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M-Commerce: Driving the E-Commerce Revolution in India

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The line between browsing and buying online and offline is blurring today as technology is playing a catalyst in converting every physical touch point for consumers into digital. Reliance had changed the landscape of mobile market in India with affordable mobile services for the masses and is probably going to repeat it with a pan-India 4G roll out in the near future. With mobile phones reaching the masses, mobile commerce is poised to bring the next e-commerce revolution in India.

Few walls suddenly become a virtual store where brands can create apps that provide personalised recommendations for what to buy in-store both online and offline.

E-commerce is not just a channel; it’s a window that enables you to shop anywhere and m-commerce is one small panel in this window. In India, M-commerce is yet to take off in full swing, though the market is already seeing various players across categories, using applications to conduct various transactions. The key vendors dominating this market space are Bharti Airtel, mCheck India Payment Systems, PayMate India, State Bank of India, Vodafone India, ICICI Bank, HDFC, Canvas M Technologies, Netxcell, Yes Bank, Bharat Sanchar Nigam, Union Bank of India, Obopay Mobile Technology India, Axis Bank, etc. According to the latest BCG report, the projected fee-based revenue from m-commerce could exceed $4.5 bn by 2015 in India. This revenue would be shared by banks, mobile service providers and device manufacturers.

Analysts forecast the m-commerce market in India to grow at a CAGR of 71.06 percent over the period 2012-2016. “As per current estimates, mobile Internet connectivity could unleash India’s latent demand for digital consumption as the following data points illustrate. The smartphone penetration stands at 44 million and is growing at 150 percent year on year. Out of all shopping queries in India, 30 percent come from mobile phones,” states Ashvin Vellody, Partner – Management Consulting, KPMG. Many cities in India are making the transition from cash payments to e-commerce. A recent survey by The Associated Chambers of Commerce and Industry of India (ASSOCHAM) found that Dehli is the city most adapted to the e-commerce methods, followed by Mumbai and Ahmedabad.

QR codes have, in the past, been used most often in the field of marketing, but have begun seeing used as an m-commerce tool. Yebhi.com, an online fashion and lifestyle merchant, sees a great deal of promise in both NFC and QR codes by believing that payments can now be made directly using a smartphone with automatic debit facility form respective credit or debit cards. Yebhi has launched a variety of virtual stores that are contained in posters that have been plastered on the walls of Cafe Coffee Day stores in Delhi and Bengaluru. These posters are equipped with NFC technology, allowing those with NFC-enabled devices to visit Yebhi’s virtual store and purchase products. The posters also include QR codes, which allow those without NFC-enabled devices to access these stores. Yebhi aims to appeal mostly to the young audience and corporate personnel that frequent Cafe Coffee Day stores.
The research shows how mobile-based transactions have gained popularity in India and have become an integral part of the consumer’s life. More than half of the consumers in India indulge in maximum mobile purchases for entertainment service such as cinema, theatre shows, DVDs, sport games (53 percent) followed by music downloads (48 percent).

The other key purchases via mobile are clothes/footware/other attires (47 percent) and books or e-books (40 percent). Already 45 percent of the online users in India access so using only their mobile and contribute close to 3 percent of the e-commerce revenues.

M-commerce will scale up as it targets large sections of remote rural areas that were earlier unapproachable. In future, customers in rural areas (where the PC Internet penetration is low but mobile penetration is higher) will drive the growth of m-commerce, and it is the rural mobile user who will eventually make a difference in ROI of m-commerce services. The absence of modern retail outlets, affordable smartphones and flexible and attractive data plans are main drivers of m-commerce in non-metros.

To penetrate this untapped market, telecom players and service providers are facilitating local innovative methods to provide the right mix of smartphone features at the right price. Mobile money, introduced by major telecom operators, has made significant progress in a short span (lower than expected growth can be attributed to current regulatory restrictions).

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