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On The Current State Of e-Commerce In India; Cash Vs Cashless

“eCommerce in India has taken off well but the fundamentals for a sustainable e-commerce ecosystem is not yet in place,” said Himanshu Singh, Chairman IAMAI. Speaking at the National Conference on Digital Commerce in Mumbai, Singh iterated that  travel alone accounted for 70% of eCommerce in India but would come down to 1/5th of all eCommerce in the next 3-4 years.

Current status of eCommerce in India

MurliKrishnan B. from eBay India, said that eCommerce in India was at $0.6 Billion in 2010 and will be at $1 Trillion* by 2013. Bejal Somaia, Managing Director, Lightspeed Ventures India, suggested that the way eCommerce was being conducted in India, with huge investments from VCs, was not necessarily converting all sales into profit.  He argued that cost of customer acquisition was anywhere between Rs 500-700, which Harinder Tahkar,CEO of PayTM, also seem to subscribe to during a different panel discussion**.  Harinder also added that for some eCommerce sites the cost of customer acquisition is extremely high and anywhere between Rs 500-1,000 which does not make it a sustainable model. Somaia also said that logistics and reverse logistics, inventory and customer service also have to be considered.  In fact, he concluded that eCommerce sites were in negative balances on purchases under Rs 1,000.

eCommerce beyond Metros

Ravi Vora, VP-Marketing, Flipkart, added that Cash On Delivery (COD) was not converting into Net/Credit card payment in Urban and Rural India. He suggested that it was all about convenience rather than use of technology. This claim was further cemented by Ashutosh Lawania, Co-Founder and Head of Sale, Myntra.com. According to the panelists, Tier 2 and Tier 3 cities and rural areas were more comfortable with COD and a lot of eCommerce sites like Flipkart, Myntra were seeing drastic changes in participation from Tier 2 and Tier 3 cities, which according to them, were now contributing more than 60% of sales. Harinder Tahkar had different views altogether. He was of the opinion that item discovery was still at a nascent stage in India and needs to be improved upon.

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On Cash Vs Cashless

One of the interesting panel discussions was on Cash or Cashless. While in previous discussions it was asserted that majority of Indian eCommerce users are more comfortable with COD rather than going cashless, cashless and mobile payment still have a long way to go.

Neel Chowdhury, Vice President and CMO, Obopay said that Mobile Money was not going to take off in the next 6 months,and would take more time. But with regulators pushing it, it is finally moving forward. Sumit Chopra, Director-Operations & Service delivery, First data, asked the right questions. He said that Cashless was not just about credit card payments on the internet.  He gave the example of a Pizza delivery guy not being equipped with the right technology for accepting cashless payments. He added that Cashless was not just about convenience, it was about user experience and trust.

Dheeraj Bharadwaj, CM, National Payment Corportation of India suggested that Mobile Payments was a good option but it will take time to adopt since it’s very fragmented. He added that there were multiple payment technology pltforms like SIM payments, NFC payments, Operator Payments, and linking bank details to mobile mode of payments. He suggested that all these modes of payment modes need to be converged.

Update: *eCommerce business in India by 2013 was wrongly quoted at $10 Trillion and has been updated to $1 Trillion. We regret the inconvenience caused to our readers and thank Ankur Warikoo for pointing out the mistake.

Update 2: **Harinder Tahkar was wrongly paraphrased in paragraph two where we quoted him denying the cost of customer acquisition. His wordings has been updated in the post. We regret the inconvenience caused to our readers.

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