E-Commerce M-commerce

M-COMMERCE and E-Commerce MEANS:

M-Commerce means commercial transactions conducted electronically, through mobile phone such transactions include purchasing goods or services, making
payments and banking, whereas e-commerce, refers to transactions over computers networks such as the internet.

CHANGE IN THE INDUSTRY:

Global Footprint:

Nowadays everyone is absorbed in their smartphones. More than one-quarter of the global population use a smartphone in 2015. The mobile web adoption is
growing 8 times faster than web adoption did in the 1990s and early 2000s.

Globally, e-commerce is worth $230billion (approx. Rs. 14,26,000 crore), with Asia representing half the market. Some say it will stand at $700
billion (approx. 43,40,000 crore) in 2017.

M-Commerce Segments in India:

According to Deloitte, the value of m-commerce based transactions in India increased to Rs. 36,000 crore from Rs.7,800 crore between FY-2013 & FY-2014.

We are now living in a mobile era: Smartphones and tablets are much more popular than desktops. It is not surprising that there is a global shift from
E-Commerce to M-Commerce. In 2014 the growth of M-Commerce outpaced the overall growth of E-Commerce. To fully understand the shifting global mobile
commerce behavior, here are the top takeaways from PayPal’s recently released report about global mobile commerce:

E-commerce To M-commerce

a. M-Commerce Growth Is Outpacing E-Commerce 3-1

Between 2013 and 2016, the multi-country average compound annual growth rate for mobile commerce is projected to be 42 percent, toppling e-commerce’s same
growth rate at 13 percent.

b. Mobile Commerce Leaders: China, Turkey, United Arab Emirates

According to the report, in the UAE, mobile shopping makes up for 24 percent of overall online spending. In China, that number is 21 percent and Turkey is
in third at 19 percent

c. 33 Percent Of Online Shoppers Say They’ve Used A Smartphone To Make A Purchase

According to the report, and not surprisingly, the surge in projected smartphone shopping growth comes from young adults. Overall, a third of online
shoppers surveyed said they’ve used their smartphone for making an online purchase in the past 12 months. And that increase in mobile shoppers is being
driven by smartphone shoppers between the ages of 18-34 (59 percent of smartphone shoppers in that age bracket reported using mobile to shop online).

d. 64 Percent Of Consumers Have Used Mobile Apps For Shopping

It reports that globally, 64 percent of smartphone users reported using an app for purchases as opposed to the 52 percent who used mobile browsers. The
reasons cited for that are two: convenience and speed. Convenience was cited by 35 percent of users and speed by 30 percent. Instant payment confirmation
and having a reminder in the app to use discounts or coupons were two other major reasons cited by those surveyed.

Users can access online stores whenever they want and are able to be accessible on other various mobile functions as well. It is also very time efficient,
because shoppers do not have to go to physical stores anymore or wait when they arrived home. All the information (such as stock) presented while shopping
on mobile devices is up-to-date. Depending on the specific end user device, mobile devices offer a certain level of inherent security.

e. What’s Hurting Mobile Commerce Growth?

The top barrier to mobile commerce is the size of the screens. While that is changing, with the launch of the iPhone 6 Plus, many of the smartphone users
(39 percent) surveyed said they prefer to use a laptop or desktop because of screen size and website functionality. Security was another top concern named,
as 21 percent of those surveyed had security concerns when it came to using a mobile device to shop online.

The recent deals which follows are in line to this above discussion:

I. MYNTRA GOES MOBILE APP BASED OPERATION:

1. Myntra has decided to shut down their website completely from 1st May 2015. So, going forward Myntra customers can make their purchases only on
the Mobile app and nowhere else.

2. More than 90% of its traffic and 70% of sales coming from though it Mobile App.

3. It 50% mobile traffic comes from Tier II & tier III cities.

4. While many feel that this is an absurd move, given that India is a Mobile-First country in many respects and especially the internet, this move might help
Myntra focuses all their energies on Mobile strategy, bringing down their costs.

II. SNAP DEAL ACQUIRE FREECHARGE:

Snapdeal on 9th April 2015, said it has acquired mobile recharge platform Freecharge. The company did not disclose the financial deal but
claimed it as the largest acquisitions in the Indian consumer internet space and as per sources it was valued at Rs. 2,500 crores.

What is claimed on acquisition:

1. Snapdeal claims to be the largest mobile commerce company in India

2. FreeCharge is at the forefront of the mobile commerce revolution which is taking place in India right now.

3. Snapdeal and FreeCharge combined together have a user base of over 40 million and a total of 30 million app downloads (FreeCharge 10 million) on play
store.

4. Both the platforms combined together witness >1 million transactions daily.

5. While Snapdeal receives over 70% of its orders from tier-2 cities and beyond, FreeCharge receives less than 30% orders from these geographies

The merit of the acquisition lies in the fact that Free-Charge buyers are transacting on mobile devices in ever greater numbers, meaning that FreeCharge
users become potential customers for Snapdeal.

Over the past few years, E-commerce has grown by almost 35% CAGR from 3.8 billion USD (Rs. 23,560 Crore) in 2009 to an estimated 12.6 billion USD (Rs. 78,120 Crore) in 2013.

Industry studies by IAMAI (Internet and Mobile Association Of India) indicate that online travel dominates the e-commerce industry with an
estimated 70% of the market share. E-commerce portals that claim to get 65-71% of traffic from mobile devices; ticketing platforms; cab/auto hailing
services; public & private banks that allow access through apps and mobile browsers; payments for mobile recharges, utility bills; mobile marketing.

However, E-retail has become the fastest-growing segment, increasing its share from 10% in 2009 to an estimated 18% in 2013. However, this share represents
a minuscule proportion (less than 1%) of India’s total retail market but is poised for continued growth in the coming years. If
this robust growth continues over the next few years, the size of the e-retail industry is poised to be 10 to 20 billion USD by 2017-2020. This growth is
expected to be led by increased consumer-led purchases in durables and electronics, apparels and accessories, besides traditional products such as books
and audio-visuals. By 2020, E-Tail in India is expected to account for 3% of total retail.

Mobile to be the most influential aspect of E-commerce:

The growth is being attributed to the growth of mobile marketing, which has been growing in popularity in recent years and is overtaking desktop marketing
and commerce at a fast pace. Currently, all online shops have mobile marketing at the top of their priority list in order to stay in touch with fast moving
trends. With the advent of low-cost mobile phones, larger screen sizes, and mobile device security improvement, the barriers to mobile commerce will
decrease.

With mobile apps being developed by most E-Commerce websites, smartphones are increasingly replacing PCs for online shopping. According to some industry
players, over 50% of the orders are being placed through mobile apps, which is not only leading to substantial customer acquisition but also building
customer loyalty for various brands. However, most mobile transactions so far are for entertainment, such as booking movie tickets and music downloads.
This trend will change soon with more and more merchandise being ordered online.

Mobile is going to be more important every day. Don’t miss this opportunity and stay ahead of your competitors by taking advantage of the mobile channel.

But whether the companies should build this infrastructure in-house and should go for inorganic growth?

The company should take into account the following points before deciding for organic or inorganic growth:

a. Time to build the same infrastructure

b. Cost

The cost, risk and management time involved will be much higher in organic growth. And in organic growth you can achieve higher market position but with
the higher cost which might/might not be total cash some can come through equity dilution also but at the same time one acquire talent, systems, and processes
also . So decision depends on individual need.

Main Contributors : Hitesh Jain

Sources : Business Standard

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