What is research Speaks about Consumer, Retail & Ecommerce Business in India?

Consumer industry is rapidly growing. In consumer industry, agriculture and food sector forms an important part. In this sector, there are immense opportunities for investments

As India has the second largest population with affluent middle class, rapid urbanisation and solid growth of internet, Indian Retail Industry has immense potential. With the entry of several new players Indian retail industry has emerged as one of the most dynamic and fast-paced industries. In country’s Gross Domestic Product (GDP) this sector accounts for over 10 per cent and around 8 per cent of the employment. In retail space India is the world’s fifth-largest global destination.

In India, consumer industry is rapidly growing. In consumer industry, agriculture and food sector forms an important part. In this sector there are immense opportunities for investments. However agriculture sector also faces some challenges such as dependence on monsoon, small land holdings, outdated technology and lack of awareness about new developments. Food processing industry is very important as it forms link between agriculture, manufacturer and the consumer. This industry is indirectly encouraging higher agriculture production by ensuring better prices to farmers. On account of perishability, it also helps in reducing wastage.

In India, E-commerce sector has revolutionised the conduct of business and has also transformed the buying experience of a consumer. E-commerce sector is witnessing a consolidation in business through strategic partnerships, inbound investments, and mergers and acquisitions. E-commerce is a term which is used for transactions done through electronic media. Under this, there is a transaction of buying and selling of goods, providing services, or transferring funds through an electronic network i.e. internet.

Market Size

The expected growth rate in India’s retail market is at a Compound Annual Growth Rate (CAGR) of 10 per cent to US$ 1.6 trillion by 2026 from US$ 641 billion in 2016. Indian retail market is divided into “Organized Retail Market” and “Unorganized Retail Market”. Organized Retail Market is valued at $60 billion which is 9 per cent of the total sector whereas Unorganized Retail Marketconstitutes the rest 91 per cent of the sector.

By the year 2020, India’s Business to Business (B2B) e-commerce market is expected to reach US$ 700 billion.

According to a study by Federation of Indian Chambers of Commerce and Industry (FICCI) and Indian Institute of Foreign Trade (IIFT), India’s total potential of Business to Consumer (B2C) is estimated to be US$ 26 billion. For retail expansion India has replaced China as the most promising markets, because of expanding economy, urbanizing population and growing middle class.

With the increase in the number of internet users India is expected to become the world’s fastest growing e-commerce market. By the year 2020 Indian e-commerce sales are expected to reach US$ 120 billion from US$ 30 billion in the year 2016.

India's e-commerce market is expected to grow by faster speeds on reliable telecom networks and with the faster adoption of online services.

E-Commerce

Online purchase of products or services is a convenient method of shopping without roaming in a market. E-Commerce business enables the buying and selling of goods and services through the internet. Under this, to start a business, one doesn’t need to set up a shop, get it furnished. For e-commerce business one need to register their business online. In comparison to offline business, e-commerce business is cost saving and have many more customers. In India day by day people in India are becoming more and more tech-savvy. Now a days everyone prefers to shop online rather than going to shop from a local store. Online lot of options are available with the customers to compare with and due to competition and low maintenance cost, prices are also lower than the local offline stores. E-Commerce business provides fastest way of buying and selling of goods and services. It has low operational costs. For e-commerce business there is no geographical boundary. It simplifies the business process and makes the business process fast and efficient. The only disadvantage is lack of transparency as there is no physical verification of the product. Due to cybercrimes and hacking of websites, making online payment is also a bit risky.

E-Commerce Website Proprietary

To start e-commerce business, it requires web development team, online marketing team and payment gateway for receiving payments. To build a successful business there is a requirement of high amount of investment efforts.

Joining an Established Marketplace

As a seller to join an e-commerce marketplace often requires only a bank account and GST registration to start e-commerce business. Multiple marketplaces can be joined by the sellers to sell their products.

Here are the following popular e-commerce/m-commerce marketplaces:

• Flipkart
• Amazon
• Snapdeal
• Shopclues
• PayTM

Requirements for Starting an Ecommerce Business

To start e-commerce business, the first requirement is to incorporate a company or LLP to have the benefits of limited liability and it also helps in improving the functioning of the business. After incorporation of a company or LLP, it will ensure opening of bank account in the name of a business or for obtaining a GST registration. E-Commerce Marketplaces allow to sell on their website to partnership firms and proprietorship firms.

It is always preferred to start with a company if promoter wishes to start a proprietary e-commerce website because it can allow for equity funding which is good for successful ecommerce ventures.

GST Registration

To start a proprietary ecommerce website and to become a seller on ecommerce portal GST registration is required. In India, GST registration is required for selling goods.

Bank Account

Only after the incorporation of a company or LLP, it is easy to open a bank account on the name of a business. Whereas in the case of a firm firstly it is required to obtain a GST registration to open a bank account on the name of a business. For a proprietary ecommerce websiteit is required to open a bank account to list on ecommerce marketplace or to obtain payment gateway.

Payment Gateway

Payment gateway would be required for the purpose of processing the customer payments on ecommerce websites. Payment gateway allows website to accept debit card, credit card, net banking, internet banking payments from multiple banks and credit card companies. One payment gateway is sufficientto accept online payments. Payment is sent to the bank account of the business in one or two working days after receiving the payment from the customer and in case of marketplaces, they accept payment through their payment gateway and credit the amount to a bank account of the seller.

Through the proper use of terms & conditions and with the privacy policy it is very important to protect the business. In case of a proprietary ecommerce website, it is required for the businesses to draft terms & conditions, disclaimer, privacy policy regarding its activities and products sold online. Seller agreement is provided by the marketplaces to the sellers in the case of marketplaces. It is required for a business to read the seller agreement.

Growth Prospectus

According to the Department of Industrial Policies and Promotion (DIPP), Indian retail trading has received Foreign Direct Investment (FDI) equity inflows of total US$1.04 billion during April 2000–June 2017.In the past few months many companies have invested in the Indian retail sectorwith the rising need for consumer goods in different sectors including consumer electronics and home appliances.

Government Initiatives

To improve the retail industry in India, Government of India has taken various initiatives and some of them are as follows:

• In food processing, Government of India may change the Foreign Direct Investment (FDI) rules, in a bid to permit e-commerce companies and foreign retailers to sell “Made in India” consumer products.
• In online retail of goods and services through the automatic route Government of India has allowed 100 per cent Foreign Direct Investment (FDI), thereby providing clarity on the existing businesses of e-commerce companies operating in India.