The Indian e-commerce market is set to overtake the US and become the second largest in the world in less than two decades, going head-to-head with China for the position of biggest e-commerce market; this according to new research from Worldpay, the leader in global payments.
For its Global Payments Report 2016, Worldpay analysed 30 markets around the world, including India, China, Hong Kong, Malaysia, Taiwan, South Korea, Singapore and Australia in Asia-Pacific. The Global Payments Report is an annual Worldpay report compiled using a combination of Worldpay's data and insights, external findings from Euromonitor, Datamonitor andystats.com and secondary data from other independent sources.
This year, Worldpay's research has discovered increasing complexity in the global payments market and found that e-commerce is expected to grow exponentially. This growth will occur around the world, but emerging markets are leading the charge particularly India, where e-commerce is predicted to mature by 28 per cent per year from 2016 to 2020. According to Worldpay projections, India will be the world's second largest e-commerce market by 2034, thanks to massive surges in internet penetration, a swelling millennial population and the rising uptake of mobile phones.
"Our research has uncovered a number of trends that point to India's potential for astounding e-commerce growth in the next two decades. The market is predicted to reach $63.7 billion by 2020 and overtake the US by 2034. This enormous development will, in turn, open up enormous opportunities for companies who sell online. However, it is essential that merchants stake their claim today in order to win over India's commerce-hungry population and capitalise on future e-commerce growth. Leading companies such as Amazon and Alibaba are already making their move, indicating clear incentive for merchants to gain their foothold within India's budding e-commerce market as soon as possible," said Vice Chairman Worldpay, Ron Kalifa.
Much of India's e-commerce growth will be the result of rising internet penetration. Roughly 350 million Indian citizens are already online, according to Worldpay's research and that number is expected to nearly double to 600 million by 2020. Google's 'Next Billion Users' team estimate that three Indians are coming online every second.
As India continues to invest in new technical infrastructure such as the National Optical Network, originally scheduled for completion in 2013 and now undergoing trial roll-outs millions of Indian consumers will get wider access to fast internet.
Another major factor driving e-commerce growth in India is the country's huge uptake of mobile phones. India is the world's biggest consumer of mobile phones, with the price of data plans running two times cheaper than in China and three times cheaper than in the United States. As the country's middle-class switches over to 3G and 4G networks, both offered at affordable prices, India is expected to see more mobile shopping, especially amongst millennials. Young people shopping via smartphones are already responsible for sharp increases in India's online spend; and with70 per cent of the population below the age of 35, millennials are expected to continue driving rapid digitisation even further.
To position their business for future success, merchants must recognise not only India's enormous potential for e-commerce growth but also its unique payment preferences. Transfers and cash currently dominate the online payment landscape, with 27 per cent of the market preferring bank transfers, followed by cash on delivery at 22 per cent. However, as the country's payment infrastructure develops, new methods are expected to rise in popularity. E-wallets, the most popular payment method worldwide, are slated for rapid growth in India. Although just eight per cent of India's online shoppers use an e-wallet today, the country's mobile wallet market is projected to reach $5.1 billion in 2020, according to Worldpay.
"Our research shows that at the moment, a stunning 75 per cent of India's population doesn't have a way to pay online. However, as more Indians get access to the internet and bank accounts, they will, in turn, develop confidence in buying online at which point we can expect to see a decline in cash on delivery, accompanied by a rise in new, alternative payment methods such as e-wallets. In this rapidly changing payment market, merchants must adopt the right payment technology and work with experienced payment partners in order to keep up with the demands of India's fast-expanding population of online and mobile shoppers," added Kalifa.