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E-commerce in India is Growing At An Unprecedented Rate The Indian e-commerce is growing at an unprecedented rate, adding around six million new entrants every month.

By Vani Kola

Opinions expressed by Entrepreneur contributors are their own.

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Is The Growth Significant?

India's internet user base is expected to cross 500 million in 2016. Despite being the second-largest user base in world, only behind China (650 million, 48 per cent of population), the penetration of e-commerce is low in comparison to markets such as the United States (266 million, 84 per cent), or France (54 million, 81 per cent). But the Indian e-commerce is growing at an unprecedented rate, adding around six million new
entrants every month. The industry consensus is that the growth is at an inflection point with just 40 million transacting users. But this anticipated growth is not without challenges.

What Is Impacting Growth Omni Channel Strategy:

India is a large country but both retail and internet industry are underpenetrated. Large e-commerce players are likely to hit saturation levels on new customers, and discounts are dwindling even on repeat orders. Rather than spending deep on discounts and marketing, opening physical stores in an underpenetrated market would become a trend to address the twin challenge of saturation and marketing costs. Omni channeling is the next wave to capture more of the expanding market in India. Integrating store inventory into centralized infrastructure would also bring much needed technology to physical retail.

Augmented Reality And Virtual Reality: Your New Fashion Stylist

The next big thing in fashion is not what the big celebrities are flaunting. But, it's you with a little black headgear going through endless virtual aisles for ensuring a perfect fit with an unmatched experience without spending a dime on travel and shop hopping. While VR puts viewers in a situation separate from their current environment, augmented reality blends digital elements with existing reality. The information gathered through such experiences provide the retailers with rich data to target you perfectly with apt recommendations for your next buy.

Hi, Artificial Intelligence

Consumer will interact with AI chatbots and are surely going to love it. According to Gartner, by 2020, 85 per cent of customer interactions will be managed without a human. Meanwhile by 2018, customer digital assistants will recognize customers by face and voice across channels. The way we shop at any e-commerce site today is quite archaic, mostly navigating a database structure with multiple filters, prices, colors, discounts presented in a format more easier for a machine to understand than humans.

On the flipside, a physical store experience is more fluid where you can converse with a salesman. For a similar experience online, the bots would need to be extremely good at natural language processing and responding in real time to unstructured data from the users.

Going Cashless – UPI (MPOS) - I Hate The Colored Papers!

UPI (Unified payment interface), is the future of payments in India and hopefully the world. UPI simplifies a transaction and makes it as simple as sending an email. No need to remember cumbersome account numbers and IFSC. Payments are a breeze, major Indian banks will be adopting UPI and it's only a matter of time before it takes over and starts dominating the electronic transactions. For every transaction made using UPI, NPCI (National payment corporation of India) will earn 50 paise, plus charges imposed by the banks, which is typically about Rs 5 for a peer-to-peer transaction.

GST - Simplification Is The New Mantra

GST gives life to one nation, one market. With GST likely coming into force starting next financial year, it solves a daunting challenge faced by the e-commerce industry ensuring a seamless movement of goods and delivery of services across the nation. E-commerce has grown from being a nascent industry couple of years ago to an industry galloping its way to significant growth. It's here to stay and the government has to ensure a transparent and conducive tax environment.

(This article was first published in the January issue of Entrepreneur Magazine. To subscribe, click here)

Vani Kola

Managing Director, Kalaari Capital

Vani is the Managing Director at Kalaari Capital, an early stage venture capital firm based in Bangalore. She is a renowned investor and a visionary known for identifying emerging markets. Her leadership at Kalaari centers around her commitment to the development of entrepreneurs and her conviction that Indian companies are poised to become global players.
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