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Mobile shopping to reach USD 40 mn by 2016 in India

Highlights
  • Online purchases by smartphones at USD 30 mn currently
  • Online travel clocks 71% in Indian ecommerce
  • E-tailing accounts only 8.7% of organised retail
  • Women women form 10% of active online shoppers
  • 75% internet users in the age group of 15-34 yrs

India is gradually emerging as a hub for online shopper while ecommerce players are rolling out initiative to leverage the same. Online purchase via mobile phones are expected to touch USD 40 million in 2016 against 30 million currently, according to a research by ASSOCHAM and Grant Thornton.

Over the course of next three years, population of 200 million from India is expected to access the internet services with smartphones guiding the larger portion of the movement, the report added. Also the current 19 per cent or 243 million users of internet population in 2014 feature the huge growth potential of ecommerce in India.

Online travel continues to rule the roost in the India ecommerce market with 71 per cent market share but in the global ecommerce industry online travel holds only a smaller share. In India, this business has grown at a CAGR of 32 per cent between 2009 and 2013. Meanwhile, e-tailing, at large, accounts for only 8.7 per cent of organized retail and a merger 0.3 per cent of total retail sales.

On gender-wise distribution, it emerged that the growth in percentage for working women y-o-y in 2013 was clocked at 43, which forms 10 per cent of active online shoppers. Consequently, this women-centric share of ecommerce purchases in India will increase to 35 per cent in 2016 as compared to 26 per cent in 2013, the study highlighted.

One of the emerging trend in the ecommerce industry is that of in the Tier II and Tier III cities. According to the study, maximum demand for online retail exists across 4,000-5,000 towns and cities in India, but there is no significant presence of physical retail in almost 95% of these locations. High real estate cost is one of the main reasons as to why organised retail is unable to expand.

Around 75 per cent of Indian internet users are in the age group of 15 to 34 years and this group shops online more than the remaining population. Peer pressure, rising aspirations with career growth, and fashion trends are encouraging this segment to shop more than any other category and India. Therefore, the category of users enjoys a demographic dividend that favours the growth of the India ecommerce sector.

In calendar year 2016, the Indian ecommerce market is estimated to grow at a CAGR of 63 per cent to reach USD 8.5 billion. Growth in the penetration levels of mobile and internet and increased consumer demand are expected to drive this growth.

Many market experts compare the current dynamics to that of China such as its growing broadband penetration, acceptance of online marketplaces, and lack of physical retail infrastructure in many places.

Proliferation of cheaper smartphones in India will place the country just next to US as the largest market of smartphone with more than 200 million smartphone users. With the growing number of smartphone users and major ecommerce players, number of users relying on app-based platforms will eventually increase in the near future, noted the joint study.

Tracking the increase in the number of users making online transactions from 11 million in 2011 to 38 million in 2015, the Government of India’s plan to rebuild and modernise the Indian postal infrastructure and plans to implement the Digital India programme, will also affect the ecommerce market in the country.

Such initiative from the government are expected to foster the growth of ecommerce to generally non-serviceable areas, thereby boosting the growth prospects for their businesses. Stabilisation of the ecosystem, inclination of venture capitalists and support from government are expected to drive the growth trajectory of ecommerce in India.

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