India’s ecommerce market is set to be worth $120 billion by 2025 according to a report by GlobalData.
Analysts at GlobalData believe the country’s ecommerce space will rise at a compound annual growth rate (CAGR) of 18 per cent between now and 2025 to reach the figure.
The country’s ecommerce growth rates had fallen from 30 per cent in 2017 to just 12 per cent last year, however as economic recovery begins to show signs of speeding up, experts predict rates will rise to over 20 per cent by next year.
Many attribute the recovery to India’s rapidly rising number of Coronavirus cases, which have stumped retail sales prompting consumers to shop online.
The online purchasing of retail goods, including grocery, electronics, and healthcare has been rising as a result of the demand.
“Wary consumers prefer online channel for purchases,” the report read, with banking and payments analyst Ravi Sharma adding: “The Covid-19 pandemic fast-tracked consumers’ transition to digital payments in most markets, a trend also seen in India.
“With social distancing rules and the closure of many brick and mortar stores, shoppers have embraced online channels even for their day-to-day purchases.”
A rise in digital literacy among India’s consumers as well as a burgeoning middle class has meant that smartphone penetration, expected to rise from 42 per cent this year to 51 per cent in 2025, has supported the growth in online shopping.
At the front of a drive towards ecommerce is the country’s rising number of tech platforms looking to capitalise on new market gains.
Brands such as Walmart-backed Flipkart, India’s largest ecommerce platform and rival to Amazon, is valued at nearly $40 billion.
Cashless payment app Paytm has also been a beneficiary of the boom in consumer demand after recently filing for IPO.
Over two-thirds of the country’s ecommerce demand comes from its Tier 2 cities according to data from Unicommerce and companies have widened their digital payment options to help expand their customer bases as a result.
Flipkart company’s head of fintech and payments group Ranjith Boyanapalli added: “With pay-on-delivery technology customers have peace of mind with their payments and at the same time can shop within the safety of their homes.”
Sharma said: “The Covid-19 crisis has accelerated the digital payments shift in India and opened e-commerce to a whole new set of consumers and merchants who were not using the online channel before.
“A rising consumer preference for online shopping, proliferation of e-retailers and the emergence of new payment methods will continue to drive the growth.”