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Prior to the entry of these new players, the e-commerce market in India had established firms like, Rediff.com, Fabmall.com, Baazee.com, eBay.in, indiatimes.com, etc., which had achieved fair success in creating a brand recall among online customers. Industry experts expected these established players to face stiff competition from the traditional brick and mortar companies in the online segment. However, Fabmall's CEO, K Vaitheeswaran said that the company was not unduly worried about the entry of other new competitors. He said, "More than competing with each other, we should figure out how to grow this pie. The industry is growing at 30-40 per cent year-on-year and there is huge potential for all of us."³ Analysts noted that given the retail market scenario in India, there was a greater need for companies to adopt a multi-channel approach to retailing in order to cater to the changing lifestyles and consumer preferences.

These companies also expected to use these multiple channels to improve their market share and customer base, and open new revenue streams, while offering shopping convenience to customers.

According to the Internet and Mobile Association of India⁴ (IAMAI) e-Commerce Report 2005, online shopping revenues were Rs. 5.7 billion in 2004-2005 and were expected to increase to Rs. 23 billion in 2006-2007.

One of the key factors for the emergence and growth of online shopping in India was the higher penetration of personal computers (PCs) and increase in number of Internet users. According to IAMAI, the number of Internet users in India was expected to reach 100 million by the end of 2007 from an estimated 25 million in 2005.⁵