Marketing in India: Ecommerce Sector Still Feeling the Fallout from Demonetization - eMarketer

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eMarketer Interview

Marketing in India: Ecommerce Sector Still Feeling the Fallout from Demonetization

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An interview with

Vivek Pathak

Engagement Manager, RedSeer Consulting

Interview summary

In November 2016, India’s government stopped recognizing two large-denomination cash notes as part of an effort to crack down on fraud and tax evaders. The move had a pronounced effect on the country's ecommerce sector, largely because cash on delivery (COD) remained a highly popular payment method among digital buyers. eMarketer’s David Green spoke with Vivek Pathak, engagement manager of Bangalore-based research and advisory firm RedSeer Consulting, on the state of ecommerce in India and what the sector looks like post-demonetization.

Interview

eMarketer: In India, ecommerce is still a relatively small proportion of total retail sales, about 3% to 4% as opposed to 17% or so in China. What are the major factors driving ecommerce growth, and what’s holding it back?

Vivek Pathak: In 2015, the total gross merchandise value [GMV] of the etailing industry was $13 billion, and it moved up 12% to $14.5 billion in 2016. That’s not a lot of growth compared with the 180% expansion we saw in 2014 and 2015 due to increased adoption of the internet, a lot of discounting, as well as higher employment levels and salaries among consumers.