India's internet surfing and shopping boom

WATCH: India could become one of the world's top ten hubs for e-commerce by 2015

"Most people of my age today in India literally live online," says Seeya Malhotra as she unwraps a box that has been delivered to her desk at work.

The box contains a set of desk speakers which she had ordered on the internet a few days before.

Technology of Business

Buying items at the click of a button is the way Seeya shops these days - she says almost half of her wardrobe has been purchased online, as well as her lunch and many other things.

India has a long and dominant tradition of small family businesses and street traders, but the online marketplace is growing here too.

As internet use rises at a rapid pace, so too does the uptake of internet shopping.

There are more than 65 million people logging onto the web in India, according to research group Juxt.

This might be a small proportion of the country as a whole, but in itself represents a sizeable market.

And Juxt estimates four in every five of these web surfers shop online.

At this rate, India could become one of the top 10 e-commerce hubs in the world by 2015, says Murali Krishnan, the boss of eBay India.

Start Quote

The prime reason we're selling online is because we can reach a larger consumer base in smaller cities other than the metros”

End Quote Payal Kothari Veruschka shoes

His prediction is based not only on increasing internet uptake in India's smaller cities, but also growing consumerism, which is driving demand for foreign labels.

"The huge proliferation of retail malls has increased awareness of the latest brands and products," he says.

"As a result, the Indian e-commerce market is growing rapidly; in fact it's exploding."

India has more than 3,311 e-commerce hubs, according to research conducted by eBay India for its 2011 census.

The company analysed transactions made on the site between July 2010 and July 2011.

Delhi, Mumbai, Bangalore, Jaipur and Chennai remain the biggest cities in terms of e-commerce, according to eBay, but what is more telling is that around 40% of transactions now come from smaller cities.

It is this broadening reach and customer base which is enticing more of India's smaller businesses online.

Shoe surfers

In her studio in South Mumbai, Payal Kothari is sketching designs for her latest shoe collection.

Crammed into the small space are boxes upon boxes of footwear - from high heels with sparkly ankle clasps to wedge sandals encrusted with beads.

Ms Kothari's designs are worn by Bollywood stars and Bollywood wannabes alike.

Shoes Many sellers find it is easier to find buyers through the web

In the past year, she decided to start selling her wares through various internet shopping portals, having previously only sold to stores.

Ms Kothari says she has customers across India, and has orders from Chennai to Chandigarh.

"The prime reason we're selling online is because we can reach a larger consumer base in smaller cities other than the metros," she says.

"The country is vast so the only way we can do that is through several websites."

For Ms Kothari internet sales offer other advantages, such as avoiding the high costs of retail space, and a guaranteed sale before a product is shipped out.

"When we sell online, we can actually concentrate more on creating the product," she says.

Popular Indian online sites in the past decade have included travel booking portals - the Indian railways ticket site (IRCTC) is used by almost one in five of the country's web users, according to research company Comscore.

Recent successes include online books, movies, and accessories store Flipkart that has been styled as India's answer to Amazon.

The company, which started in 2007, is India's e-commerce success story and is reportedly valued at $1bn (£635m).

It now employs more than 2,500 staff, and has eight million visitors a month.

Hurdles

The diversifying e-commerce landscape is also demonstrated by the success of group buying sites in India, as well as Groupon India, which will soon operate under Crazeal.com site, in 11 cities.

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If you're able to give Indians the right kind of price point that's what makes the market click, and you can taste the success of it”

End Quote Vijayanand Shekokar Dealite.in

Snapdeal.com is another popular site that offers discounts to those who sign up.

Mr Krishnan says there has been a shift in Indian e-commerce in recent years, with more women buying online and a rise in the purchase of lifestyle products.

He estimates that the Indian online shopping market in the country is worth $500m (£317m), but is predicted to grow in the next year to $750m.

However, there are still hurdles associated with e-commerce in India.

Poor infrastructure and logistics make deliveries to some parts of the country difficult, and the relatively low uptake of credit cards has forced companies to think creatively.

The lack of credit means many firms in India offer cash on delivery as a means of payment.

Rahul Jagtiani, the owner of the online-only home accessories store plushplaza.com, says cash on delivery has helped to build up customer trust in the market.

Mr Jagtiani believes online is the best place for a start-up to operate in, but concedes that there are many Indians who are still fearful of buying a product online without having seen it first.

"A lot of people are still a bit unsure as to how a product is going to look when they receive it," he says.

Seeya Malhotra Many Indian shoppers like Seeya Malhotra prefer to buy most things online

"In India they have that mentality, and are a bit paranoid about customer service. We speak to each customer individually and try and quell their fears and ensure that what they see is what they get."

Mr Jagtiani is one of many entrepreneurs in India who are betting on India's online market.

Vijayanand Shekokar is another - he left his career working at PayPal India and eBay India to start up his own online auction site, Dealite.in.

Mr Shekokar's site, which went live a month ago, works on the principle of using social media to advertise sales.

Despite some cultural hesitancies around online buying, he believes the medium is suited to Indians.

"Everybody is a deal seeker here," he says.

"If you're able to give Indians the right kind of price point, that's what makes the market click, and you can taste the success of it."

Investors see this potential too, and more venture capitalists are looking to invest in e-commerce businesses in India.

A report from research firm Venture Intelligence suggested that between January and August of this year $137m had been invested in e-commerce firms in this way, across 21 deals.

Internet use in India is predicted to skyrocket in the coming years, and so too could the profits of companies betting on the online future.

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