Indian e-commerce market to reach $20 bn next year

Online travel constituted 71% of e-commerce market, followed by e-tailing (16%)

The e-commerce market in the country is expected to grow 37% to reach $20 billion by next year on the back of growing internet population and increased online shoppers, a report has said.

"E-commerce in India is a $11 billion market, and is estimated to reach $20 billion by 2015, growing at a CAGR of 37% over 2013-15," Motilal Oswal Securities said in its report on e-commerce.

The research firm said their are multiple enablers for this growth which include increase in the number of internet users and an increased proportion of online shoppers within those users, growth in the per-shopper transaction value and continued flow of capital by willing investors.

The report said currently online travel dominates the e-commerce market but in the future, e-tailing will drive the growth.

Online travel constituted 71% of the e-commerce market in India, followed by e-tailing (16%). Travel has grown at a CAGR of 32% over 2009-13.

"However, going forward, e-tailing will be the biggest growth driver, with expected CAGR of over 60% to $7 billion in 2016 from $1.7 billion in 2013. Within e-tailing, fashion is likely to be the driving segment," it said.

Fashion was $559 million in 2013, and estimates peg the growth in fashion e-tailing to anywhere between $3 billion and $6 billion by 2016.

The research firm said heavy discount on online sales is a direct reflection of the industry's competitive intensity.

"The amount of money raised by Flipkart, lately Snapdeal, and that committed by Amazon is all yet to be invested, indicating that we may not be anywhere near the end of round-the-clock discount seasons at online stores," it added.