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The road ahead for the online marketplace industry in India

The road ahead for the online marketplace industry in India

Mr Dinesh Agarwal, Founder & CEO, IndiaMART.com

Oct 27, 2014 1:00 PM

The last few years have witnessed a rapid surge in the number of online marketplaces in India, along with a rise in their popularity. The country, known for its crowded and colorful bazaars and open markets, is gradually migrating to a virtual platform. People fondly visiting the crowded markets of Karol Bagh, Chandni Chowk, and the likes, are now seen frequenting online platforms like Snapdeal, Flipkart, etc, for all kinds of needs. About a couple of decades ago, consumers, perhaps, did not even have the idea that such ease and convenience could be extended to them. The quick transition can be attributed to various factors like increasing penetration of Internet in the country, among others. The latest estimates reveal that India has about 243 million internet users currently, ahead of United States, and second only to China. In this rapidly advancing world, the consumer of today is increasingly looking for convenience, speed and choice. Surely, marketplaces cater well to their changing needs and demands.

The model could be regarded as a valuable and profitable proposition, as the start-up cost is relatively low and the fixed costs become minimal, as the customer base expands. Disrupting the inefficient and fragmented markets, these virtual bazaars have the utmost potential to expand the opportunity for the consumer by greatly enhancing convenience. In the process of adding potential value for both buyers and sellers, online marketplaces are certainly on their way to become more dominant, as they get larger. Moreover, with the attitudes towards online transactions relaxing, the concern of scaling up of marketplaces moves down in the list. Gaining scale, however, is not always easy. Only when the reach is expanded to a larger mass and awareness created, the platforms gain significant traction.

The concept is likely to get a stronger boost with the rising mobile penetration, making fast inroads to the farthest corners of the country, and the number of mobile internet users increasing rapidly. Indian mobile operators have added 28 million new users during the first quarter of 2014 itself, and marketplaces report that up to 35 percent of their traffic comes from mobile devices. Undoubtedly, there is a clear indication of the emergence of m-commerce, and businesses are extensively developing robust models, clearly addressing this new market dynamic. I am positive that the next wave of growth in India will certainly come from brands that are ready to leverage the online and mobile platforms.

Clearly, the marketplace model is here to stay and their future will depend on how fast we are able to bring the ease of buying to the consumers. A variety of innovations have already been brought in like Cash on Delivery, Easy Returns, Free Trial, etc., and definitely, there are more innovations waiting down the road. However, with the current widespread technology revolution, we are still to see what turns out to be the next game changer.

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