Online shopping has become a way of life for a number of Indians and the total number of online shoppers is estimated to grow 3.5 times to touch 175 million by 2020, from 50 million in 2015. E-tailing will drive 25 per cent of the total organised retail sales of $240 billion in India by 2020 and will reach $60 billion in gross merchandising value.

These are findings of a report entitled ‘Digital Retail 2020’ by Google and AT Kearney, which was released in the city on Tuesday.

‘High-value’customers The report reveals that, of the 175 million online shoppers in 2020, the top 60 million ‘high-value’ customers will contribute to 68 per cent of total spend. Customers from higher income classes who live in Metros and Tier-I cities are more likely to be high value and will account for a similar share of spend.

Value-added services will be a key differentiator and over 90 per cent of online buyers will be willing to pay for premium value-added services; over 46 per cent 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 country will see a 5x growth in the number of women shoppers by 2020 when they will more than double their share of online spend.

They are likely to spend more on lifestyle categories, such as apparel and accessories, and look for the latest trends and brands online. Women respondents said they would increase their spends of online shopping if they get more options for flexible delivery time, more pick-up locations, so that they don’t have to divulge too many personal details.

Lifestyle (apparel and accessories) as a category will overtake consumer electronics to become the largest online category by 2020 at 35 per cent of the total online spends. Consumer electronics will be at 20 per cent by 2020. The report highlights that new buyers will more likely start their online purchase journey with lifestyle, followed by consumer electronics and existing buyers will spend more on lifestyle driven by availability of latest designs.

Niche categories such as home (furniture and furnishing) and personal care will see high adoption due to assortment and convenience of purchase, especially in Tier II + cities. Omni-channel presence will become key in home and furnishings, lifestyle and consumer electronics category to serve the need-gap of non-buyers. “The e-tailing industry in India is at an inflection point and will touch 175 million online buyers by 2020. The next 3-4 years will be critical for the industry to get on the path of sustained profitability from the earlier focus on unconstrained growth,” said Rajan Anandan, vice-president and Managing Director, Google SEA and India.

By 2020, 55 per cent of online volumes will be driven by cashless transactions as opposed to 40 per cent today. Mobile wallet share will double by 2020 to reach 15 per cent from current 8 per cent.

The base of online sellers will need to grow by 5x to cater to the increase in demand from users across geographies and improve delivery capabilities.

Continuous growth Ajay Gupta, Partner with AT Kearney highlighted, “As the 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 consumers will continue to buy online even if there are no discounts. With the right game plan, the e-tailing industry will grow at a healthy CAGR of over 40 per cent.”

The report was compiled by combining primary research of over 3,000 consumers, qualitative interactions of over 60-plus consumers and AT Kearney’s proprietary model predicting e-commerce spend across categories, income segments and geographies in 2020. Respondents comprised 1,380 online buyers, 1,380 non-buyers, sellers, non-internet users across 20 cities in India including Metros and Tier-I, II and III cities.

Related Topics
comment COMMENT NOW