As India’s retail market is expected to cross $1 trillion in value by 2021, the share of e-commerce will grow more than three-fold in four years, reveals a report titled ‘Unravelling the Indian Consumer‘ by Deloitte India and Retailers Association of India.
While the overall retail market is expected to grow from $795 billion in 2017 to $1.2 trillion by 2021, the market size of e-commerce will increase from $24 billion to $84 billion in the same period. By 2021, e-commerce will account for 7% of the country’s overall retail market, the report said.
Growing at a compounded annual growth rate of 19%, the e-commerce market is likely to get to be valued at $200 billion by 2026, the study finds.
The share of the organised retail market is expected to increase from 12% in 2017 to 22-25% by 2021.
Increasing internet penetration and the exponential growth of mobile commerce are driving India’s -commerce business. Mobile wallet transactions increased from Rs 20,000 crore in 2015-16 to Rs 3,00,000 crore in 2017-18.
Internet users in India are expected to increase from 432 million in 2016 to 647 million by 2021, taking internet penetration from 30% in 2016 to 59% in 2021. Approximately 75% of new internet users are expected to come from rural regions. This would subsequently see the number of online shoppers increase from the current 15% to 50% by 2026.
Smartphone users in India are expected to increase from 260 million in 2016 to around 450 million by 2021, which is also likely to drive the m-commerce sales from $10.5 billion in 2016 to $38 billion in 2020.
Social commerce is playing a vital role here as the study finds that 28% of millennials purchase products due to social media recommendations, and 63% of millennials stay updated on brands through social channels.
India has the world’s largest number of millennials, people in the age group of 18-35 years, constituting nearly 34% of the country’s total population. While millennials constitute more than one-fourth of the workforce in the Asia Pacific region, their contribution to the Indian workforce is significantly higher at nearly 48%.
According to the report, consumer experience will be the key focus of the companies and technology will facilitate the enhancement of consumers’ experience throughout their shopping journey.
India, Asia’s third-largest retail market and the world’s fourth largest after the US, China and Japan, is expected to grow at a CAGR of 7.8% between 2021 and 2026. Food and grocery (65%) accounts for the majority share of the retail market in India followed by apparel and footwear (9.8%), consumer durables and information technology (9.2%), jewellery and accessories (7.1%), health and entertainment (3.7%), home décor and furnishings (2.7%), beauty and personal care (2%).