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E-commerce in India

E-commerce

Internet access
As of December 2017, India had an estimated 481 million internet users, 11.3% more than the previous year. While internet penetration in urban India is at 64.84% (up from 60.6% in 2016), in rural areas internet penetration has grown only a little - from 18% in 2016 to 20.2% in 2017. Delhi, Mumbai and Kolkata are the cities with the highest penetration. Online communication remained the top activity among urban users, whereas in rural areas entertainment is the most common reason for browsing the internet. The majority of internet users in India are male, with women estimated to represent only about 30% of total users. According to data released by the Telecom Regulatory Authority of India (TRAI), India’s mobile phone subscriber base has reached the one billion users mark, with a smartphone user base of over 300 million. India has topped the U.S. to become the second largest market for smartphones after China. Google is by far the most common search engine, with a market share of 97.6%, followed by Bing (1.4%) and Yahoo (0.9%).
E-commerce market
Indian e-commerce is growing at an annual rate of 51%, the highest in the world, and is expected to jump from US$ 30 billion in 2016 to US$ 120 billion in 2020. According to a Morgan Stanley report, India’s e-commerce market will be worth US$ 200 billion by 2026. As per industry body NASSCOM's latest estimates, India's e-commerce market was worth US$ 33 billion in the financial year 2017. India’s e-commerce sector is highly competitive, as it sees the presence of international marketplace players like Amazon, eBay, Alibaba and others competing alongside the domestic marketplace operators such as Flipkart, Snapdeal, TataCliq. Since 2014, the Government of India has announced various initiatives to propel e-commerce and internet usage in general, namely, Digital India, Make in India, Start-up India, Skill India and Innovation Fund. Technology enabled innovations like digital payments, hyper-local logistics, analytics driven customer engagement and digital advertisements will likely support the growth in the sector. Cross-border B2C e-commerce is growing fast, with automotive, baby supplies, toys, clothing, footwear, wearables and accessories, jewelry, watches, cosmetics, health products and digital entertainment and educational services being the leading product categories for international purchases. The major challenges restricting growth of cross-border e-commerce are high shipping costs, import duties and complexities in returns and exchanges. The Indian B2B eCommerce market is also expected to grow, reaching US$ 700 billion by 2020. In order to exploit the huge potential in the B2B e-commerce market in India, leading B2B companies have started to build their own platforms for small business owners and traders.
E-commerce sales and customers
Fashion is currently the leading product category in India, followed by electronics, home and furnishing and entertainment. E-commerce is increasingly attracting customers from 2nd and 3rd tier cities, where people have limited access to brands but have high aspirations. The Associated Chambers of Commerce of India estimated the number of online shoppers to have crossed 100 million in 2017, compared with 69 million in the previous year. 56% of online shoppers in India buy using desktops, compared to 29% using smartphones and 10% preferring tablets. The main reason why Indian consumers are adopting e-commerce is because of price convenience. The possibility to access an expanded basket of goods is also one of the main drivers. Thanks to rising income levels and increased awareness, there is growing interest for international brands and better quality foreign products. Due to transport infrastructure difficulties, consumers often prefer the service providers that offer the fastest delivery. Cash on Delivery (COD) payments accounted for 45% of online payments and remained a popular mode of payment for Indian e-commerce transactions. Nevertheless the demonetisation process started in November 2016 by the government affected this trend, with cash on delivery quickly changing into “card on delivery”. The shift away from the cash is evident by the growth in payments by credit cards and mobile wallets. The launch of a Unified Payments Interface (UPI) by the Reserve Bank of India is expected to be a game changer, as it will enable e-commerce delivery staff to collect money electronically even for COD transactions.
Social media
Social networks' penetration rate in India - at only 14% of the population – is one of the lowest rates in the world. Facebook is the most popular social network: India is the country with most Facebook users in the world (270 million) ahead of the US. Key Facebook users from India are aged 18-24, with more than three-fourth of the users being male. WhatsApp has more than 200 million users, followed by Messenger, Instagram (59 million), Google+ and Twitter (10.1 million) (Statista). The professional social networking platform LinkedIn has over 42 million users. Most active users on LinkedIn in India are in age group 24-35, with an almost even share of men and women.

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Latest Update: May 2022

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