Digital commerce market may touch USD 128 billion mark by 2017: Study

Digital commerce market in India is likely to touch USD 128 billion in 2017 from the current level of USD 42 billion in 2015 due to increase in mobile and internet penetration, m-commerce sales, payment options, exciting discounts, according to the joint study by ASSOCHAM and Deloitte.

With an increasing mobile and internet penetration, m-commerce sales, advanced shipping and payment options, exciting discounts, and the push into new international markets by e-businesses are the major drivers of this unprecedented growth.

The digital commerce market in India has grown steadily from USD 4.4 billion in 2010 to USD 13.6 billion in 2014, according to a study on "Future of e-Commerce: Uncovering Innovation", jointly conducted by ASSOCHAM and Deloitte.

The M and A deals (Softbank's USD 627 million deal with Snapdeal, Flipkart acquired Myntra for USD 370 million, Ola Cabs acquired TaxiForSure for USD 200 million) and sky-rocket valuation of these e-commerce giants rising in last one year shows that the sector is heating up.

The global players like Amazon and Alibaba have deep pockets to rely on their parent companies for continuous funding support. The homegrown players would definitely need different metrics to preserve the investor confidence build in the sector.

While releasing the paper D S Rawat, Secretary General said, "The supply chain and logistics in e-commerce business are highly complex to manage in a vast country like India where infrastructure is not well-developed to reach every remote and rural area."

"The taxation policies for the e-businesses are not well-defined depending on different business models and transaction types. The complexity has further amplified with transactions happening across borders for online selling of goods and services. Moreover, e-businesses do not take sufficient steps to deploy a security solution, which is hindering the consumer rom transacting online."

The future of e-commerce is bright and growth will come from mobile platforms, personalization, social media analytics, omni-channel service, and sharing economy business models. The e-commerce industry is an exciting place with the interplay of social, mobility, analytics, cloud (SMAC), digital, 3D and, virtualization. The current high valuations, in spite of losses, perhaps, are indicative of the future potential.

The Government's ambitious 'Digital India' project that aims to offer a one-stop shop for Government services will further bolster the sector by introducing internet and broadband to remote corners of the country and increase trade. This initiative through a targeted investment of nearly $17 billion will transform India into a connected economy and also attract investment in electronics manufacturing and create millions of jobs, said Rawat.

The rapid spread of mobile internet, especially of smart phones could unlock a significant market beyond the Tier 1 cities for the online retail segment. Undoubtedly, mobile retailing is expected to continue to grow aggressively. In the next three years, global e-commerce sales made via mobile devices are expected to top USD 638 billion.

In India, online shoppers are expected to increase from 20 million in 2013 to 40 million in 2016. An additional 200 million Indians will access the internet in the next three years, with majority of them coming online through smart phones.

Around 75 percent of Indian internet users are in the age group of 15 to 34 years. This category shops more than the remaining population. Peer pressure, rising aspirations with career growth, and fashion trends encourage this segment to shop more than any other category and India. This category, therefore, clearly enjoys a demographic dividend that favors the growth of the India e-commerce sector.