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India retail landscape. Inset: author Ambreen Athar
India's e-retail market: what's holding it back?


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Retail is big business in India; the country boasts a number of successful, home-grown retailers that have a strong, dedicated customer base.
Prospects for growth are also bright,  says Bijou Kurien, Chief Executive of Reliance Retail’s Lifestyle division: “India is expected to contribute 7.5 per cent of the world GDP (PPP) and 10 per cent of incremental income growth, which will be driven by factors such as rising incomes, growing working age population, increasing savings rate, increasing urbanisation, growing aspirations of consumers, nuclear families and working women, increasing consumption levels, etc.”
The prospects for online retail growth, too, are positive. Currently, online retail is less than one percent of total retail trade in the country, but the Financial Express reports that this number is seeing a 40-to-50 percent year-on-year growth, and could reach $4 billion by 2015.
However, as compared to global averages, online shopping has been slow to take off in the country.
Research house Nielsen's 2010 Global Online Shopping Report shows that 23 percent of India’s internet-using population says they have never shopped online. Nielsen's online division Director, Karthik Nagarajan, commented on the figures, saying, "Low internet penetration and lack of confidence in using credit card credentials are the biggest challenges for online shopping in India, although high adoption for online travel sites is changing this.”
Some online retailers say that logistical issues plague their success. Rahul Narvekar, the co-founder of one of the country’s shopping websites, said that though the company promises 14 days for delivery, “Certain parts of India I cannot physically get to in 14 days, that's the biggest challenge right now."
However, Narvekar backed the online retailing medium, saying, “E-retail provides an alternative channel of liquidating your excess inventories. It helps save real estate costs and also aids in building up a brand.”
Other experts also cite lack of demand, as a reason for the slow popularity of e-retail. Even though India has a large number of middle-class, young, tech-savvy internet users, many of them prefer the experience of actually going shopping.
Other issues such as not wanting to divulge credit card information may also be holding people back.
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