India presents one of the strategic growth areas for e-commerce companies all over the world. In fact, this has so much been the case that various international brands such as Amazon and Alibaba are seeking to find investment opportunities in the Indian market. This paper considers why India is such a strategic area of investment for international expansion of business brands. In general, background information regarding this market is expounded to consider its appropriateness as a market expansion option for a multi-national company.
India is a country located in central Asia and it is the leading business hub into the Southeast and Eastern Asia. These markets are valuable to any expanding e-commerce brands as they contain high populations where internet penetration is rather low (Shetty, 2017). This is in comparison to other developed countries. This spells certain success for brands which establish themselves quickly, thereby gaining customer trust and reliability. As a result, e-commerce companies entering this market expect to meet with a large and untapped middle class that is expected to keep growing (Goyal, 2017).
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Culture & Beliefs in Business
India is the seventh largest country by land area, and is also the second most populous nation in the world, being host to just over 1.2 billion people. Hinduism is the most prevalent faith in the country, with over 80 percent of the population describing themselves as Hindu. The major currency in the country is the Indian Rupee (Kwik Essential, 2015). India was predominantly based on caste systems previously, where there was minimal interactions between members across different social castes. Nevertheless, in a developing business environment, interactions based on caste systems is no longer the norm. People are no longer identified using this system. In fact, the legislature has reinforced this outlook by enacting laws that would seek to equalize social welfare across the board. As a result, family remains the most critical part of the Indian culture that remains intact, with a lot of the business running in the country being family-owned.
Significant Events Affecting Business Success in India
Despite the beautiful prospects for presence in the Asian market, e-commerce companies must have to contend with existing market giants in the region including Alibaba and the recently joining Amazon. In fact, Alibaba’s heavy presence in the region is a threat to new entrant’s success as it moves on to absorb regional giants such as Singapore’s Lazada in 2016. Moreover, Amazon is also looking to expand its Amazon International brand in the face of losses in 2016, thereby prompting its move to the Asian market with more zeal (Trefis Team, 2017).
Nevertheless, there still remains a large untapped market in India, with the e-commerce sector only being worth $1.6 billion in 2016 (Trefis Team, 2017). It is also experiencing double digit growth every year over the past few years, presenting one of the best waves of growth in any available market worldwide. The expectation is that this market will grow in the tune of 30 percent annually till 2020 to account for $64 billion at that time (Trefis Team, 2017). Predictions also see India becoming the second largest e-commerce market after china after two decades.
This information presents India as one of the most strategic investment platforms for e-commerce businesses in future. As an e-commerce company looking to expand investments internationally, the Indian market presents one of the subtle opportunities in the Asian region. Taking advantage of this opportunity, in conclusion, means accessing a 1.2 billion people market, where e-commerce growth is experiencing double digit growth every year. This means exponential growth opportunities for an e-commerce company looking to expand. While the global giants are looking for future investment in this market, there is certainly room for smaller enterprises to enjoy market presence in India as well.
References
Goyal, L. (2017). Leading Digital Strategy: Driving Business Growth through Effective E-commerce. Vikalpa, 42(2) , 128-130.
Kwik Essential. (2015). Guide To India - Etiquette, Customs, Culture & Business . Retrieved from Kwik Essential: http://www.kwintessential.co.uk/resources/guides/guide-to-india-etiquette-customs-culture-business/
Shetty, A. D. (2017). E-Commerce Industry Significant Factor for the Growth of Indian Economy. Asian Journal of Research in Social Sciences and Humanities, 7(4) , 177-183.
Trefis Team. (2017, November 28). Why India Is Crucial To Amazon's Massive International Expansion Plans . Retrieved from Forbes: https://www.forbes.com/sites/greatspeculations/2017/11/28/why-india-is-crucial-to-amazons-massive-international-expansion-plans/2/#e3d333c6748c
