The Indian e-commerce industry is expected to cross the $100-billion mark in value by 2019, growing at a CAGR of 35 percent over the next five years, said a Assocham-PwC study.
In 2014, the sector attracted the attention of investors, including top global firms and leading Indian industry leaders like Azim Premji and Ratan Tata and brands such as Flipkart and Snapdeal are growing over global players like Amazon and e-Bay.
The country's E-commerce industry is valued at $17 billion at present. According to the study titled: 'Evolution of e-commerce in India - Creating the bricks behind the clicks', the online commerce sector is likely to see a 67 percent increase in the average annual spending on online purchases per person in 2015, to Rs 10,000 from Rs 6,000 in 2014.
The growth driversAccording to the study, with improvement in infrastructure such as logistics, broadband and internet-ready devices, the number of consumers making purchases online will significantly increase. By 2015, the report estimates around 65 million consumers in India to buy online, as against 40 million in 2014, adding that 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.
Other factors contributing to the growth of e-commerce include aggressive merchandising and discounting from flash sales and daily deals, more online loyalty programmes and increasing popularity of smartphones and tablet computers among consumers, the study added.
The steady growth in the number of web shoppers also is helping to boost e-commerce sales. "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", said the report, stating that for many it is also a matter of convenience as they need not travel all the way to the marketplace, thereby avoiding traffic and other commuting hassles and expenses.
Among popular shopping categories, the study showed that apparel sales are the most popular, and grabbed 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.
"The smartphone and tablet shoppers will be strong growth drivers. Mobile phones already account for 11% of e-commerce sales, and their share will jump to 25% by 2017," Assocham secretary general DS Rawat said. Computer and consumer electronics, along with apparel and accessories, account for the bulk of Indiaâ€™s retail ecommerce sales.
In 2015, computer and consumer electronics and apparel and accessories are together estimated to account for 42 percent of total retail e-commerce sales, as against 39 percent now, it said.
Travel and tourism are also fast growing segments with as much as 75 percent 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 percent of the revenue on warehousing and sortation centers, which would translate to $450-900 million.
The industry is expected to spend an additional $500 million to $1 billion on logistics functions, leading to a cumulative spend of $950 million to $1.9 billion till 2017-20.
Currently, over 25,000 people are employed in e-retailing warehousing and logistics. It is estimated that there will be an additional employment of close to 1,00,000 people in these two functions alone by 2017-20, the study said.