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Despite all the regulatory challenges surrounding the e-commerce sector in India, the segment is well equipped to drive the next level of Indian consumer growth this year, according to a report.
Consultancy firm Deloitte India, along with the Retailers Association of India (RAI), in a report has said that the India's e-commerce marketplace is poised to grow to $1.2 trillion by 2021 from the current market of $200 billion.
The report, titled ‘Unravelling the Indian Consumer’, said that e-commerce is currently growing at CAGR 32 per cent and would further rise on back of factors such as increasing internet penetration. It further added that mobile wallets are also a reason for the growth of the e-commerce sector. The mobile wallet transactions in the country has increased from ₹200 billion in FY16 to ₹3,000 billion in FY18.
Besides, e-commerce has changed the shopping patterns in India as the number of smartphone users have increased both in urban and rural markets.
Millennials are one of the major reasons for the growth of e-commerce. According to the report, 28 per cent millennials purchase products due to social media recommendations, and 63 per cent millennials stay updated on brands through social media.
Huge potential
Anil Talreja, Partner, Deloitte India said, “India continues to hold a strong position as far as its market potential is concerned and is on its way to becoming the third largest consumer market in the world, poised to grow close to US$ 1.2 trillion by 2021.” He added that the Indian consumer is empowered with the decision-making capability and adoption uptick going beyond the urban areas. This is further facilitated by digital technology.
Moreover, the use of innovation by way of offering experiential retail has picked up of late with the use of advanced data analytics, bots and drones, beacons, cloud-platforms, AR and VR to understand the real need of the consumer, he added.
The report further added that even though the retail industry is growing, its convergence is evident from the number of M&A deals that rose by 25per cent between 2017 and 2018.
In terms of sub-sector performance within consumer retail, the report highlights interesting insights. While the F&B and apparel, footwear and accessories space contribute a bigger share to the consumer retail pie, FMCG and automotive companies have much higher numbers for total market capitalisation when compared to the former.
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