NEWSROOM

Online retail sales to surge in India

NEW DELHI: Ecommerce sales are set to more than triple in India during the period to 2015, a study has predicted.

Source: ASSOCHAM; additional content by Warc staff, 5 July 2011

The Associated Chambers of Commerce and Industry of India, the trade body, forecast that sector revenue levels should hit 7,000 crore rupees ($1.6bn; €1.1bn; £980m) in four years time. Such a figure would substantially improve on the 2,000 crore rupees at present, and result from an annual growth rate topping 30%.

Alongside increasing internet penetration, the easier availability of broadband is encouraging this process, the organisation argued. India currently has an estimated 100m netizens, but ASSOCHAM anticipates it could house the third largest web population, behind China and the US, by 2013. "A booming economy and rising disposable incomes have contributed to the evolution of online shopping," said DS Rawat, secretary general of ASSOCHAM.

The study drew on a survey of 5,000 consumers in ten cities, including Bangalore, Chennai, Kolkata, Mumbai and Delhi. All of the participants were drawn from the 16-35 year old demographic, which makes up a sizeable portion of India's connected community. Nearly 40% of interviewees stated a preference for buying online given the convenience afforded by this channel, and the capacity to simply gather information about goods and services.

A majority of those questioned also cited the ability to find items not typically sold in malls and markets. Additional factors holding considerable importance incorporated being able to compare products and prices, both from local firms and overseas alternatives. Free shipping and returns, demonstration videos and multiple payment options were some of the other attractive characteristics for people picking between vendors.

Similarly, user-generated reviews and ratings were thought to be desirable features on internet retail sites, the analysis revealed. While the web was previously used mainly as a research tool before buying in markets and stores, or to complete low-cost transactions, ASSOCHAM suggested habits are evolving. "The trend is changing fast," Rawat said. "Leading companies have gauged the potential of online retail industry and are gearing up fast to cash in. Elsewhere, around 25% of the sample - often affluent individuals living in New Delhi - would rather visit high-end malls, due to the wide assortment and carefully managed experience.

Another 20% handed such a status to traditional markets, which provide familiarity, easy access, a broad variety of products, long opening hours and personal relationships with shop owners. For 15% of customers, speciality stores constituted the premier destination, as they generally offered exactly the right items.  Residents of Mumbai proved most enamoured with ecommerce, as 65% rated the web as their number one channel, not least because it allows them to avoid surging fuel prices. Delhi posted 45% on this metric, ahead of 30% choosing traditional markets, 15% referencing premium malls and 10% naming speciality outlets.

Among respondents across the entire panel expressing reticence regarding making online purchases thus far, 30% like to research products utilising the internet and buy them from bricks and mortar stores. A quarter did not want to share financial details electronically and 20% outlined concerns about high delivery costs. Some 15% had doubts the ordered goods were likely to reach them in suitable condition, and 10% did not possess a debit or credit card.

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