An essay on e-commerce in India should include basic information on that country’s demographics, for instance, the size of its middle- and upper classes, the main target of e-commerce companies, as well as the country’s overall economic condition. India has a total population of about 1.2 billion, slightly below that of China. Whereas China’s middle class has already reached 300 million and counting, however, India’s remains comparatively low, roughly about 70-80 million. In short, the percentage of India’s population that represents real-purchasing power is far smaller than that of other large industrialized countries. While India projects to have a middle-class population of over 500 million over the next decade, most economists view that estimate as unreasonably high. This data is directly relative to the discussion regarding the proliferation of e-commerce sites in India. The people who sit at home and make both planned and spontaneous purchases over their computers are overwhelmingly the middle and upper-classes. That the growth of India’s middle class has not kept pace with other nations does not bode well for the ever-expanding number of e-commerce sites that have emerged to compete for those consumers.
As of today, Flipkart continues to maintain its position as India’s number one e-commerce service, but competition from Jabong, Myntra, and others may succeed in slowly degrading its status. Jabong, in particular, has emerged as a potent competitor, and has aggressively been courting new consumers at a greater pace than any its rivals. Furthermore, according to some industry-watchers, Flipkart’s fixed pricing structure may make it vulnerable to more flexible alternatives. Flipkart is also the most expensive of the major e-commerce players in the Indian market. To date, consumers are willing to pay a small premium for the reliability that Flipkart provides, particularly in its ability to deliver products on time. As the competition heats up, however, that may not be enough. As one analyst pointed out,
“Soon flipkart will have to take a leap ahead and cut down their expenses and bring down prices with the competitive market or it would have to face a tough competition from the newbies attracting shoppers with great deals.” [See the discussion in the following link: http://forum.nextbigwhat.com/discussion/1139/is-jabong-a-threat-to-flipkart/p1]
In the meantime, over-saturation of the Indian market by upstart companies can succeed in lowering prices for consumers to unrealistically-low levels – levels too low to support the costs associated with operating an e-commerce company. A 2013 article discussing the toll of intense competition on Flipkart and other e-commerce companies, and the layoffs that are resulting, included the following:
“. . . industry executives who spoke on condition of anonymity said it is the first time that e-commerce firms are sacking staff in such numbers.” [“Slowdown takes toll as online retailers like Flipkart, Jabong hand out pink slips,” India Times, May 15, 2013]
The major points to be raised in an essay on Flipkart, Jabong, and other Indian online retail companies, then, are the number of such companies entering the market, the current but uncertain industry-leading position of Flipkart, and the need for India’s economic growth to lead to greater expansion of its middle-class.