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.
Driver 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
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.
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
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.
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
Challenges of Online Shopping in India
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.
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
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