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Online shopping is one of the most popular ways to make purchases but not everyone is comfortable doing so. In developed countries, like U.S., retail stores are setting-up online platforms (daily) in order to remain competitive as consumers gravitate towards the speed and convenience of online shopping. If reports are to be believed, India’s online shopping tendencies appear to have come of age. With only 3% of its population shopping online, the country does not compare to table-topping USA who has 10% of shoppers buying goods and services. However, there is some encouragement as the people using internet for shopping in India has been increasing by more than 80% every year. In fact, according to a study by Motilal Oswal Securities, Indian online shopping will grow immensely by the year 2020. The study states that the total online shopping value in India will jump to $45 billion from its present $5 billion. Experts say that online shopping in India is catching on fast. This is not just in the bigger cities but also in the smaller ones. Google estimates that India has the third biggest internet users behind USA and China and it thus represents a big opportunity for online shopping. With such a huge market size, companies, which range from retail shops all the way to consumer goods, are going into the web to expand. Even established traditional retailers like Westside and Shoppers Stop are turning to the internet for growth.

   
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Driver of online shopping in IndiaDriver of online shopping in India

The explosive growth that is expected in the Indian online shopping industry is driven by a rise in the number of people using internet, growth in the value of online transaction per shopper, and also the increased flow of capital by investors, which arms companies with money to attract consumers online, according to the report by Motilal Oswal Securities. According to estimates, 5 million internet users were added to 213 million that the country had in 2013. This is driven the rapid growth seen in smartphone ownership.

Other things that spur online shopping in India are the convenience it gives users, availability 24 hours and the fact that many consumers have internet access not only at work but also in their homes.

What dominates online shopping in India?What dominates online shopping in India?

At the moment travel tops online shopping in India. The report by Motilal Oswal Securities states that travel has a compound annual growth rate of 32%. However, it further states that moving forward, it is e-retailers who will drive growth. It predicts the CAGR of e-retailers to hit 60% by 2016. This will be equivalent to $7 billion compared to $1.7 billion in 2013. Within the segment of e-retailing, the report says that fashion would be the driving sector. In 2013, it stood at $559 million and will be in the range of $3 billion -$6 billion by the year 2016.

The expected surge in the Indian online shopping sector has seen general retail chains upgrade sites for ecommerce. They want to make their sites more convenient for consumers to place purchase orders online. EBay says that online shoppers in India are brand-savvy, and this is true even when they shop online. It found brands like Sony, Apple, Samsung and Nokia topping Indian online buyers’ charts.

Problems facing Indian EcommerceProblems facing Indian Ecommerce

Despite having one of the largest populations in the world, India does not compete favorably with other countries like China and the US. The biggest deterrents to online shopping in India remain poor internet connectivity and poor speeds. Over 1 billion people still don’t have access to the Internet and even those who have, majority of them are discouraged by the infinitely slow speeds of connection. With an average speed of only 2 megabytes per second, India is ranked at position 116 in the world with regard to internet access.

Of the people with internet access, only 69% of them have broadband connectivity. As it stands, this is the single-biggest drawback to internet shopping in India. If the government can play its part and increase internet connectivity and speeds, India will soon be a force to reckon with in terms of internet shopping.

Challenges of Online Shopping in IndiaChallenges of Online Shopping in India

Slow Change in Buying Behavior of Consumers: Most Indians still prefer the traditional brick and mortar stores and are reluctant to buy online. They still like to have a feel of the product and spend time examining what they are purchasing.

Varying Confidence in quality of products: Lack of the ability to try a product before buying is a major hindrance for some internet users and the fact that products delivered in some situations sometimes differ from that displayed on the website.

Issues concerning security and online fraud: Indians are still very skeptical about online shopping because of the fear of insecurity of their financial transactions and personal details. The online retail platforms must build trust and must have certificates that guarantees them as reliable and secure platforms. Cash on delivery is the most preferred payment method in India even for those who shop online.

Lack of Awareness: Even though, internet access penetration is increasing rapidly, most Indians are unaware of the availability and ease of online shopping.

As you can see, India has a great potential for growth in its internet shopping industry. Although total online shopping value currently stands under $5 billion, experts are very optimistic that this figure will grow 11 times by the year 2020, hitting the $45 billion mark. This will be driven by increased internet users and connectivity. Other things include convenience of internet shopping, huge deals and 24-hour availability. Also, more money being pumped into the sector by investors is being used by companies to attract online shoppers. This will pay off and also increase online sales in India.


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