Key Trends in Indian E-commerce Industry

E-commerce is the sunrise industry at the moment ,a darling of consumers as wells as VCs who are pumping millions and billions of dollars in the industry. With the entry of Amazon in India last year , the competitive intensity in the industry is increasing and many interesting battles are expected in coming future . It will be interesting to see how the industry shapes up in the times to come. Presenting few of the insights just to recapture the growth story of Indian E-commerce (excluding travel , ticketing and food ordering) -

1- Online Physical Goods in India is expected to grow 4X revenue driven by 2X growth in consumers

Online shopping of physical goods in India is expected to grow from $2Bn in 2013 to $8.5Bn in 2016 driven by increase in online shoppers from 20 million in 2013 to 40 million in 2016. Increase in online shoppers is expected to be driven by penetration of smartphones and lower data charges on technologies such as 3G and introduction of newer technologies of 4G.

Source : Accel Partners report on E-commerce -2014

2- Increase in Average order Value year on year

Increase in Average Order Value is driven by penetration of categories such as Jewellery , Home Decor etc.and increase trust of users on online shopping as a channel

3- Mobile Shopping is experiencing tremendous growth

According to a report by Internet and Mobile Association of India (IAMAI) and IMRB, India is expected to have close to 165 million mobile Internet users by March 2014, up from 87.1 million in December 2012 as more people are accessing the web through mobile devices and dongles.

Mobile Traffic in India is expected to outgrow Desktop Traffic

According to Shop Visible ,overall mobile devices were responsible for 30 percent of traffic in E-commerce but only 15 percent of online orders in 2013. And, if you consider tablets to be more like PCs than smartphones (as Google does), then “mobile” orders were only 4 percent of the total

E-commerce Traffic and Orders by Device

As suggested by the data below, conversion rates for smartphones are much lower than PCs, though mobile ad CTRs and other engagement metrics are often considerably higher. This is well established in multiple studies and data sets.

One of the major reason that online smartphone purchases are much lower than their traffic is the cumbersome nature of the mobile checkout experience .

In addition, most people shopping on smartphones are either “on the go” (and will buy in stores offline) or they’re “higher up in the funnel” conducting research that may not lead immediately to a purchase.

This is expected to improve over time with companies focusing on Mobile Websites and building apps to enhance customer experience.

4- More growth potential in Tier 2 and Tier 3 compared to Metros

With rising Internet penetration and adoption of mobile devices across the country, companies selling products and services through websites are looking at smaller cities for expanding business.The Key Growth Drivers are convenience of shopping online and access to the best international brands.

According to eBay Census 2011, a study on the Indian e-commerce landscape released last year, as many as 3,311 Indian cities shopped online between July 1, 2010, and June 30, 2011. Of this, over 1,267 were non-metro cities.

"Metros have a dominant share of purchases, with Tier 2 and 3 cities catching up fast. Metros contributed 51 per cent of all e-commerce transactions, while Tier 2 and 3 cities contributed about 40 per cent and rural India 9 per cent," the survey said.

5- New Shoppers will come from 40M + Gen Y FB users

Potentially 40M shoppers between ages of 19 – 24 years, will start spending money online.These shoppers also have a propensity to spend more money than Gen-X shopper Generation Y They prefer to stay at home, play video or computer games, chat online and Shop online . Convenience is a huge factor for Gen Y sopping online as it integrates well with their preference of staying home and being connected all the time

If you are looking to understand details on these trends , I suggest you read the reports below-

1- The IBEF( Indian Brand Equity Foundation )Report on E-commerce in India

2- Ernst & Young - Rebirth of E-commerce in India

Will be happy to get a feedback on this article and let me know if there are topics that interests you.

Cheers ,

Always Positive

6th May 2014