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With 350 mn shoppers, India’s e-tail market to clock GMV of over US$ 100 bn by 2025: Report


India’s e-retail market is geared to touch Gross Merchandise Value (GMV) of US$ 100-120 billion by 2025 with nearly 350 million shoppers logging onto digital platforms to make purchases, a report by Bain & Company said on Tuesday.

With 350 mn shoppers, India's e-tail market to clock GMV of over US$ 100 bn by 2025: Report

The report titled ‘How India shops online?’, prepared in collaboration with Flipkart, pointed out that the US$ 850 billion Indian retail market is the fourth largest in the world, but is largely unorganised.

“This market is on the cusp of a transformation, led by the emergence of e-retail and its growing influence on Indian shoppers. The e-retail industry in India has seen an upsurge in the last five years and there is significant headroom for further growth,” it said.

Online retail penetration currently is estimated to be at 3.4 percent.

Spurred by cheap, ubiquitous mobile data, growing online spends by ‘Digital Natives’ and supply-side innovations like vernacular-based user interfaces, voice and visual search, the Indian e-retail market is primed to reach nearly 300 to 350 million shoppers by FY2025, it added.

This will propel the online Gross Merchandise Value (GMV) to grow at 30 percent CAGR to USD 100-120 billion by 2025 (from US$ 30 billion in FY20), the report said, adding that fashion categories are expected to play a critical role in acquiring customers online, similar to mature markets of the US and China.

“Online shoppers in tier-II and smaller towns make up nearly half of all shoppers and contribute to three out of every five orders for leading e-retail platforms. These customers from tier-II and smaller towns buy similar categories of products as customers from metro cities or tier-I towns with only a marginal difference in average selling price,” it said.

The report noted that COVID-19 has caused an inflection in e-commerce penetration globally, driven by consumers’ need for safety and convenience, and online shopping is gaining salience in India also.

“To win the next wave of online customers, it is critical to harness a strong ecosystem which will play a much larger role in influencing purchase decisions.

“Ecosystems attract a huge customer base, which in turn attracts retailers who want easy access to a critical mass of consumers. And customers gain a one-stop shop for all their needs,” Arpan Sheth, Partner and Leader of Bain & Company’s Asia-Pacific Technology, Vector and Advanced Analytics practices, said.

The report highlighted that over the past year, consumer engagement with online platforms has increased, but a visitor spends less than nine minutes per visit on an e-retail platform.

Also, one in two visitors browses the image gallery and only one in 15 click the detailed product description, indicating that brands and sellers should invest in high quality product images and high impact summary product descriptions.

Interestingly, online shoppers browse more than 20 product pages before making a purchase. For categories like mobiles and women’s ethnic wear, consumers browse about 50-60 product pages before purchasing one.