E-commerce to reach $60-bn GMV by 2020

The estimate by Google and AT Kearney is less than that projected by Goldman Sachs last October, which pegged the e-tail segment to be valued at $69 bn

With a strong consumer base of around 175 million, Indian e-commerce could reach $60 billion in gross merchandise value (GMV) by 2020, Google and AT Kearney said in a report titled Digital Retail 2020. The estimates are less than that projected by US investment bank Goldman Sachs last October, which pegged the e-tail segment to be valued at $69 billion.

According to the report, e-tailing will become a substantial channel for the Indian organised retail sector, contributing as much as 25 per cent of the total organised retail sales by 2020. Value-added service will be a key differentiator and 90 per cent of the online buyers will be willing to pay for premium value-added services.

“Forty-six per cent of online buyers said they would 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 report stated.

“E-tailing in India is at an inflection point and will touch 175 million online buyers by 2020. The next three to four years would be critical for the sector to get on the path of sustained profitability. Innovative delivery models and creating omni-channel presence will help bring on board new online shoppers and help grow the overall share of e-tailing from the organised retail industry in India,” said Rajan Anandan, vice-president and managing director, Google SEA & India.

Among the other findings of the report is a five-fold growth in the number of women shoppers by 2020. “They are likely to spend more on lifestyle categories, namely apparel and accessories, and are looking for the latest trends and brands online. Women respondents also said they would increase online shopping if they can get more options for flexible delivery time, and more pick-up locations so that they don’t have to divulge too many personal details,” it said.

Google said the report was compiled by combining primary research of 3,000 consumers, qualitative interactions of 60-plus consumers and A T Kearney’s proprietary model predicting e-commerce spend across categories, income segments, and geographies in 2020.

It further said lifestyle, which includes apparels and accessories, 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.

According to the report, 55 per cent of online volumes will be driven by cashless transactions by 2020, as opposed to 40 per cent at present. Mobile wallet share will double to reach 15 per cent from the current eight per cent.

A report by Goldman Sachs last year had suggested that India’s overall e-commerce market was expected to breach the $100-billion mark by 2020. It had said the overall online market in the country including travel, payments and retail could reach $103 billion, of which the e-tail segment would be valued at $69 billion.