E Commerce Business Models in India
Different types of e commerce business models are prevailing in India today. As India’s economy is growing at a rapid pace, new avenues such as ecommerce are inevitable. However, there are certain challenges to overcome before this sector can truly flourish in India. Let’s take a look at some of the challenges and opportunities faced by ecommerce players in India today. First of all, there is poor e-infrastructure in India. Second, the penetration of the internet in the country is very low, at 34.8%. Third, Indian consumers still prefer physical shopping over online shopping. And finally, the market size of ecommerce in India is limited to urban areas.
Most ecommerce players initially acted as intermediaries between buyers and sellers. The emergence of the Internet changed this paradigm. Online retailers were seen as technology/media companies with minimal exposure to retail, but they later became popular by leveraging their offline channels to sell their products. This new model, known as a “private label,” came into existence after online retailers saw this as an opportunity to develop their own brand without investing capital. The online retailers outsourced manufacturing to a third party manufacturer, who then packaged the product in branded packaging.
This model is unsustainable in the long term due to regulatory restrictions on foreign direct investment in retail in India. It is not a me-too jump in the long run because of the large amount of capital required to develop a new business. As the internet market in India is becoming more competitive, a pure-play D2C model will be difficult to sustain. However, with the help of the government’s FDI policy, the Indian government is easing regulations for foreign investments in e-commerce businesses.
A rent-to-own model is another popular ecommerce business model. In this model, the business organization hires an individual to rent products from the company in exchange for a small monthly interest. This model is used by sites such as LoanNow. Another example is Lending Luxury, which is a high-end ecommerce store using the rent and loan ecommerce value delivery framework. And finally, the concept of a rent-to-own model is an ecommerce business model for businesses in India.
Different ecommerce business models have different nuances. Amazon started with selling books and later evolved into a juggernaut. Flipkart started out as an inventory-based model. Most of them end up being marketplaces. They drive prices down by offering a diverse range of products at lower prices. So, it’s crucial to understand the fundamentals of ecommerce business models in India to make the best decision for your business.
Another popular ecommerce business model is B2C. B2C businesses are targeted towards individual customers. Their product is displayed on a website, and potential customers will review and decide whether or not it addresses their pain points. This model is largely successful and has made Portugal Footwear a success story. It is one of the most unique ecommerce business models due to the sheer demand that exists in online platforms. If you’re interested in starting your own business in India, contact an expert today.