NEW DELHI — India’s e-commerce companies are targeting the $1 billion sales mark.

While these are numbers that brick-and-mortar retailers also hanker for in the $500 billion retail market in India, analysts believe that e-commerce is going to continue to eat into their market share as online sales grow to account for 4 percent of India’s gross domestic product by 2020.

Snapdeal, a big player in e-commerce that was fueled by a $50 million investment by eBay last year, is expected to get there soon, and Flipkart, another giant e-commerce company, expects to near the $1 billion threshold in 2015.

Although foreign direct investment is not allowed in the e-commerce space — just as in the brick-and-mortar world — global companies have been circumventing the situation by establishing a presence through a marketplace such as Amazon’s, launched in June last year, and eBay India. Google also conducted its second marketplace in December, bringing more than 200 e-tailers together with an estimated 20 million customers.

The e-commerce market in India has defied all predictions, growing 88 percent over the last year, according to figures from the Associated Chambers of Commerce and Industry of India, or Assocham. The market was worth $16 billion last year, up from $8 billion in 2012, and has idiosyncrasies particular to the Indian market. It’s a market heavily based on cash on delivery, for instance, with almost all e-tailers offering that option, where the customer can order first and pay later.

Over the last few months, the game changer has been getting delivery of merchandise within 24 hours, with some sites offering it for free as an added bonus to attract customers while others have begun to charge about 100 rupees, or $1.40 at current exchange, for a confirmed 24-hour delivery.

Although there continues to be a rapid churn of e-commerce companies — studies estimate that out of the 53 e-commerce sites funded by venture capitalists in the last three years, only 14 will still survive in 2014 — the market is becoming increasingly sophisticated, with an estimated 200 million Internet users by the end of last year.

“Once the brick-and-mortar retailers enter this game, it’s going to change once more,” said Darshan Mehta, president and chief executive officer of Reliance Brands, which has been looking at this space for its global brand associations that include Steve Madden, Kenneth Cole and Thomas Pink.

“For, we have our own monobrand site apart from selling it on a multibrand e-commerce site like Myntra, on which we are selling Timberland as well. These are expensive products — 6,000 to 7,000 rupees [$95 to $112] — and we are not doing a promotion on these, so they are selling there at the same price as in stores.

“We are finding that 45 percent of our deliveries are happening to towns beyond the 20 biggest towns in India, and even the 55 percent that are in key cities are coming from the outlier parts of the city, for example Noida in the New Delhi area or Thane in the Mumbai area. It is the sheer convenience of not traveling the distance to the malls,” Mehta observed.

Although there are many players competing for the consumer’s wallet, the top tier remains Flipkart, Myntra, Snapdeal, Jabong and Junglee in the multibrand space, while there are numerous sites that focus on particular segments, such as for fashion.

According to a study by Bangalore-based Allegro, 53 e-commerce companies have raised $853 million in venture capital in the three years to April 2013. While books and music were the leaders in this funding, fashion has been growing fast. Twenty apparel and accessories firms have been funded to the tune of $231 million.

Some of the top players continue to attract venture capital funding. Flipkart, for example, raised an additional $360 million last year, over two rounds, in July and October. With funding of $540 million since 2009, it has become an example of the funds that e-commerce companies can raise — as well as burn through — to position themselves correctly.

“The increasing Internet penetration and availability of more payment options boosted the e-commerce industry in 2013,” said D.S. Rawat, secretary general of Assocham, who suggested that the fast growth of e-commerce has been fueled by aggressive online discounts, rising fuel prices and the availability of abundant online options.

“We believe this is just the tip of the iceberg, and over a period of time, there are many reasons why this will grow significantly,” Manu Kumar Jain, cofounder of Jabong, an online site that is strong in the fashion retail space, told WWD. “I would expect the Internet penetration to go up from 14 to 15 percent to 30 to 40 percent in the next four to six years depending upon various factors. Internet consumers are almost doubling on a year-to-year basis. If you look at the number of Facebook users, they were 50 million in 2013, and in 2013 they were close to 100 million. We expect Internet users to go up from 150 million to 200 million to 400 million to 500 million in the next three four years.”

Yet he said that only a “small number of people” are shopping on the Internet at the moment, primarily in bigger cities where consumers are looking for convenience and better product and price comparisons. The trend is “slowly moving to tier-two and tier-three cities, where people are coming online and are beginning to shop online,” said Jain.

Men are doing a lot of the shopping — 65 percent of shoppers are still men, with women comprising 35 percent, according to figures from Assocham. And certain age groups are shopping more: 55 percent of the shoppers range from 26 to 35 years old, while 35 percent are between 18 and 25, 8 percent are between 36 and 45 and only 2 percent are between 45 and 60.

The group cited Mumbai as having the greatest number of online shoppers, followed by Delhi and Kolkata.

One of the key issues is delivery across India, which is a logistical challenge and a geographical nightmare. E-commerce companies are finding ways to ensure delivery, as in Amazon India’s tie-up with the Indian postal service in November and a strong network of in-house delivery options with other companies.

“We deliver in 11,000 PIN [postal index number] codes,” said Jain, about Jabong. “Delivery is one of the biggest challenges — we wanted to provide something unique and different in terms of providing excellent customer service, so the first thing we did was to provide our own in-house delivery service. The way we have tackled it is that we deliver now in about 60 cities. For more than these 60 cities, we partner with third-party delivery companies or logistics companies. This number keeps on increasing. When we started we had our own in-house network in four cities, then six, then eight, then 12 and now 60,” he said.

As Mehta of Reliance Brands noted, “The proportion of sales for each brand on the Internet will go up quickly. For the brands that are online, about 2 percent are online sales. But that 2 percent will become 5 percent and 10 percent very, very quickly. Today, for Timberland and Steve Madden, the total online sales are equivalent to one good store each — but this will dramatically catapult,” he said.

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