Online retailing set for growth in India

Online retailing or e-tailing will become a substantial channel for the organised retail sector in India, contributing as much as 25% of the total organised retail sales in by 2020, and is predicted to touch $60 billion in gross merchandising value, states the ‘Digital Retail 2020’ report by AT Kearney and Google.

The total number of online shoppers will grow to 175 million by 2020; one-third of customers will drive two-third of total online shopping spends. Value added service will be a key differentiator with over 90% of the online buyers expected to be willing to pay for premium value added services. More than 46% of online buyers said that they will be willing to pay extra charges for faster delivery; 37% for hassle-free return and 35% for extended warranty.

Speaking about the key findings of the report, said, “The e-tailing industry in India is at an inflection point and will touch the 175-million mark of online buyers by 2020. However, the next three-to-four years will be critical for the industry to get on the path of sustained profitability,” says Rajan Anandan, VP & managing director, Google SEA & India.

“Some of the areas that will accelerate and support profitability include following a focused approach to drive deeper engagement with 60 million high value customers as they will drive two-thirds of the total spends on e-tailing. 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 adds.

“As the internet continues to grow, digital presence is paramount for brands and organised retail. It will influence 50% 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 focused efforts the Indian e-tailing industry will grow at a healthy CAGR of over 40%,” states Ajay Gupta, partner with AT Kearney.

Some of the other findings of the report include five times growth in number of women shoppers by 2020 and women currently shopping online will more than double their share of online spend. They are likely to spend more on lifestyle categories, apparel and accessories, and are looking for the latest trends and brands online. They will increase their spends of online shopping if they can get more options for flexible delivery time and more pick-up locations so that they don’t have to divulge too many personal details.

Lifestyle, including apparels and accessories, as a category will overtake consumer electronics to become the largest online category by 2020 at 35% of the total online spends. Consumer electronics will be at 20% by 2020. New buyers will more likely start their online purchase journey with lifestyle followed by consumer electronics, while existing buyers will spend more on lifestyle driven by availability of latest designs. Niche categories like home, including furniture and furnishing, and personal care will see high adoption due to assortment and convenience of purchase especially in tier two cities.

Omnichannel presence will become very important in home, lifestyle and consumer electronics categories. In home and furnishing over 60% buyers look for physical stores to be able to see and test the product before buying. In lifestyle, 40% respondents said that offline stories will help in alterations of clothes and for consumer durables 60% buyers wanted salesman guidance for installing and using the product.

By 2020, 55% of online volumes will be driven by cashless transactions compared to under-40% at present. Mobile wallet share will double by 2020, reaching 15% from current 8%. The base of online sellers will have to grow over five times improving delivery capabilities as consumer demand rises.