Dropshipping To India: A Short Review Of The Indian Ecommerce Market [Updated]

Is dropshipping to India a good idea? Let’s find it out!

India is one of the fastest growing eCommerce markets these days. In 2018, the Indian eCommerce market value was estimated at about $50 billion, and it’s expected to grow to $200 billion by 2027.

Besides that, the number of online shoppers in India is expected to reach 300-350 million by 2025.

What is more, India is the second most populous country in the world – its population is about 1.38 billion people. In addition, more than 65% of its citizens are below the age of 35. Everyone knows that the younger the generation, the more tech-savvy it is. So the number of people using the Internet will also grow significantly.

As you can see, dropshipping to India seems to be an attractive opportunity. Is it really so? Let’s figure it out!

Dropshipping to India: pros of the Indian eCommerce market

Although some advantages of the Indian eCommerce market were mentioned above, there are lots of other positive moments that you should draw your attention to.

Lots of government initiatives

The government of India has lots of plans on how to improve the eCommerce market of the country and support online retailers. So, it runs and supports different campaigns such as Digital India that help make the country more digitally empowered and contribute to the growth of the eCommerce market.

Besides that, the Indian government is working on building secure cyberspace for India’s citizens and businesses. In 2017, the country even made it to the 23rd place of the UN Global Cybersecurity Index (GCI).

Increase in the number of payment options

Some time ago it was hard for Indian business people to choose the most appropriate payment gateway for their eCommerce stores because of the small number of available options.

But the situation has changed significantly. These days, there are lots of services that you can add to your store to accept payments. Among the most popular ones, there are PayU, InstaMojo, PayTabs, etc. All these payment gateways are available for the AliDropship plugin, so if you’re living in India, it will be easy for you to start your own online business.

On the other hand, starting from 1 April, 2021, PayPal will shut down its domestic payment services for India, which will certainly affect the countries domestic ecommerce.

Positive consumer sentiment

Most Indians feel positive about purchasing goods online. According to the survey, conducted by Capgemini Research Institute, 64% of Indian consumers prefer shopping online rather than in physical shops. So, it’s a good reason to start dropshipping to this country.

Among the most frequently purchased product categories are consumer electronics, mobile phones, clothing, books and stationery, fashion jewelry, kitchenware, sports and fitness equipment, and other goods.

Dropshipping to India: cons of the Indian eCommerce market

Now, let’s see if there are any barriers to exploring this market!

Limited Internet knowledge of potential buyers

Although computers, the Internet, and social media are an essential part of our lives, there are lots of people in the world who aren’t good at technologies or don’t know how to use them yet.

According to the data published by UNESCO in 2017, only 70% of Indian citizens aged 15 and above can both read and write. As for digital literacy, only 46% of the Indian population aged 14 and above can operate a computer.

When these people start using the Internet to buy something from online stores, they will probably face different issues. It is likely that they will have trouble finding the necessary products and placing their orders.

Of course, it doesn’t mean that you can’t work with these customers! On the contrary, you can be the person (or the company) that guides them through this new exciting world. It will require lots of your patience, energy, and time, but the result will totally be worth it.

Psychological barriers to online shopping

Although the number of digital buyers in India is increasing, a lot of Indian consumers prefer to touch a product before purchasing it. This is especially the case when buying clothing, shoes, perfumes, and accessories.

The lack of touch and feel experience may significantly affect Indian customers and put up barriers that stop them from buying. Although the situation is gradually changing (especially because of the COVID-19 pandemic), many Indians still prefer either buying in brick-and-mortar shops or order stuff with cash on delivery options.

The solution is to create product videos and detailed product descriptions that will help your potential customers better understand what the chosen product looks like and what features it has.

Legal related issues

If you want to start a dropshipping business in India (where you live), you need to register your business officially. And you may feel confused when choosing the most appropriate business form and dealing with the paperwork.

Actually, there are 4 popular types of companies in India:

• Sole proprietorship
• One person company
• Limited liability partnership (LLP)
• Private limited company

The type of business form determines how money flows in and out of the business, how the business is taxed, and what documents you need to start it.

The easiest way of company registration is deciding on the sole proprietorship model. You will just need your Aadhaar and PAN cards, a bank account, and proof that you have an office. That’s it.

This business type is ok for people who have never had their own businesses and just want to try their strengths.

However, if you have some experience in eCommerce, you can focus on other forms. Although it takes more time to get all the necessary documents, these business forms are more flexible and have some more benefits than the sole proprietorship model.

Is AliExpress banned in India?

Last year, the Indian government banned a number of Chinese apps including the AliExpress mobile app. As the officials explain, these apps collect massive amounts of user data that have nothing to do with their services. So, they were banned due to security reasons.

By the end of 2020, the government banned over 200 apps in total. With continuing tensions on the India-Chinese border, one could expect more moves of this kind in the nearest future.

At first, the consequences of this decision were not that harsh as the AliExpress site was still working and customers could place orders. But later, AliExpress sellers faced certain problems at the customs.

By the end of 2020, AliExpress officially stopped exporting goods to India. As of now, it is impossible to place an order on AliExpress if the customer’s address is located in India. This is what the platform’s Help Center says:

Does it mean dropshipping to India from AliExpress is no longer available? Some buyers report that they were able to place orders by contacting sellers directly and asking them to send goods via more expensive shipping options (often with longer delivery times). But even in this case, sellers don’t guarantee that the parcel will be successfully delivered.

This is why, right now, we’re considering dropshipping from China to India to be too risky, and can’t safely recommend following this business model. However, it doesn’t mean that as an Indian citizen, you can’t do dropshipping at all!

As you likely know, one of the advantages of the dropshipping model is that you can sell products to almost any destination in the world. Even if you live in India but want to dropship from AliExpress, there’s nothing stopping you from selling products to another country. The experience of Faraz, an Indian entrepreneur who shared his dropshipping success story recently, illustrates this point perfectly!

As of now, the best countries to dropship to are the United States, the UK, Australia, Canada, and a number of European countries. So, instead of dropshipping to India, pick one of these destinations and start your dropshipping business there.