Growth of India e-Tail e-Commerce Industry

India’s rapid population growth and its ever-expanding Internet base favors the online retail industry. At present, more than 250 million of the country’s residents use the Internet. A recent survey forecasted that India is poised to experience phenomenal growth in terms of Internet connectivity among existing users and an increase in the overall user base.

The country currently ranks as one of the world’s top 10 retail markets, and it is estimated that India’s online retail sector will reach $95 billion by the end of 2015, which would mean a compound annual growth rate of 13 percent for the entire e-tail sector. These statistics point to an incredible boom for the e-commerce sector and the online industry in general.

Simply put, India is expected to be the fastest growing e-commerce market over the next few years. Nomura’s “projected” report on the Indian Internet industry estimates that the country’s e-commerce industry will reach a staggering $43 billion within next five years. This will make India a top player, and it gives it the ability to help shape the future of e-commerce. What makes this number so significant is that as recently as 2009, India’s e-commerce industry was hovering around the $3 billion to $4 billion mark only.

The largest sector of the Indian e-commerce industry is online travel, which makes up roughly 71 percent of the online market. However, this will only decrease as more Indians take advantage of the growing e-tailing market, which was worth about $2.3 billion in 2013. With an estimated 70 percent compound annual growth rate by 2016, this sector is likely to start to dominate the market, with fashion retailers heading this growth.

With growth comes jobs, and the e-commerce industry is likely to directly create more than 50,000 jobs over the next five years. Of course, no industry exists in a vacuum, and this growth will give a substantial boost to other sectors, notably outsourcing, inventory, product management and creative product writing as well.

Some e-tailing industry players have already exceeded $1 billion in sales, most notably Flipkart.com, which announced it passed the threshold on March 7, 2014. The company had originally hoped to exceed this figure in 2015.

Google substantially helped to boost the presence of the e-commerce industry by introducing the Great Online Shopping Festival(GOSF) since 2012. This helped to promote the burgeoning industry, and as a result, numerous companies, including Flipkart, Snapdeal and MakeMyTrip, experienced a significant boost to their traffic. According to Google India Director of e-Commerce Nitin Bawankule, Google India had more than 14 million visitors over the three days of the festival, Dec 2014.

Naturally, this sparked interest from investors, leading to a substantial amount of money being poured into the e-commerce industry.

A survey conducted by Zinnov indicated that more Indians than ever are shopping online, and the user base is currently about 10 million people. Electronics and fashion are currently the two biggest e-commerce markets, and growth is projected to be about 30 percent.

A number of factors are currently driving the growth of the Indian e-commerce market:

  • Increased Internet access with 3G penetration and the growth of smartphone market
  • Significant increases in per capita income and overall standards of living
  • A change toward a more sedentary lifestyle, resulting in increased online shopping
  • Attractive discounts
  • Social media, which is responsible for almost 30 percent of traffic to e-tailing sites
  • Increased interest in buying and selling second-hand products to save money
  • Presence of websites such as Snapdeal and Flipkart that have improvise user-friendly interfaces that reduce bounce rates.

 

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