India has been a great market for e-commerce companies. The country’s 50 million internet users can clock transactions worth Rs 3.5 lakh crores, as per a joint study headed by Google.
The report highlights the massive digital opportunity in India and reveals that the next three to five years will shape the e-commerce market in India. Walmart’s acquisition of a majority stake in Flipkart is expected to change the dynamics of India’s booming digital market. The report highlights India’s 12 leading startups and their growth.
The report titled ‘Unlocking Digital for Bharat: $50 billion opportunity’ covers the challenges in India’s online space. The major challenge being the decrease in consumer’s willingness to spend online in the medium term due to low GDP per capita. Businesses will be forced to find frugal and innovative ways to sustain.
The report suggests that internet companies will have to find innovative ways and have the patience for scaling their businesses. The alternate monetization approaches beyond consumers can help them in unlocking the potential of online commerce in the country. The large difference in the internet access across demographics is another challenge that needs to be addressed.
India’s e-commerce sector has recorded $20 billion of sales in 2017. But the figure is much lower as compared to the other major economies. The United States recorded $459 billion of spends in e-commerce market while China reported $935 billion. Although the penetration of e-commerce market is much lower, it is expected to grow at a much higher pace in the coming years.
In the urban areas of the country, the internet penetration is over 55% while the rural areas of India account for only 15% of Internet usage. Gender-wise categorization suggests 33% of internet usage among males as compared to the 22% of women. Despite the availability of low-cost, fast internet services, India has a low internet penetration.
The report suggests that the ability to spend online is quite low in India. It takes three to four months for an internet user in the country to make the first online transaction. A larger number of 54 million stopped spending online after the first online purchase. The report blames this fall on the user experience offered by India’s e-commerce platforms.
The growth of internet users has been highest in India. More than 40 million new users are added every year since 2013. Although India lags behind China and Brazil, e-commerce firms in the country can unlock the potential $50 billion worth of e-commerce market.