India Development News & Foreign Investment Opportunities

ASSOCHAM sees strong growth in online shopping

Investors attracted to Indian e-commerce platforms


Investors attracted to e-commerce platforms

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More than 120 million Indian consumers are expected to shop online, clocking annualized growth of 115% in 2018 on the e-commerce platforms, making it one of the most attractive investment sectors, according to ASSOCHAM-Resurgent joint study.

As many as 108 million consumers did online shopping in 2017 even as the mobile phones are becoming the preferred choice of device for the e-commerce sales.

Online platforms are slugging it out with discounts and other attractive deals in a wide range of products from clothes, mobile phones, air-conditioners to a whole lot of consumer items, noted the report.

Some 60%-65% of online shoppers would opt for placing their orders on mobile phones from the present 40%-45%, the study projected, citing fast increasing data consumption and improvement in logistics.

As many as 89% of the consumers covered in the study are heavy users of the Internet. The study respondents were across Delhi, Mumbai, Kolkata, Bangalore, Ahmedabad, Hyderabad, Pune and other Indian cities.

In 2017, popular categories accounted for higher consumer spend online. The frequency of purchase was also higher for categories like apparels and accessories (54%), beauty & personal care (43%) products in comparison to electronics (33%).

“Since the base is still quite low, there is a huge scope for growth year on year for quite some time. With improvement in logistics and more and more delivery channels, the online shopping is bound to grow,” said ASSOCHAM Secretary General D S Rawat.

“No wonder, a huge amount of foreign investment is coming in the sector. It has become a multi-billion investment business. Investment in back end delivery channels, brand building, consumer research and building trade partners would be the key drivers,” he said.

Online ticket buyers were also seen to be more comfortable with the use of debit cards (23%), credit card (17%) and cash on delivery (58%). For regular internet users – cash on delivery was the most preferred mode of payment (74%), followed by debit card (18%) and credit card (5%), the study pointed out.

In terms of motivators to shop online, the consumers’ highlighted cash back guarantee as the number one benefit, ability to give cash on delivery, fast delivery, great deals and access to branded products.

The consumers also highlighted some barriers that deter them from shopping online – the number one factor was inability to touch and try the goods before purchase, fear of faulty products, fear of posting their personal and financial details online and the inability to bargain were cited among the other reasons.

Online apparel sales continue to capture a greater share of Indian retail e-commerce as a category along with the computer and consumer electronics sector, fuelling the overall market growth.

There is a surge in the number of people shopping on mobile across India with tier II and III cities displaying increased dominance. In fact, 50% of our traffic is coming from mobile and a majority of them are first time customers, added the paper.

The year 2018 will see large scale growth in the Indian e-commerce sector with increased participation from people across the country. This industry will continue to drive more employment opportunities and contribute towards creating more entrepreneurs through the e-commerce marketplace model, noted the study.

Top reasons given by shoppers in buying through Internet:
· Good discounts/lower prices;
· Saves time and efforts;
· Convenience of shopping at home;
· Wide variety/range of products are available;
· Get detailed information of the product;
· You can compare various models/brands;
· An insight into some of the problems stated by customers.

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