Online retail will drive 25% of organised sales by 2020

Total number of online shoppers will grow to 175 million; 33% of customers will drive two-thirds of total shopping

May 31, 2016 12:52 pm | Updated 01:09 pm IST - Bengaluru

Online retail will become a substantial channel for the organised retail sector in the country. According to a study conducted by Google and A.T. Kearney about 25 per cent of the total organised retail sales by 2020 will be contributed by the online channel.

The report titled 'Digital Retail 2020' also said that online shopping in India will reach a gross merchandising value (GMV) of $60 billion by the end of 2020.

The report also predicts that the total number of online shoppers will grow to 175 million and about 33% of customers will drive two-thirds of total shopping.

Value added services, the key

As per the report, value added services will be a key differentiator and over 90 per cent of the online buyers will be willing to pay for premium value added services. About 46 per cent online buyers who participated in the study said they will be willing to pay extra charges for faster delivery; 37 per cent for hassle free return and 35 were willing to pay more for extended warranty.

"The e-Tailing industry in India is at an inflection point and will touch 175 million online buyers by 2020. Having said that the next three to four years will be critical for the industry to get on the path of sustained profitability," said Rajan Anandan, vice-president and managing director, Google SEA & India.

Lifestyle to overtake consumer electronics

Further, the report said that lifestyle as a category will overtake consumer electronics to become the largest online category by 2020 at 35 per cent of the total online spends. Consumer electronics will be at 20 per cent by 2020.

By 2020, 55 per cent of online volumes will be driven by cashless transactions. Mobile wallet share will double to reach 15 per cent from current 8 per cent.

"As the internet continues to grow, digital presence is paramount for brands and organised retail. It will influence 50 per cent of all purchase decisions be it in discovery or comparison," said Ajay Gupta, partner with A.T. Kearney.

The report also predicts a five times growth in number of women shoppers. They are expected to more than double their share of online spend.

The report was compiled by combining primary research of over 3000 consumers. The respondents comprised of online buyers and non-buyers, sellers, non-internet users across 20 cities in India including metros and tier 1, tier 2 and tier 3 cities.

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