RedSeer Consulting, a research based advisory firm focused on achieving excellence in emerging markets, makes striking revelations on E-tailing industry.
Indian E-tailing industry is experiencing a slowdown in terms of growth, depicts its latest report. After witnessing a steady growth in the four quarters of the calendar year 2015, the numbers of the first two quarters in 2016 are suggesting a decreasing trend. The report suggests a dip of 19% in the first quarter and a dip of 5-10% in the second quarter this year.
However, reassuring the e-tailing industry players, Mr. Anil Kumar, Founder, RedSeer Consulting commented, “Despite the descent noticed in the growth graph, the industry players in e-tailing need not loose heart. The industry that is pegged at 13 billion currently is expected to touch 80-100 Billion by the year 2020. The Indian e-tailing market is still evolving and the evolution is driven by the increasing internet and smartphone penetration, especially in Tier 2+ cities, apart from the growing disposal income and increasing comfort with online shopping across categories.”
The report further reveals that the growing number of online shoppers will be one of the key growth drivers. With 23 Million online shoppers at present, the number is anticipated to touch a 100 million by the year 2020. The average order of 1.5 per person valued at 33 USD, the transactions per person is projected to reach 1.9 with an increased value of 36 USD.
The study also reports that not only will the growth of the industry be fed by the increasing number of online population (370 million to 600 Million), but also by the increasing number of online shopping population (5.7% to 16%) by 2020. It further highlights the barriers to shopping online such as - not easy to Shop online (39%), slow speed of Internet (29%), lack of compatible device (28%) lack of reliability of delivery (26%), online transactions are not safe (23), high price (15%) and unavailability of products/service on time (9%). However the report concludes that while some of the threats would moderately continue impacting the growth, a maximum number of aforementioned threats would be almost negligible in the future. As barriers to online shopping fall by 2020, penetration of online shopping amongst online population will likely triple from 5.7% in 2015 to 15% in 2020.
The industry which is at present dominated by electronics that contributes over 73% to the overall market. Going forward, the strongest growth is expected to be recorded by fashion category with 36% contribution to the e-tailing market in 2020 from 20% in 2015.
However, in to order achieve the aforementioned growth; the report suggests that E-tailers will have to expand beyond their current core customer segments to achieve steep growth. Furthermore, the report also recommends certain must - do’s for the industry players viz. increase the comfort of Tier 2 city shoppers with e-commerce, deepen the understanding of customers with respect to their actual shopping needs, localization of advertising campaigns and move away from generalization and lastly continue to invest in reliable and fast delivery.
Concluding the study on a constructive and positive note, the report depicts that 230 million+ new people will come online between 2015 and 2020 and that E-tailers need to have a clear strategy to induce this population to shop online.
