It has been long since e-commerce made its debut in India but it is still to catch on in a major way. The absence of Amazon from Indian market is a major indication that it is not yet considered a lucrative enough market by big players. A lot has been said about it, tons of research papers written, lots of workshops/panels have probably discussed it to death. I have not read any of them and so pardon me if what I am going to say sounds very amateurish.
As somebody who is betting on a business model that has Internet distribution at its core, it is very important for me to understand why e-commerce has not caught on in India and what would it take? There is a first obvious bunch of reasons that comes to mind - lack of broadband penetration, lack of good online payment mechanisms ( which includes lack of widespread credit card use and absolutely pathetic state of Indian payment gateways), lack of good logistic providers ( some are way too costly while others are simply not reliable, you can read the horror stories all over web and then I can tell you some of my own experiences) and simply bad e-commerce websites (as put to me by one of the players in the space, pointing towards an old competitor). We all know and understand these and save for the last one, can hardly do anything about them other than pray.
But this post is about a different aspect. I was in US for 2 years and the overarching theme of retail sector there and economy in general seem to be a destruction of giant brick-n-mortar chains at the cost of more efficient online alternatives. Amazon is of course there, Zappos is there and the whole e-bay thing. The current recession has only amplified the vows of physical stores. In short - large scale organized retailers are incumbents in the new economy that is taking shape.
Turn to India and the picture couldn't be different. The organized retail sector in India is just getting started. The last few years have actually seen the spread of the model from groceries to stationary, shoes, electronics and everything else you can think of. Deep pocket, large players are entering the space one after another in a mad rush. Again the current slowdown has brought down the expansion speed but the trend is not over by any stretch of imagination because the fruits of a more integrated supply chain managements are just beginning to be felt by the common masses.
Let's talk specifically about books. Today we have several large format book store chains around - Landmark, Crossword, Depot, Timeout and others. And the customer experience is just so much better in them as compared to normal book shops - you no longer need to know the name of the book/author you are looking for, you can go and browse the books, read them, discover new authors right there in the book store - none of which is possible in an old format store. The choices available are much wider. The point is - the new format retail is a much bigger deal for books as compared to let's say grocery. Most of the time you don't have to explore and discovers new groceries. But in books - that is the name of the game. There is a value add besides simply the price.
On the other hand, this is also a fact that books are one of the best selling online items in India after ticket bookings (Air and train). In a especially price sensitive market like India, they have a clear advantage (although combined with the expensive shipping, that gets diluted). The large number of languages in India present a totally new challenge for distribution and creates many types of long tails (inherently smaller languages like Tulu, the groups of people living away from the main language area - Tamils in North) which are again ideally suited to digital solutions but none of the current players seem too keen on them. Increasing petrol prices are kind of ambivalent - they probably encourage users to avoid driving to retail stores but they also jack up the logistics costs in form of fuel surcharges.
The question I wonder about is - In this situation where these two models are seeing simultaneous evolution, how will they interact? Will we see a Indian Amazon emerge which will soon start kicking butts of big retail stores? Will the Indian retail chains adapt to Internet better and sooner then their US counterparts have managed (given that Indian companies have already seen how it can turn out)? Will we short-circuit to the future that seems to be taking shape in US or will we reach some different equilibrium point? All these are interesting questions and those making right bets will emerge at the top. But as we know from the Quantum Physics - "The very process of observation affects the results of observation." Similarly these bets are also going to decide what future turns out to be.