Indian eCommerce market- Past, Present and Future

eCommerce, marketplaceThe rapid penetration of Internet and increasing use of smartphones and tablets has led to accelerating growth in the Indian eCommerce industry.

According to a report ‘E-commerce in India – Accelerating Growth’ by Price Waterhouse Coopers, the eCommerce industry is estimated to cross $21.3 billion by the end of 2015 that would be a growth of $4.9 billion in the intervening 12 months. This sun-rise industry has grown steadily from $5.3 billion in 2010 to $16.4 billion by end of 2014.

In worldwide terms, this doesn’t mean much, for the year 2014, China clocked a total sales of $2.1 trillion which composed of $1.6 trillion from B2B and $450 billion from online retail sales. To put it in a perspective, Alibaba alone sold $9 billion worth of goods on one single day during their massive online promotional “11 11” singles day.

Focusing on India, the travel/ticketing industry (ticketing for air, rail, bus, movies, events) is still the biggest segment in Indian eCommerce with 61% share followed by E-tailing (retail products like mobiles, apparels, footwear, consumer durables, laptops, home furnishings etc.) with 29%. These are followed by Indian eCommerce sectors like online financial services (insurance, mutual funds), matrimonial, classifieds and other digital commerce services (like online food ordering/delivery companies, online marketplace).

As mentioned earlier, India has a low but one of the fastest growing internet using population in the world. In absolute terms, India is just short of 36 million users to overtake the USA which has 279 million internet users. Interestingly, around 75% of these users are in the age group of 15-34 yrs, the group which tends to shop more than the other age groups. Also, with rural internet penetration fast catching up with urban areas, the Indian eCommerce market is poised for exponential growth.

One another factor driving Indian eCommerce growth is the usage of mobile/apps, some industry players claim almost 50% of orders placed are through a mobile, according to IAMAI-IMRB. This fact has been vindicated with one of the leading Indian eCommerce portal taking the “app-only” approach.

So what does the future look for Indian eCommerce? According to one estimate by e-Tailing India, Indian eCommerce market is estimated to be at “$76 bn by 2021”, but the market would undergo rapid changes in business model with “increasing innovation in the promotion, pricing, sale and even distribution channel”.

Suggested reading, “eCommerce in India – Accelerating Growth” by PwC and “Future of e-commerce: Uncovering Innovation” a joint study by Deloitte and ASSOCHAM India.

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