The Indian e-commerce industry is likely to clock a compounded annual growth rate (CAGR) of 35 per cent and cross the $100-billion mark in value over the next five years, a study conducted by Associated Chambers of Commerce and Industry of India (Assocham) along with PricewaterhouseCoopers (PwC) has said. According to the study, the Indian e-commerce industry is valued at $17 billion now.
Continuing on the strong growth momentum of 2014, the e-commerce industry is estimated to see a 67 per cent increase in the average annual spending on online purchases per individual in 2015, to Rs 10,000 from Rs 6,000 in 2014, the study said.
Additionally, with improvement in infrastructure such as logistics, broadband and internet-ready devices, there is likely to be a significant increase in the number of consumers making purchases online, the study said. It estimates around 65 million consumers in India to buy online in 2015, as against around 40 million in 2014.
“With nearly one-third of internet users already making purchases online, the e-commerce growth will rely more on increased spending from existing buyers than first-time online buyers,” the study titled 'Evolution of e-commerce in India - Creating the bricks behind the clicks' said.
While there have been concerns over steep discounting by e-tailers, the study said, these flash sales and daily deals have played a major role in contributing to the growth of e-commerce. The increasing adoption of smartphones and tablet consumers has also aided to the e-commerce growth.
“The steady growth in the number of web shoppers also is helping to boost e-commerce sales,” the report said. “Many consumers will prefer the web to bricks-and-mortar retailers in large part because of online deals, about 52 per cent of shoppers said they made purchases online rather than in stores because online retailers offered better deals.”
Among popular shopping categories, the study showed that apparel sales capture the biggest share of Indian e-commerce retail, along with computer and consumer electronics. The two categories are likely to continue fueling the market in the future as well.In 2015, computer and consumer electronics and apparel and accessories are together estimated to account for 42 per cent of total retail e-commerce sales, as against 39 per cent now, it said.
Travel and tourism are also fast growing segments with as much as 75 per cent of the total industry having migrated to online commerce. Among other things, a major portion of services such as air, train, bus, movie ticket bookings, hotel reservation and tour packages have moved to the internet.
The report added that between 2017 and 2020, the e-commerce industry could spend around 2-6 per cent of the revenue on warehousing and sortation centers, which would translate to $450-900 million.
“The industry is expected to spend an additional $500-1,000 million in the same period on logistics functions, leading to a cumulative spend of $950-1,900 million till 2017-2020,” the study said.
On the employment front, the report estimated the e-commerce industry to employ an additional 100,000 people in warehousing and logistics, over the around 25,000 persons working in the segment currently.