NEW DELHI -- Led by companies such as Flipkart and Amazon.com, e-commerce has begun to flourish in India as consumers outgrow a "can't touch, won't buy" approach that had subdued online growth.
Bangalore-based Flipkart, the largest e-commerce company in India, boasts 22 million registered users and more than 4 million daily visits for products in 70 categories, including books, media and consumer electronics.
Flipkart, founded by former Amazon employees Sachin Bansal and Binny Bansal in 2007, announced in July that it had raised $1 billion in fresh capital, within months of becoming the first Indian e-commerce company to reach $1 billion in gross value added, a measure of sales success.
Amazon, whose chief executive officer Jeff Bezos visited India last month, has announced plans to invest $2 billion in India. Other companies vying for a larger share in India's e-commerce business include eBay and Delhi-based Snapdeal and Jabong.
Overall, the market is expected to be worth $56 billion a year in sales within a decade, from $16 billion in 2013, according to the Associated Chambers of Commerce & Industry of India (Assocham).
More immediately, the electronic retailers are fighting to cash in on the Oct. 23 Diwali festival -- the biggest in India. Massive discounts are available to tempt shoppers, many of whom regard the festival as an auspicious time to exchange gifts.
Snapdeal has roped in a battery of Indian television stars to promote the brand and its Diwali Bumper Sale, while Amazon, which entered India last year, tried to woo consumers with its Diwali Dhamaka Week from Oct. 10 to Oct. 16. Dhamakais a Hindi word that means explosion.
Flipkart held a Big Billion Day sale on Oct. 6 that offered steep discounts on a variety of products, including smartphones and electronic goods. The sale prompted visits from 1.5 million shoppers, but triggered a hue and cry from offline traders who complained that some of the deals were "unbelievable".
"We targeted $100 million in [gross merchandise value] on the Big Billion Day. We achieved that target is just 10 hours!" Flipkart said, declaring that India was changing the way it shopped.
However, many of Flipkart's customers complained of technical glitches and cancelled orders. Pushkar Sharma, 18, an engineering student in New Delhi, said the deals were irresistible, but unavailable, noting that many of the products had sold out within minutes.
Flooded with such complaints, the Flipkart founders issued an apology to their customers, acknowledging that shoppers' experiences on the Big Billion Day were "less than pleasant" because "we didn't source enough products and deals in advance to cater to your requirements. To add to this, the load on our server led to intermittent outages."
Praveen Khandelwal, national secretary-general of the Confederation of All India Traders, has demanded an investigation into the business models of online retailers, together with the formation of a regulatory authority to monitor e-commerce business.
"We want to make the government realize how serious the issue is. We will launch a nationwide campaign demanding rules and regulations for e-commerce business," Khandelwal told The Nikkei, adding that the industry body had already met with Commerce and Industry Minister Nirmala Sitharaman and conveyed its concerns to her.
Sitharaman had already said that her ministry was looking into complaints about Flipkart's Big Billion Day event.
Khandelwal accused online retailers of "unhealthy business practices and predatory pricing." In the last six months, he said, "many segments of offline retail like cosmetics, mobile phones, computer hardware and software, footwear, electronics and kitchen appliances have suffered a loss of 20-35%, and we presume that by the end of the Diwali festival this loss will go up to 50%."
However, Arvind Singhal, chairman and managing director of retail advisory firm Technopak, said electronic retailers accounted for only 0.4% of total merchandise retail spending in India.
"It is a fact that e-commerce is a very promising channel. It is also true that one single category, which is mobile phones, is finding a lot of interest from consumers shopping online, but that doesn't mean that [the] rest of the spending is also moving online," he told The Nikkei.
"As per my understanding, no law has been broken by any of the online portals in India by selling some goods at a discount."
Assocham said the Flipkart Big Billion Day sale should not be used as "a ploy or an ammunition" to subject the fledgling e-commerce sector to regulations in excess of those applicable to offline businesses.
Assocham said that while it was true that part of the existing market dominated by brick-and-mortar retailers would shift online, the Internet-based delivery platform had also created additional demand in areas such as books, music and premium goods such as sunglasses.
"To assume that [online retailing] will spell doom for the organized retailing in the malls and traditional markets will be an incorrect assessment," Assocham Secretary-General D.S. Rawat said in a statement.
In a joint study released in August, Assocham and comScore, an Internet information group, said online retailers had penetrated 65% of retail categories, and were receiving 53.4 million visitors a month, with overall visitor growth of 15% a year.
The study said the Flipkart group of websites, including the company's recently acquired online fashion portal Myntra, were the most visited online retail sites, followed by Jabong and Amazon.
Assocham had earlier said in a separate report that India's e-commerce market was worth about $2.5 billion in 2009, rising to $6.3 billion in 2011 and $16 billion in 2013. It was expected to reach $56 billion by 2023, which Assocham forecast would be 6.5% of the total retail market.
Reeling under the impact of online shopping, Sunil Chawla, a book store owner in New Delhi, said online retailers had badly hit his business, forcing him to sell small gift articles alongside books.
Mohd. Ashfaq, who works for a mobile store, said customers were asking why comparable phones were available at much cheaper prices online. Ashfaq said it was a hard task to convince them to buy offline.
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