India’s E-Commerce Market: Trends and Forecast

E-commerce has unleashed a revolution and this thriving business is poised for robust growth in the years ahead. With 150 million Internet users, India now boasts of the 3rd largest Internet population in the world, only after China at 575m and the US at 275m. A large section of this population is logging in to discounted fashion brand retailers and specialised online stores to satiate their lifestyle shopping needs. Although the transition from traditional purchasing to online purchasing took a long time, e-commerce has now turned into the second largest website category (according to an analysis of 200 domains for the 2012 Opera Software State of the Mobile Web report). An aggressive marketing campaign by these portals and ease of transacting online seems to have provided the much-needed impetus to these e-commerce companies. The same report reveals the top e-commerce sites in India are Quikr, Amazon, Flipkart, Alibaba and Snapdeal. Multi-product e-commerce portals that provide goods and services in a variety of categories including Books and magazines, computers and peripherals, vehicles, software, consumer electronics, household appliances, jewellery, audio/video, entertainment, goods, gift articles are the most popular.

Metros are E-commerce Hubs

According to a study of 100,000 transactions on Shopclues.com (another player in the ecommerce segment) during October-November 2012, Delhi-NCR, Bangalore, Chennai, Hyderabad, and Mumbai topped the list of top 10 cities for e-commerce in India. Patiala, Bhatinda, Faizabad and Panipat were ranked among the top 10 emerging cities for e-commerce.

Investors Not Wary of Investing in E-commerce

According to estimates, investors pumped in over $450 m into Indian e-commerce in 2011. Shopclues has also estimated that e-Commerce will touch $900 million in gross revenue by the end of 2013. With Ambareesh Murty, erstwhile E-bay executive using a seed fund of $5 m to launch lifestyle-products website,Pepperfry.com, Myntra tapping investors for $40 m since 2007, Snapdeal’s backers ushering in $52 m, and Amazon debuted in India through product-comparison site, Junglee.com – it looks like e-commerce has truly come of its age in India.

Future of E-commerce in India

The number of new entrants into the e-commerce arena is rising and it won’t be long before retailers begin switching to the online medium. A recent pan India report released by Com Score Inc revealed that online shopping in India has touched a growth rate of 18 per cent in 2011 and is looking at higher rates in the years ahead. Forrester, a leading global research and advisory firm in its report titled “Asia Pacific Online Retail Forecast, 2011 To 2016,” has stated that the e-commerce market in India is set to grow the fastest within the Asia-Pacific Region. At a Compound Annual Growth Rate (CAGR) of over 57% between 2012-16, this industry seems to be flourishing on the back of growing disposable incomes and an internet-savvy population. The future of e-commerce industry in India is promising, fuelled by the rising number of Internet users especially among bargain-hunting middle class. It is only going to witness an upward trajectory and technological advancements including 3G and 4G wireless communication would be a catalyst in its growth leading more and more users to buy products online, frequently. It has also been observed that social media is accelerating e-commerce adoption, allowing users a chance to engage with brands.