India eCommerce to lead BRICs
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India – not China – is set to become the fastest growing B2C eCommerce market of the BRIC countries in the next five years.
A new publication by Germany-based secondary market research expert yStats.com India B2C eCommerce Market 2015 also reveals the main challenges faced by online retail in this country, including underdeveloped logistics and low credit card penetration.
The rapid growth of B2C eCommerce in India is driven by a combination of its vast population, increasing internet penetration and the scarcity of organised retail – especially in small towns and rural areas.
“Next year, India is predicted to top the USA to become the second largest country worldwide in terms of the number of Internet users, behind China. While China has been the leader among the BRIC markets in terms of online retail growth in the five years to 2014, during the next five-year period India is predicted to take over this position,” says the report.
Online retail in India has much room for growth. B2C eCommerce share of total retail sales was estimated at less than one per cent in 2014, while the share of internet users making purchases online was below one quarter. Another sign of immaturity is the high share of online travel in total eCommerce sales, reaching close to two-thirds according to some estimates. Furthermore, Internet penetration on the 1.3 billion population in India was relatively low in 2014, although showing an improvement from a single digit figure in 2010.
“The spread of mobile Internet is expected to especially benefit the state of connectivity in this country, while also driving mCommerce sales up,” said the report.
Apart from low Internet penetration, some major challenges faced by B2C eCommerce in India include underdeveloped logistics infrastructure and low credit card penetration. Online merchants’ profitability suffers from the necessity of accepting cash on delivery and offering free shipping.
The top three eCommerce companies in the country – Flipkart, Snapdeal and Amazon India – developed their own logistics capabilities using recently obtained investment. Other eCommerce players that benefited from investment pouring into the Indian market include marketplace operator ShopClues, online classifieds website Quikr and online accommodation booking website Oyo Rooms.
Questions & Answers
Q.Which specific challenges are currently hindering the growth of online retail in India?
Which specific challenges are currently hindering the growth of online retail in India?
Underdeveloped logistics infrastructure and low credit card penetration are significant challenges. Online merchants' profitability is affected by having to accept cash on delivery and provide free shipping.
Q.What factors are driving the predicted rapid expansion of B2C eCommerce in India?
What factors are driving the predicted rapid expansion of B2C eCommerce in India?
The rapid growth is driven by India's large population, increasing internet penetration, and the lack of organised retail, particularly in smaller towns and rural areas.
Q.How will India's internet user numbers compare globally in the near future?
How will India's internet user numbers compare globally in the near future?
Next year, India is predicted to surpass the USA to become the second largest country worldwide in terms of internet users. It will still be behind China.
Q.What indicates the current immaturity of India's online retail market?
What indicates the current immaturity of India's online retail market?
B2C eCommerce made up less than one per cent of total retail sales in 2014, and less than a quarter of internet users made online purchases. Online travel also accounts for nearly two-thirds of total eCommerce sales.
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