Internet shopping has become an effective way of boosting an economy by increasing demand, expanding consumption and promoting employment. It has improved operations through greater use of electronic book-keeping and records management. Despite this, e-retail sales are expected to account for only 4.4 per cent of all retail sales in India in 2019.
One of the most visible changes that technology is bringing to people’s lives is the manner in which they are going about their shopping. Consumers are globally and increasingly buying online. Progressive enhancements in internet technology, online payment security and rapid delivery systems have made internet shopping a flourishing global industry. A US research estimates that internet shopping will account for 11 per cent of all purchases in 2018 in that country. Online sales have reached 15 per cent of total sales in the UK this year. The western developed countries, however, are left far behind in terms of the volumes of China’s online shopping. In 2014, China’s online retail market became the largest in the world, accounting for 34% of the world’s internet retailing market share.
India’s online shopping percentages are rising every year. Improvement in logistics and greater confidence of consumers in the use of e-commerce platforms and satisfaction with services are some of the reasons that have fueled this growth. A recent ASSOCHAM-Resurgent study has revealed that over 120 million Indian consumers are expected to shop online this year. As per this joint study, online shopping is expected to clock an annualised growth of 115 per cent in 2018. With more than 450 million internet users, over 400 million smartphones and the arrival of global retailing giants, online shopping will most likely gain more momentum. The latest wave of effort on the part of e-commerce companies is to move beyond metros, reach their goods far and wide and access consumers in smaller towns.
Online shopping is preferred by customers due to the reason that they can shop ‘anytime, anywhere, anything.’ This they can do with utter convenience while comparing prices and product features among available varieties and brands at online shopping sites. Convenience, cost, variety and time — all work in favour of online shoppers.
Internet shopping has become an effective way of boosting an economy by increasing demand, expanding consumption and promoting employment. It has improved operations through greater use of electronic book-keeping and records management. Internet placement reduces storage cost, space and serves its customers faster and more effectively. Online banking services such as electronic bill payment, funds transfer and payroll management improve the efficiency of the business.
Despite all this, e-retail sales are expected to account for only 4.4 per cent of all retail sales in India in 2019. It is evident that Indian consumers are at different levels of familiarity and trust with e-commerce. The younger urban middle class finds online shopping the preferred method for a whole host of goods. Others buy limited goods online. But the large majority of consumers are yet not capable or ready. As a consequence, they use the traditional methods of purchase. Referring to a study undertaken by Google, Bain & Company and the Omidyar network, The Economic Times reported that 54 million Indians stopped shopping online after their first transaction. The majority dropping out were first-time internet users from lower income groups. The primary reason for abandoning online shopping was a language barrier since most e-retail platforms were in English. On a broader note, Commerce Secretary, GoI is reported to have called for a comprehensive national e-commerce policy to tap opportunities in this segment. She said that several government departments — DoT, Finance, Posts — needed to be on the same page to capitalise on business prospects offered by digital space.
While there were issues that needed to be sorted out in e-commerce, one could safely say that more Indians will buy online as the years roll by. This will gather greater momentum as India further urbanises, digital systems further improve, more Indians join the internet and more consumers gather confidence to use digital platforms. Studies indicate that online shoppers may reach the 250 million mark by 2026. The majority of these will be in the top metros of this country.
This article is primarily concerned with the impact online shopping will have on land use planning, city infrastructure, environment and security. In terms of land use planning, one needs to take note that on line shopping is likely to reduce demand for retail space. This is in evidence as shopping malls, book shops, toy shops and electronic outlets, to name only a few, are struggling or closing. Of the 1,200 malls across the United States, a dozen have closed, another 60 are on the brink of closure and many have 30 to 50 per cent of their rental space vacant. The situation in India broadly replicates that of the States. On the other hand, industrial real estate, in particular warehouses, have become big business and demand for them is steeply rising. This has implications on land use planning in terms of commercial space allocation. More mixed land use, provision for less retail and more decentralised warehousing appear to be the logical urban planning adjustment to growing online shopping and e-commerce.
On the transportation side, while the healthy part is that e-commerce supports a reduction in car trips in a city, there is an upsurge in freight traffic. The last-mile delivery traffic is getting messier as delivery vans use the same road space, curbs and footpaths and impose their own loading zones. Clearly, Indian city roads are not sufficiently designed to take this fresh e-commerce onslaught. Newer cities must plan for more road space, more delivery lanes, roadside curbs and road designs that take into account the needs of growing e-commerce.
Environmentally, two major issues arise. One is the packaging waste generated for cities to handle. According to the US Environmental Protection Agency, e-commerce packaging accounts for 30 per cent of solid waste generated in the US. E-commerce packaging comprises plastic, paper, bubble wrap, air packets, tape and cardboard cartons. While most of these packaging materials are recyclable, inefficient solid waste management systems of some of India’s cities and poor civic sense may lead to some of these materials clogging city drains and landfills. The problem of excessive packaging has been exacerbated due to the growth of customer services that place a premium on ultra-fast delivery which do not allow for consolidated delivery of packages. This is leading to multiple individually packed deliveries thus increasing the generation of waste. In times to come, the responsibility of waste collection would have to be shared by companies and recycling facilities for recyclable waste would have to be better organised so that environmental damage is minimised.
In addition to increasing the waste generated in India, the growing trend of excessive packaging will certainly lead to considerable loss of forest cover, as wood pulp remains the main raw material for making packaging cardboard. Moreover, the toxic chemicals used in the production of these packaging materials are bound to affect human health as they enter our food cycle. It is clear that there is an urgent need for some stringent implementation in this regard.
Lastly, with so many packages to be delivered and so many men delivering them, sometimes at very odd hours, there is the question of security of households and residential societies. Most condominiums have still not reacted and others are struggling to sensibly tackle the flood of deliveries. Hours of delivery, quite clearly, would need regulation. Housing societies could employ people as per requirement for internal distribution and the cost would have to be borne by the online shopping residents.
Online shopping is still in its early days and has only gained nascent adherents. But as e-retail expands, cities will be faced with multiple situations that may leave them gasping for answers. The time to think and react is now before it gets too big to handle.
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Dr. Ramanath Jha is Distinguished Fellow at Observer Research Foundation, Mumbai. He works on urbanisation — urban sustainability, urban governance and urban planning. Dr. Jha belongs ...
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