would be in terms of creation of an ecosystem that would boost entrepreneurship across the entire e-retail value chain, creating new opportunities for small and medium businesses in urban as well as rural geographies.
Unarguably, small sellers are some of the biggest beneficiaries of the expanding e-commerce horizon as they could better leverage the influence and prominence as well as the logistical and related infrastructure offered by e-commerce companies. Besides seller enablement, e-commerce companies are also investing in market development; an example is the ‘concept shop’, set up in smaller towns to allow first-time buyers to have an experience. This has increased the conversion of such non-digital buyers to take to online platforms.
Kirana store owners see spurt in business, income
The revolution of e-commerce is percolating to the lowest strata of suppliers and trade; local kirana store owners are equally happy to get more business from the click-and-mortar mode. In fact, while considering the implications of opening the retail business to large players, the government has concerns about the survivability of small kirana stores but empowerment through use of technology has provided them even more opportunity.
Neha, who owns a small kiosk of cosmetic goods, Maharani Shringar in Patna City, is a classic success case. Currently, she delivers 35-50 packages on a daily basis, earning an extra income of `18,000-20,000 per month over and above her regular income of `12,000-15,000 from the kiosk. “I want to give a better future to my daughter with this additional income. I am also trying to get more women to be associated with this programme,” says Neha.
Many such self-motivated entrepreneurs are using their newly acquired skills to generate additional sources of income by providing assisted shopping services to the digitally under-served communities in nearby localities.
It’s not only national, but International expansion
E-commerce, as we see it, is a springboard to find newer markets internationally for ‘Made in India’ products , literally at the click of a button! In the last 19 months, over 18,000 Indian entrepreneurs, SMEs as well as large Indian brands such as Amul, Fabindia, Himalaya etc have taken their Made in India products and creations directly to millions of global customers through Amazon’s Global Selling. Nadeem is one of them. Nadeem’s job in a small leather workshop in Mumbai’s Dharavi earned him just enough to meet household expenses. But that was soon to change; an opportunity to do business on his own through the e-commerce platform of Amazon’s Global Selling Program. Nadeem promptly registered on the platform and took off, listing original leather jackets at attractive prices. Today, Nadeem does business worth over $8,000 each month on Amazon.in and intends to focus more on expanding his online business.
Opportunities, but systemic issues need govt attention
As various industry surveys point out, e-commerce has the potential to grow at over 50% per annum for the next several years and can attract an FDI of almost $120 billion till 2020 if a ‘well-structured and thoroughly considered tax system, an enabling policy framework and a focused thrust on digital inclusion’ can be enacted upon. Though the Goods and Services Tax is likely to solve some of the existing tax issues, few aspects could hamper the e-commerce marketplace.
The e-commerce segment has a proven ability to create jobs, promote entrepreneurship, build nationwide logistics and infrastructure, control inflation and boost realisation of important programmes such as Make in India and Digital India. But the sector can integrate the length and breadth of India into one single massive market, if public investment in telecom infrastructure and affordable Internet can be sustained and in addition, legal, financial and structural support systems are created.
The author is Vice President and Country Manager for Amazon India