"Digital commerce is at a nascent stage in India. However, India is one of the fastest-growing eCommerce markets in Asia/Pacific," Praveen Sengar, research director at the research firm, said.
"India represents a $3.5 billion market, growing at approximately 60-70 per cent every year. It represents less than 4 percent of the total retail market. B2C eCommerce leads the market in India, while B2B is limited to organisations that drive online channels to integrate with their partners and distributors," he added.
Digital commerce facilitates a purchasing transaction over the Web, and supports the creation and continuing development of an online relationship with a consumer or business customer across multiple retail, wholesale, mobile, direct and indirect sales, call centre, and digital sales channels.
Mobile commerce is finding increasing traction in mobile shopping. Marketplaces, consumer product goods, and food and beverages companies have started investing in mobile commerce. However, less than 5 per cent of total digital commerce happens through mobile.
"The digital commerce platform market is maturing; incumbent vendors are investing in building out their commerce platforms, and those in adjacent areas, such as search, order management and marketing a" both through organic development and acquisition," Sengar said.
"Vendors are increasingly focused on execution and winning new customers, sometimes at the expense of articulating future vision. Merger and acquisition activity is increasing, resulting in fewer digital commerce platform options in the market, but also serving to extend the commerce platforms of the established vendors."
Limited internet penetration, low digital commerce volume, multiple payment models, logistics and fulfillment challenges, higher return rates and low average order value is putting pressure on the profitability and viability of B2C eCommerce businesses, Gartner said.
The B2B model is leveraged to drive efficiency in the supply chain. The biggest challenge is getting the business digital commerce strategy right and adequate investments in people, process and technology to engage with customers across channels, which has been ignored by Indian enterprises so far, it added.