Citing that India’s ecommerce sector is growing at the fastest pace in the world, the Competition Commission of India (CCI), in its new report, estimated that the revenue from this segment will reach $120 Bn in 2020, growing at an annual rate of 51%. In 2017, the revenue from ecommerce segment stood at $39 Bn.
‘The Market Study On Ecommerce In India’ report, which was published on Wednesday (January 8), highlighted that the growth in the ecommerce sector is fueled by the increased penetration of smartphones as well as the internet in Tier 2 and Tier 3 cities.
Additionally, the report cited that the introduction of cash of delivery as a payment method by ecommerce platforms helped in gaining the trust of users, thereby increasing the number of online orders. Other factors that helped the ecommerce industry to boom were discounts and deals offered by the marketplaces, faster deliveries, and access to a large product range, especially in Tier 2 and Tier 3 cities where choices were limited earlier.
For a particular category of goods, the report cites that the share of online distribution to offline sales varies significantly. For instance, the online sale of mobile phones accounts for around 40% of total sales in India. The report also stated that smartphones sell online more than feature phones.
On the other hand, for electronic appliances and fashion products such as apparel, shoes, accessories, the report found, ecommerce platforms perform more as a supplementary channel as brick and mortar stores are still predominant in these categories.
Highlighting that the ecommerce platforms have brought increased transparency for sellers, the report said that the majority of the retailers track competitors’ prices and adjust price levels accordingly. “While the idea of dynamic pricing strategy is not new, ecommerce has transformed the way price information is disseminated,” the report quoted.
Investors Bullish On Ecommerce Startups
One of the reasons for this significant growth of the ecommerce industry is the increasing trust of investors. According to the report, ecommerce startups received a total of $13.3 Bn in 904 funding rounds since 2009. Most funding in ecommerce startups took place in 2017, which saw a total of 124 funding round, valuing $3.5 Bn.
Moreover, the report estimates that there are around 4757 active ecommerce startups in India. Though ecommerce startups started to emerge in 2009, the report cites that 1650 startups entered the ecosystem in 2015, which is the most in a single year.
In India, ecommerce segment is largely dominated by two players — US-based Amazon and Walmart-owned Flipkart. Besides these two, other notable players in the market are Snapdeal, Paytm Mall, Shopclues, Myntra, Jabong, among others. Fascinated with India’s ecommerce growth, global consumer goods brand Procter & Gamble (P&G) has also started testing an ecommerce store in India.