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Allowing foreign investment is a minor problem in ecommerce space. Flipkart has foreign investment via VCs for quite some time.

There are a lot more fundamental issues in ecommerce space.

(1) Low penetration of credit cards - Banks have slowed down considerably their efforts to market credit cards. RBI regulations don't help either. Besides both of these, people have a negative feeling towards credit cards. So credit card usage is low. Cash is king and debit cards and direct bank transfers are next.

(2) Payment is a pain. Paying via credit card, debit card or bank account goes through a two step authentication process which is fraught with failures. There are multiple sites through which payment is routed => Seller site -> Payment gateway intermediary -> Bank site -> (enter password to authenticate payment) -> Back to intermediary -> Back to seller site. This long chain is breaks more often than not. And when it breaks, it becomes a pain to get your money back. Buying something online, especially for some one new is a heart-in-your-mouth experience. Again, RBI guidelines prevent any change in the payment process. It is easier to use Cash on Delivery (CoD).

(3) Two and three means that most customers prefer CoD. But CoD is a pain for merchants. There is no guarantee that customers would end up completing the sale. Most purchases are impulse purchases. But in case of CoD, you receive the product after 2-3 days, long after the impulse is gone. So the rejection rate for CoD sales is high compared to Credit/debit card sales.

(4) Logistics is another nightmare. The companies do not have scale and are quite expensive compared to the cost of goods sold. They are also not reliable. Delivery management and providing customer support for late/missing shipments forms the bulk of support cost. So any medium/large ecommerce company starts its own courier service. Suddenly these companies are not just ecommerce companies, they are also managing a completely new and different business.

(5) Low internet penetration and usage.

(6) Wafer thin margins. The margins are already thin. It is spread even thinner by offering free shipping. Shipping used to be free for any product of any cost. Its only now that companies have started charging for shipping. These thin margins mean companies won't be breaking even any time soon. Its a long haul game and its going to leave quite a few dead companies in its midst.

Why do you feel that foreign investment into e-commerce is the solution?

I think FDI in e-commerce and retail sectors is something that will come to pass in India.

Its inevitable.

The most interesting thing about Indian e-commerce shipping to me (someone who lived 28 years in the USA and the last 1 year in India) is that there is no concept of choosing delivery speed. There is only standard shipping. You need the product tomorrow? Well you're out of luck. It'll be there in a couple days if you're in a metro, which definitely isn't bad for standard shipping. But you don't get to control the shipping speed.

(Note #1: I have gotten some items the next day, but it was out of luck. If you live in Mumbai, New Delhi, or Bangalore, this will happen occasionally that the warehouse on the outskirts of the city will have the product and you'll get it the next day. But it's just not close to guaranteed.)

(Note #2: I heard or read something that Flipkart, often known as "India's Amazon", will soon be offering expedited shipping for an additional fee).

Well there is Flipkart (http://www.flipkart.com/). They usually take about 2-3 days to deliver. Again that depends where you are located and the product you are ordering. But they do have a huge collection of stuff.

In China you can have Amazon (and other major e-commerce firms) ship things to your home or office and pay in cash on delivery (for most items).

The amount of delivery people in Beijing, especially near lunch time, is quite impressive.

Off-topic, but can you expand more on this? I only remember reading article after article about how you could pay for everything in Japan using chips in your mobile phone. And article after article of Japanese companies lamenting how they did not manage to internationalize their mobile payment technology. And then the iPhone came along. And then Square came along.

If you are saying that Japan is still very much a cash based society, what percentage of transactions are done in cash and what percentage are done via mobile phones, judging from your personal day-to-day experience?

It is also the case that Debit Cards are insanely popular in India, a lot more than Credit Cards. Secondly, Online Banking (banks exposing merchant APIs) is also very popular for internet purchases as it removes the middleman.

Its not just cultural, but financial, unless you consider tax evasion a part of culture. A lot of Indians don't want to spend via credit cards because the money is 'black', i.e. unaccounted for. This is a big reason for COD, esp. among the business class.

> The end result is that Indian book prices are quite high for a country with largely third-world living standards.

Indian book prices, especially for foreign books which are published in India, is quite low.

http://www.flipkart.com/feynman-lectures-physics-mainly-mech...

Price: Rs 236

http://www.amazon.com/The-Feynman-Lectures-Physics-Vol/dp/04...

Price: USD 38(about Rs 2100)

That's almost a 10 fold difference. The paper quality isn't good, it's mostly paperback[1], but paying 10 folds for a hard cover isn't worth it. Books which aren't published locally(imported) are an issue. Prices are too steep compared to books which are published here.

http://www.flipkart.com/algorithm-design-manual-0002/p/itmdy...

Price: Rs 5163

[1]: In the examples above, both books are low quality paperback books.

As per my understanding, two things drive the prices in the market. One is the perceived value the thing provides to users. This is the primary factor is the cost of producing the good is much lower when compared to perceived value. If the cost of production is high, there is usually a cost+ pricing.

One way competition reduces prices when sellers start undercutting each other in the first case. That doesn't apply to books in India. No one is making astronomical margins on books which can be cut down.

The other reason prices reduce is when competition leads to reducing production cost. It can be because of expanding market, technological improvements, improving supply chains.

Amazon may be able to make some difference in establishing better supply chains. But beyond that I do not see how they can help reduce the book prices in India. There has already been enough bloodbath in the online book retailing in India, so lack of competition is hardly an issue.

Take a look at e-commerce in China. Lots of people forget, that the big Chinese players are now orders of magnitude larger than the Amazon's and Ebays in the west.

The "end result" thanks to "protectionist legislation" is not as straight forward as people imagine.

If it was wouldnt Alibaba have been allowed to buy Yahoo ;)

I was under the impression that the books sold in India (and some other Asian countries) are low-priced international editions of those books. This is specially true for college textbooks with foreign authors.

"Your margin is my opportunity" -Jeff Bezos

In e-commerce, doesn't latency == $$? Is the bandwidth premium really that much higher? Or is the performance difference between the geographies negligible?

This is one of those technical things that makes little or no difference to a customer.

They'll probably get to it eventually.

I see it fine on Chrome (latest stable) Win 7 Pro, but that explains it.

Visible on FF 21.

Yup it is similar to google shopping www.google.com/shopping