E-commerce in India is growing explosively. Until recently, foreign companies were only able to profit from this to a limited extent, because foreign-owned web shops and comparison websites were not permitted in India. Since 1 April, that law has changed, says Bart Hergaarden, associate of IndiaConnected. "This is the moment to go to India for Dutch online retailers."
What should Dutch online retailers do in India?
Bart Hergaarden: "Nowhere in the world is online retail growing faster than in India. In 2015, e-commerce in India accounted for a total turnover of 16 billion dollars, in 2020 business bank Morgan Stanley expects this to be seven times higher. In five years time! India is going after China, concludes The Economist. Not for nothing are Amazon and Alibaba investing billions in the subcontinent."
What are the main reasons for the rapid growth?
"India is the fastest growing major economy in the world, almost 70% of the population is under 35 and every second three Indians take their first steps on the internet. Today, 300 million Indians have an internet connection, mainly through their smartphones; by 2018, it is estimated that 500 million will have one. For millions of people, online shops are also the only way to get hold of certain products, simply because they live too far from the selling shop. Market leaders Flipkart and Snapdeal deliver about half of their orders outside the major Indian cities. Dutch company Hunkemöller, which recently started selling lingerie in India, also realises that it can never reach its target audience with physical shops alone."
Why is this the best time for Dutch parties to explore the Indian market?
"India's e-commerce legislation has recently changed fundamentally. From 1 April 2016, foreign investors can fully own e-commerce businesses based on affiliate marketing; the facilitation of a transaction between buyer and seller, also known as the "marketplace model" in India. Previously, this was not allowed. It is expected that selling directly to consumers (also called the "inventory led model" in India) will soon be open to foreign investors as well. The relaxation of regulations is characteristic of the policy of Prime Minister Modi, who came to power last year: it is becoming increasingly easier to do business in India."
For which Dutch companies do you see particular opportunities?
"At the moment, there are opportunities in particular for affiliate marketing parties such as comparison websites, auction sites, marketplaces and commercial lifestyle websites. For other parties too, it is good to keep a finger on the pulse in the coming period and already build up a strategic network of contacts in India. That is why IndiaConnected, together with Salesupply, is organising a business e-commerce trip to India for entrepreneurs with an interest in this gigantic growth market.
Read more about e-commerce in India:
Online business in India, Emerce
Amazon to Flipkart clash in India's nascent e-ecommerce market, Bloomberg
Online retail in India: The Great Race, The Economist