Monday, November 24, 2014

Online Retail in India to Grow 11 Times in Next Four Years

Call it e-tail or online retail, it is all set to see 11 fold growth in next four years. According to various market reports, at present, the size of e-tail in India is estimated to be around $1.6 billion (around Rs.9,900/- crores) which is expected to swell to over $17.6 billion (about Rs1.08 lakh crores wherein a $ = Rs.61.67/-), by the end of 2018.

Online shopping is not new to India as e-commerce companies existed even before the dot com bubble got burst in year 2000. But it was much before the time as India did not have much Internet penetration. In last five years, the internet penetration has seen steep growth from less than 40 million (4 crores) to over 200 million (over 20 crores) net users at present.

Of the total population of the country, it is estimated that currently 16% of that is accessing internet, that used to be less than 4% until 2007. Now, it is expected that the number of internet users in India will grow by 2.5 times in next four years. India is likely to see that almost one third population of the country will be accessing the internet. Number of net users are expected to grow to 500 million (around 50 crores).

This 2.5 times growth in internet subscribers in four years is likely to lead the growth of e-tail size in India by 11 times. At this moment, of the total number of internet users, up to 70 million (7 crores) are estimated to have access to faster data downloading speed. As the next generation of mobile technology, 4G is expected to expand its penetration in India by mid-2015, the number of people using fast data downloading speed will increase to over 150 million (15 crores) in next two to four years.

As per market reports, Indians spend majority of their time on news, information, sports and retail portals. Time spent on online retail is still lowest. Computers and electronics contribute maximum in the online retail subcategories, followed by apparels, books and consumer electronics.

The total size of e-commerce  in India is estimated to be over $11 billion (around Rs. 68,000/- crores), of which e-tail contributes about 15%. Travel has the maximum share of over 70%, while e-tail is second largest in the category. The remaining 15% share is shared between financial services, classified and others.

Source: IAMAI-IMRB, Elara Capital & Other Industry Reports