2014 will go down as the year of e-commerce, firing the aspiration of the Indian youth and middle class while the coming year will be even more promising both for the consumer as also the entrepreneurs, with average annual spending on online purchases projected to increase by 67 percent to Rs 10,000 from Rs 6,000 per person, according to an ASSOCHAM-PwC study.
In 2014, about 40 million consumers purchased something online and number is expected to grow to 65 million by 2015 with better infrastructure in terms of logistics, broadband and Internet-ready devices will be fuelling the demand in e-Commerce.
The sector attracted the attention of investors, who included top global firms and leading industry leaders like Azim Premji and Ratan Tata. The brands like Flipkart and Snapdeal are enjoying edge over the global players like Amazon, adds the study.
Online apparel sales continue to capture a greater share of India retail ecommerce sales, as the category, along with the computer and consumer electronics sector, help fuel overall market growth. E-commerce industry, valued at $17 billion, growing at an compound annual growth rate of about 35 percent each year and will cross $100 billion in the next five years, noted the ASSOCHAM-PwC study.
The smartphone and tablet shoppers will be strong growth drivers, said DS Rawat, secretary general of ASSOCHAM while releasing the study. Mobile already accounts for 11 percent of ecommerce sales, and its share will jump to 25 percent by 2017.
Computer and consumer electronics, as well as apparel and accessories, account for the bulk of India retail ecommerce sales, will contribute 42 percent of total retail ecommerce sales in 2015 from the current level of 39 percent, further highlighted the ASSOCHAM-PwC study.
With nearly one-third of internet users already making purchases online, the ecommerce growth will rely more on increased spending from existing buyers than first-time online buyers. The paper said, online shoppers and buyers starting with a base age of 18 are become more involved with ecommerce in their early teens.
The steady growth in the number of web shoppers also is helping to boost e-commerce sales. Many consumers will prefer the web to bricks-and-mortar retailers in large part because of online deals, about 52 percent of shoppers said they made purchases online rather than in stores because online retailers offered better deals, adds the paper.
Other factors contributing to the growth of e-commerce include aggressive merchandising and discounting from flash sale and daily deal, more online loyalty programs and increasing popularity of smartphones and tablet computers among consumers which leads them to spend more on online shopping.
Online shoppers are also now finding it easier to shop than ever before due to improvements in mobile and tablet shopping capabilities, according to the ASSOCHAM earlier survey. “In 2015, Mobile commerce will become more important as most of the companies are shifting to m-commerce,” adds Rawat.
India’s travel and tourism are second fastest growing travel and tourism industry in the world. 75 percent of total travel related business has migrated to e-commerce. The main businesses are online air ticket booking, train ticket, bus ticket, hotel booking, tour packages and movie booking. Among this online air ticket booking contribute the major part, adds paper.
Industry estimates that the total spend on warehousing and sortation centers could be as high as 3 to 6 percent of top-line revenues, which represents an cumulative spend of over 450 to 900 million USD of spend in warehousing till 2017-2020. The industry is expected to spend an additional 500 to 1000 million USD in the same period on logistics functions, leading to a cumulative spend of 950 to 1900 million USD till 2017-2020, further highlighted the joint study.
It is also estimated that currently over 25,000 people are employed in e-retailing warehousing and logistics. Even with efficiency improvements in individual performance and productivity (IPPs) in the delivery networks, it is estimated that there will be an additional employment of close to 1,00,000 people in these two functions alone by 2017-2020, representing an increase in employment.