Big Challenges Still Face India’s E-commerce Space [Report]

Here’s an interesting report on India’s e-commerce space from the folks over at MSL Group. It outlines many of the problems facing the nation’s online shopping space, which despite an internet population of over 121 million, still has trouble winning over consumers.

The report notes that e-commerce is still in a nascent stage. The travel sector led the way, thanks to companies like Makemytrip (NASDAQ:MMYT), Yatra, Cleartip, and Travelguru pushing the space to be worth an estimated $6 billion in 2012. Other areas like retail and classifieds are strong while mobile e-commerce will surely make an impact soon as well, although not as quickly as more mature mobile markets.

Fundsupermart’s Nelson D’Souza is quoted as being quite skeptical about India though, particularly in relation to the world’s other booming internet population, China:

The Chinese are way ahead on the e-commerce front. The massive success of local sites such as Alibaba reverberate the growth story for e-commerce in China. E-commerce businesses have managed over 10 percent of the GDP in some countries. In 10 years, we will be probably where China and the world are today.

MSL Group notes that credit cards are not ubiquitous in India, and payment is still an issue for the sector. We have seen this payments issue in Indonesia as well (as was discussed in our Startup Asia panel in Jakarta earlier in the month) so the problem is one that affects many emerging e-commerce markets – not just India.

It notes that because many consumers are still skeptical about online payment methods, or have concerns about security or ‘cyber-crime’ [1] many still look to cash-on-delivery, which can be hard for businesses. Thankfully, some companies like MyGrahak.com are finding other options like card-on-delivery, for example.

Courier and post delivery options have improved. And there are concerns about shipping high-value goods. This is a problem that we have seen China struggling with as well, as many e-commerce sites in that country have made moves to handle shipping themselves recently (see 360buy and Vancl; VIPShop and Coo8).

Personally, I think that consumers will come around quicker than skeptics think. Indian e-commerce leaders will become household names once they have been around for a few years, and by virtue of their name recognition, they should win more trust among consumers like Amazon, Rakuten, and Taobao.

The full report is below if you would like to check it out in its entirety. Apologies for the crappy pagination. You may want to full-screen this one.

[Via WARC]