M-commerce is where India's potential lie

M-commerce is where India's potential lies

Instead, she now indulges in retail therapy "mostly on the go" through her Samsung smartphone. For example, during her daily commute to work, Deerpaul spends most of her time browsing through the latest deals on e-retailers Flipkart and Jabong.

For 32-year-old Varsha Deerpaul, shopping these days no longer involves weekend trips to her favorite mall in South Delhi's Saket area.

Instead, she now indulges in retail therapy "mostly on the go" through her Samsung smartphone. For example, during her daily commute to work, Deerpaul spends most of her time browsing through the latest deals on e-retailers Flipkart and Jabong.

"If I wanted to buy a dress, I probably will have to check out many shops before deciding on one and that takes up too much time and effort. But now, I can easily browse through 20-30 dresses and there are discounts almost throughout the year. It's really easy and by the time I reach my metro station, I would have decided on what I want," the human resource senior executive told CNBC.

With consumers such as Deerpaul, it is little wonder that India's e-commerce companies are racing to embrace mobile, with some ditching their web platforms entirely to go mobile-only such as online fashion retailer Myntra earlier this year.

Most recently, the country's biggest e-commerce player Flipkart unveiled a new mobile website on November 9, which aims to give users an experience close to standalone apps.

"In July 2014, we had about 15 percent of transactions coming from mobile. In a year, we have gone from 15 percent to 70 percent. This kind of revolution is almost unforeseen and we have to come up with a whole new set of products to deal with that," Flipkart's chief product officer Punit Soni told CNBC in September.

Drivers and limitations

According to a report released in April by market research firm Zinnov, India's mobile commerce market could balloon to USD 19 billion by 2019, up 850 percent from its current size of USD 2 billion. Surging smartphone sales in the world's second most populous country amid a tidal wave of low-cost handsets is the key driver, the report said.

Projections by Cisco put the number of smartphone users in India at 651 million by 2019, a near five-fold jump from 140 million by end-2014. The study, released in February, noted a 54 percent surge in the number of smartphone users in 2014 as the average price of handsets fell to around USD 150 last year and as smartphone penetration increases in rural India.

With the availability of cheap mobile data plans increasing, analysts believe this will help boost internet usage via mobile handsets — and consequently online shopping.

"India has a huge opportunity for mobile commerce. This is the first time a majority of Indians are getting connected to the internet. They are discovering products at costs that are lower than they've never seen before, and they are getting products that were not available in their market before. So it's a huge opportunity," FreeCharge's co-founder Sandeep Tandon told CNBC.

To be sure, obstacles that threaten to stymie the growth potential of mobile commerce in India remain aplenty.

For one, India's focus on cash usage and security concerns about e-transactions are creating friction with the burgeoning online shopping market, analysts say. Large players are wary of the 'Cash on Delivery' system as it is manpower intensive, and requires time to collect the cash from the consumer's doorstep.





In addition, India's poor logistics infrastructure creates a challenge for e-retailers to offer quick delivery services, while the lack of stable telecommunications infrastructure across the country could also limit the pace of growth.

However, companies such as India's second-biggest e-commerce player Snapdeal have taken the proactive approach by actively investing in solutions that will iron out these obstacles.

"Connectivity over telecom networks in India isn't that great. So what we are doing is investing massively in building lighter apps [and] mobile sites that load up in three seconds even on a 2G network. It's a lot of tech investments that we have to make, but we are seeing fairly exponential growth from mobile commerce," co-founder and CEO Kunal Bahl told CNBC on November 18.

Others are hopeful, with recent government policies being supportive of developments in the mobile commerce space, particularly in paving the way for non-cash payments.

"There's a lot of gap when it comes to understanding the digital space. Luckily the government has taken huge strides over the last six months to understand [the sector and] this is why they've offered more banking licenses. The recognition is coming so I think over the next year or so, we will see a huge amount of change and upward growth in the [mobile payment] space," e-commerce consultancy eTailing 's founder Ashish Jhalani said.

In August, the Reserve Bank of India (RBI) announced that it plans to grant licenses to 11 businesses such as U.K. telecommunications group Vodafone and India's Airtel to launch new so-called payments banks, which will allow transfers and deposits up to a limit of 100,000 rupees (USD 1,532) predominantly via smartphones. Analysts have widely viewed this as a significant shake-up of the country's financial sector.

The next big thing?

With competition heating up, both established players and fresh entrants are seeking to differentiate themselves with a "new variant of mobile commerce" that moves beyond the retail realm, according to FreeCharge's Tandon.

"Competition is so severe [so] not everybody is going to jump in and do mobile commerce [in the same] way... There are now service companies like UrbanClap [where] you can choose and hire a service professional to your house. For example, I'm invested in a company called Amber [which] is a platform for every stylist to become a business person and deliver the product to a customer's house," Tandon said.

Started in October 2014, hyperlocal start-up UrbanClap offers hiring services across categories such as health, home and events via its smartphone app. On the other hand, Mumbai-based mobile-first marketplace Amber taps on a pool of freelance make-up artists, hair stylists and henna artists to provide on-demand beauty services.

"These are new variances of mobile commerce which have not been so successful in the US markets because [of] a lower population density," he added. "But in India, a city like Mumbai has 20 million people."

Paytm is also venturing into the hyperlocal commerce segment, as consumers get increasingly comfortable with the idea of making purchases with just the touch of a finger.

The Alibaba-backed firm announced last month it was partnering hyperlocal businesses BookMyShow and Zomato to roll out food ordering and table booking services, as well as deals available in a user's neighborhood.

"India's infrastructure may not be so highly developed, but it is developed compared to 5 years go and consumers are now more comfrtable with shopping from smartphones. India has leapfrogged from one generation so we might just leapfrog to another generation." Paytm's Sharma said.








Why markets see next week as among most important of year

"Next week could be one of the most important weeks of the whole year," said Marc Chandler, head of foreign exchange strategy at Brown Brothers Harriman.

Even in a Thanksgiving holiday lull, financial markets are gearing up for a week of drama.

"Next week could be one of the most important weeks of the whole year," said Marc Chandler, head of foreign exchange strategy at Brown Brothers Harriman. US markets are closed for the Thanksgiving holiday Thursday, and stocks trade in a shortened session Friday. So by Wednesday the market focus was already on the coming week, and for investors worldwide, it's a busy one.

First on Monday, the IMF is expected to grant China's yuan reserve currency status. The yuan would be included in the fund's Special Drawing Rights basket which, while largely symbolic, would elevate the currency and China's influence in the global economy.

Next Friday's US November jobs report is the highlight of the week because it is the last big piece of data for the Fed to mull before its rate hike meeting Dec. 15 and 16. But then there's the European Central Bank's meeting next Thursday, where it is expected to expand its easing program and the diverging central bank policies should continue to play out in markets.

Fed Chair Janet Yellen speaks not once but twice next week, and she is expected to hammer home the US central bank's message that it wants to raise rates in mid-December barring any unexpected economic blowup. Yellen will be testifying before the Joint Economic Council on Thursday, but she speaks before the Economic Club of Washington on Wednesday at 12:35 p.m. EST. There are more than a half-dozen other Fed speakers, and an open central bank meeting Monday on how the Fed operates under new Dodd-Frank rules governing its emergency powers.

Oil will also be big in the coming week, with OPEC's meeting in Vienna next Friday.

The Organization of the Petroleum Exporting Countries is not expected to take any action that would change its year-old strategy to let the market set prices but the meeting may be loud with rhetoric from members that want the policy to change.

Already outspoken Venezuela tops the list, but Iran and others may also want the cartel to cut some production. Iran would want to clear the way for its own oil to come back on the market, once sanctions are lifted.

The currency market Wednesday was already previewing next week's central bank activity. News reports of a more aggressive ECB sent the euro lower, to the USD 1.05 range and the dollar index moved above 100 before settling back below it. ECB President Mario Draghi speaks after the meeting Thursday, but he also travels to New York where he will be speaking to the Economic Club of New York on Friday.

The European Central Bank is expected to possibly add to its quantitative easing program and extend it to different types of debt. The ECB could also cut its already negative deposit rate by another 10 basis points.

"They are buying 60 billion euros [USD 64 billion] worth a month, and they possibly get to 80 or 90 billion euros," said Chandler. As the euro fell Wednesday, the yield gap between the two-year German bund and US Treasury was the widest in nine years. The two-year bund yield fell to negative 0.42, reaching the widest spread with the US two year in nine years.

The euro crossed back above USD 1.06 Wednesday after dipping below it, and analysts say it's possible the common currency could move lower again after the ECB meeting. "The market's priced in a lot so it's going to be tough for Draghi to leapfrog expectations," said Alan Ruskin, head of G-10 currency strategy at Deutsche Bank.

Ruskin said the currency market will also be waiting for the November jobs report.

"Most people view the Fed tightening in December as a fait accompli unless the jobs number is very weak," he said.

He said a level above 200,000 could not only signal a Fed rate rise but would be strong enough to bring forward expectations for hiking in 2016.

"There's a big level (in the euro) at 104.60, which is a cycle low. Just the ECB alone is going to have a hard time taking out that kind of level. I think we're going to need strong US jobs data to propel it to new levels," said Ruskin.

The IMF move on the yuan has been much anticipated, but Chandler said what's not known is the percent it will be given in the basket.

Currently it was expected at about 15 percent but that could be reduced. "Chinese interest rates are higher than US interest rates. The bigger the weight the more emerging markets have to pay for debt," he said. "The SDR is a function of the country and the interest rate."



Chandler said there's an expectation the IMF move would boost private-sector investment, as investors follow central banks into the currency but he doubts there will be much of that initially.

Happy Investing

Source:Moneycontrol.com