e-commerce likely to be $80 billion industry by 2020: report

Majority (85 per cent) of small and medium enterprises which adopt e-commerce, believed that it is a cost-effective medium to grow sales, says the report

Driven by growing adoption of smartphones and increasing Internet penetration, the e-commerce sector in India is projected to cross $80 billion by 2020, and grow further to $300 billion by 2030, according to a report released by Snapdeal and KPMG.

The report, however, pointed out patchy Internet connectivity due to underdeveloped infrastructure, a general lack awareness about the benefits that e-commerce offers and a lack of trust among organisations considering to go online, are some of the key challenges faced by the sector.

Further, the report titled ‘Impact of e-commerce on SMEs in India’ found that majority (85 per cent) of small and medium enterprises (SMEs), which adopt e-commerce, believed that it was a cost effective medium to grow sales.

In fact, SMEs using Internet for business saw 51 per cent higher revenues and 49 per cent more profit. About 73 per cent SMEs, the report said, felt that e-commerce enables them to understand their markets better and 46 per cent said they saw increase in business through listings on online marketplaces. “e-commerce-enabled SMEs also reported 60-80 per cent reduction in distribution, marketing and sales spend to get incremental business,” it added.

Speaking to reporters, Snapdeal co-founder and CEO Kunal Bahl said the fast paced growth of the ecommerce industry in India represents an unprecedented opportunity for the sector.

However, inadequate financing remains one of the major challenges for small and medium enterprises. “Approximately 41 per cent of SMEs in India do not have access to bank loans or other products offered by financial institutions, with a financing gap of more than Rs.2.93 trillion in the SME sector,” the report said.

Mr. Bahl said that Snapdeal aimed to help online sellers raise about Rs.1,000 crore in loans through its ‘Capital Assist’ initiative, launched in August last year. NBFCs and banks such as Axis Bank, ICICI Bank, HDFC Bank, RBL, Religare and L&T Finance are part of this initiative.

“We have already helped sellers secure Rs.200 crore in loans through Capital Assist. By March 2016, we aim to take this to Rs.1,000 crore,” he said.