In addition to being the second-most populated country in the world with 1.2 billion people, India is a potentially huge market with an English-speaking middle class of approximately 260 million people. With the middle class projected to grow to 600 million by 2030, India is a lucrative market for American companies.
Amazon launched an Indian version of its e-commerce site in 2013 and the company has been spending billions of dollars to compete against native companies Flipkart and Snapdeal. Most e-commerce sites do not have that kind of capital to spend. However, the market is today dominated by open source software solutions, such as Magento, which allow ecommerce companies to easily get online and grow their business. With that in mind, companies such as Finest Shops, which specifically creates Magento based ecommerce solutions for clients, also has a huge opportunity in this market.
That has led to an increase in investments in delivery companies that get the products to the consumers. Shares in delivery companies such as Transport Corp of India and Gati Ltd. have increased by 75 percent during the last year as more companies and individuals seek to invest in this lucrative market.
“When you see the limitless growth in the e-commerce sector, you do want to get involved,” said Eric Mookherjee, a Paris-based fund manager at Shanti India, whose holdings include Transport Corp to Reuters. “The next Alibaba or Tencent can be created in a country whose population is roughly similar to China. You will get that in India.”
Even though India’s e-commerce market is huge, the infrastructure that supports delivering goods to the consumers is underdeveloped and will need more development to keep up with delivery concerns. Currently, Amazon India and Snapdeal use a combination of in-house and external logistics to deliver packages to specific markets, the upsurge in use will see them expand their delivery areas and speed of delivery to more areas.
“Amazon is today advertising 24-hour delivery and that’s where people like us come in,” said Areef Patel, executive vice-chairman of Patel Integrated Logistics Ltd which delivers for Amazon India. “We are looking to get e-commerce market share today because that’s the flavor of the day.”