Online sites shake up hidebound retailing in India
As a result, big players such as Wal-Mart and IKEA have put opening their own retail stores on hold. India has a few large retail chains, Tata Group’s Croma for electronics and department store chain Big Bazaar, but they are mostly limited to major cities.
Still, India’s e-commerce businesses face several other challenges.
Fewer than 12 percent of Indians have credit or debit cards, meaning that to expand, Amazon, Flipkart and Snapdeal have had to accommodate cumbersome cash payments.
"Cash-on-delivery is very important. It’s a very Indian concept," said Ashwin Vellody, an information technology expert at KPMG. "But that is inefficient and expensive for companies."
The companies must also develop logistics and distribution systems in a country notorious for creaking infrastructure and inefficient transport.
The biggest challenge, though, will likely be price wars in the fierce fight for market share, said Srinivasan, the Crisil director.
"From a consumer perspective, it means better days to come," he said. "I think the bargains they will be able to get online will only get better."