India e-retail GMV to touch USD 60 bn by 2020: Report

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New Delhi | Published: May 31, 2016 10:24:53 PM

With an increasing number of Indians making purchases online, e-retailing in the country is expected to reach USD 60 billion in gross merchandising value by 2020, contributing to about 25 per cent of organised retail sales, a report said today.

With several e-commerce and online tech firms shutting their grocery verticals and a few e-grocers closing down operations in select cities, is the initial euphoria dying out for the once-hot sector?About 55 per cent of online volumes will be driven by cashless transactions by 2020 as against 40 per cent currently. Mobile wallet share is also expected to double by 2020 to reach 15 per cent from current 8 per cent.

With an increasing number of Indians making purchases online, e-retailing in the country is expected to reach USD 60 billion in gross merchandising value by 2020, contributing to about 25 per cent of organised retail sales, a report said today.

According to the report by Google and AT Kearney titled ‘Digital Retail 2020’, the total number of online shoppers is expected to grow to 175 million by 2020, with one-third customers driving two-thirds of total online shopping spends.

Value-added service will be a key differentiator and over 90 per cent of the online buyers will be willing to pay for premium value-added services, it added.

“Over 46 per cent of online buyers (interviewed) said they will be willing to pay extra charges for faster delivery; 37 per cent for hassle-free return and 35 per cent were willing to pay more for extended warranty,” the report said.

Ajay Gupta, Partner with AT Kearney, said as internet continues to grow, digital presence is paramount for brands and organised retail.

“It will influence 50 per cent of all purchase decisions, be it in discovery or comparison. Our data reveals that majority of buyers will continue to purchase online even if there are no discounts. With the right game plan and focussed efforts, the e-tailing industry will grow at a healthy CAGR of 40 per cent-plus,” he added.

The report forecast a 5-times growth in number of women shoppers by 2020 with their share of online spend more than doubling.

Besides, lifestyle (apparels and accessories) as a category is expected to overtake consumer electronics to become the largest online segment by 2020 at 35 per cent of the total online spends. Consumer electronics is expected to be at 20 per cent by 2020.

Niche categories like home (furniture and furnishing) and personal care is expected to see high adoption due to assortment and convenience of purchase, especially in tier-II cities.

About 55 per cent of online volumes will be driven by cashless transactions by 2020 as against 40 per cent currently. Mobile wallet share is also expected to double by 2020 to reach 15 per cent from current 8 per cent.

“The next 3-4 years will be critical for the industry to get on the path of sustained profitability.

“As per the report, some of the areas that will accelerate and support profitability include following a focussed approach to drive deeper engagement with 60 million high-value customers as they will drive 2/3rd of the total spends on e-tailing,” Google VP and Managing Director South East Asia and India Rajan Anandan said.

Innovative delivery models and creating omni-channel presence will help bring on board new online shoppers and help grow the overall share of e-tailing from the organised retail industry in India, he added.

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