Advertisement
Singapore markets closed
  • Straits Times Index

    3,178.36
    +6.43 (+0.20%)
     
  • S&P 500

    5,149.42
    +32.33 (+0.63%)
     
  • Dow

    38,790.43
    +75.63 (+0.20%)
     
  • Nasdaq

    16,103.45
    +130.25 (+0.82%)
     
  • Bitcoin USD

    63,697.21
    -4,158.49 (-6.13%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • FTSE 100

    7,721.08
    -1.47 (-0.02%)
     
  • Gold

    2,155.90
    -8.40 (-0.39%)
     
  • Crude Oil

    82.62
    -0.10 (-0.12%)
     
  • 10-Yr Bond

    4.3400
    0.0000 (0.00%)
     
  • Nikkei

    40,003.60
    +263.20 (+0.66%)
     
  • Hang Seng

    16,529.48
    -207.62 (-1.24%)
     
  • FTSE Bursa Malaysia

    1,544.96
    -8.68 (-0.56%)
     
  • Jakarta Composite Index

    7,336.75
    +34.30 (+0.47%)
     
  • PSE Index

    6,848.43
    -4.86 (-0.07%)
     

In India, it's all about m-commerce

Ezra Bailey | Iconica | Getty Images

For 32-year-old Varsha Deerpaul, shopping these days no longer involves weekend trips to her favorite mall in South Delhi's Saket area.

Instead, she now indulges in retail therapy "mostly on the go" through her Samsung smartphone. For example, during her daily commute to work, Deerpaul spends most of her time browsing through the latest deals on e-retailers Flipkart and Jabong.

"If I wanted to buy a dress, I probably will have to check out many shops before deciding on one and that takes up too much time and effort. But now, I can easily browse through 20-30 dresses and there are discounts almost throughout the year. It's really easy and by the time I reach my metro station, I would have decided on what I want," the human resource senior executive told CNBC.

With consumers such as Deerpaul, it is little wonder that India's e-commerce companies are racing to embrace mobile, with some ditching their web platforms entirely to go mobile-only such as online fashion retailer Myntra earlier this year.

ADVERTISEMENT

Most recently, the country's biggest e-commerce player Flipkart unveiled a new mobile website on November 9, which aims to give users an experience close to standalone apps.

"In July 2014, we had about 15 percent of transactions coming from mobile. In a year, we have gone from 15 percent to 70 percent. This kind of revolution is almost unforeseen and we have to come up with a whole new set of products to deal with that," Flipkart's chief product officer Punit Soni told CNBC in September .

Read More Snapdeal CEO: We will be India's biggest e-commerce player

Drivers and limitations

According to a report released in April by market research firm Zinnov, India's mobile commerce market could balloon to $19 billion by 2019, up 850 percent from its current size of $2 billion. Surging smartphone sales in the world's second most populous country amid a tidal wave of low-cost handsets is the key driver, the report said.

Projections by Cisco put the number of smartphone users in India at 651 million by 2019, a near five-fold jump from 140 million by end-2014. The study, released in February, noted a 54 percent surge in the number of smartphone users in 2014 as the average price of handsets fell to around $150 last year and as smartphone penetration increases in rural India.

With the availability of cheap mobile data plans increasing, analysts believe this will help boost internet usage via mobile handsets - and consequently online shopping.

"India has a huge opportunity for mobile commerce. This is the first time a majority of Indians are getting connected to the internet. They are discovering products at costs that are lower than they've never seen before, and they are getting products that were not available in their market before. So it's a huge opportunity," FreeCharge's co-founder Sandeep Tandon told CNBC.

Read More Flipkart founders debut on Forbes billionaire list

To be sure, obstacles that threaten to stymie the growth potential of mobile commerce in India remain aplenty.

For one, India's focus on cash usage and security concerns about e-transactions are creating friction with the burgeoning online shopping market, analysts say. Large players are wary of the 'Cash on Delivery' system as it is manpower intensive, and requires time to collect the cash from the consumer's doorstep.

In addition, India's poor logistics infrastructure creates a challenge for e-retailers to offer quick delivery services, while the lack of stable telecommunications infrastructure across the country could also limit the pace of growth.

However, companies such as India's second-biggest e-commerce player Snapdeal have taken the proactive approach by actively investing in solutions that will iron out these obstacles.

"Connectivity over telecom networks in India isn't that great. So what we are doing is investing massively in building lighter apps [and] mobile sites that load up in three seconds even on a 2G network. It's a lot of tech investments that we have to make, but we are seeing fairly exponential growth from mobile commerce," co-founder and CEO Kunal Bahl told CNBC on November 18.

Others are hopeful, with recent government policies being supportive of developments in the mobile commerce space, particularly in paving the way for non-cash payments.

"There's a lot of gap when it comes to understanding the digital space. Luckily the government has taken huge strides over the last six months to understand [the sector and] this is why they've offered more banking licenses. The recognition is coming so I think over the next year or so, we will see a huge amount of change and upward growth in the [mobile payment] space," e-commerce consultancy eTailing 's founder Ashish Jhalani said.

In August, the Reserve Bank of India (RBI) announced that it plans to grant licenses to 11 businesses such as U.K. telecommunications group Vodafone and India's Airtel to launch new so-called payments banks, which will allow transfers and deposits up to a limit of 100,000 rupees ($1,532) predominantly via smartphones. Analysts have widely viewed this as a significant shake-up of the country's financial sector.

The next big thing?

With competition heating up, both established players and fresh entrants are seeking to differentiate themselves with a "new variant of mobile commerce" that moves beyond the retail realm, according to FreeCharge's Tandon.

"Competition is so severe [so] not everybody is going to jump in and do mobile commerce [in the same] way... There are now service companies like UrbanClap [where] you can choose and hire a service professional to your house. For example, I'm invested in a company called Amber [which] is a platform for every stylist to become a business person and deliver the product to a customer's house," Tandon said.

Started in October 2014, hyperlocal start-up UrbanClap offers hiring services across categories such as health, home and events via its smartphone app. On the other hand, Mumbai-based mobile-first marketplace Amber taps on a pool of freelance make-up artists, hair stylists and henna artists to provide on-demand beauty services.

"These are new variances of mobile commerce which have not been so successful in the U.S. markets because [of] a lower population density," he added. "But in India, a city like Mumbai has 20 million people."

Read More Meet India's home-grown IKEA

Paytm is also venturing into the hyperlocal commerce segment, as consumers get increasingly comfortable with the idea of making purchases with just the touch of a finger.

The Alibaba-backed firm announced last month it was partnering hyperlocal businesses BookMyShow and Zomato to roll out food ordering and table booking services, as well as deals available in a user's neighborhood.

"India's infrastructure may not be so highly developed, but it is developed compared to 5 years go and consumers are now more comfrtable with shopping from smartphones. India has leapfrogged from one generation so we might just leapfrog to another generation." Paytm's Sharma said.



More From CNBC