'India's online retail market to grow at 40-45 pc CAGR'

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SME Times News Bureau | 31 Oct, 2014
India is among the most swiftly emerging online retail market across Asia Pacific region, with the sector poised to grow at a compound annual growth rate (CAGR) of 40-45 percent during 2014-2018, according to research and consultancy firm RNCOS.

"The major reasons for this growth will include the increasing penetration of mobile internet, higher purchases of smartphones, need for ease of shopping, time, convenience, and higher mobility. Heavy discounts offered by online portals will also propel the market growth," said a the 'Indian Online Retail Industry: The War of 'Clicks' report.

The report said in the future the trend is expected to continue as the online retail market in India is estimated to touch the mark of USD 14.5 billion by 2018.

In terms of product segments, currently electronic gadgets claim the highest share followed by apparel and books, it said.

"The major trends acting as a tailwind for the industry include the increase in number of online buyers, increasing internet penetration, augmented sales of smartphones/tabs, aspirations of tier-II and tier III cities, and the ever changing consumer buying behavior. We believe, online buyers in India will cross 125-million mark by 2018 end," the report said.

As of July 2014, the leaders of the online retail space in terms of number of visitors include Flipkart-Myntra combo, closely followed by Jabong. Amazon claimed the third slot.

There are several industry players who are speculating big on the Indian online retail industry. For instance, in a recent move, Flipkart raised fresh capital of USD 1 billion in one of the largest funding rounds, while Amazon quoted that it will invest USD 2 billion in India.

The report said another trend cum driver includes the aspirations of tier 2 and tier 3 cities' young population. It was found that majority of the new online shoppers are youth of small towns and tier II and tier III cities, where broadband connectivity is still very patchy and access to personal computers is limited.

Women are also emerging as one of the fastest growing cohorts or online shoppers. Moreover, the number of home makers coming forward for online purchases is also increasing swiftly due to ease of shopping, time, convenience, and more flexibility towards online payment options.