Online sales to hold up even without discounts: Google-A.T. Kearney report

Mumbai: A majority of Indian buyers will continue to purchase online even if there are no discounts, according to a report published by Google Inc. and consulting firm A.T. Kearney.

“As the internet continues to grow, digital presence is paramount for brands and organised retail. Our data reveals that majority of buyers will continue to purchase online even if there are no discounts,” says Ajay Gupta, partner with A.T. Kearney. “With the right game plan and focussed efforts the e-tailing industry will grow at a healthy CAGR (average annual pace) of 40%+.”

The report estimates that the total number of online shoppers in India will rise to 175 million and gross merchandise value will surge to $60 billion by 2020.

One third of the users will drive 66% of total online shopping spending and online retailing will drive 25% of the total organized retail sales in India by 2020, the Digital Retail 2020said.

The report estimates that 55% of online volume will be driven by cashless transactions by 2020 as compared to a 40% today and the share of mobile wallets will almost double to reach 15%. The number of online sellers will need to grow five times to cater to the increase in demand from users across geographies and improve delivery capabilities.

“As per the report some of the areas that will accelerate and support profitability include following a focussed approach to drive deeper engagement, innovative delivery models and creating omni channel presence will help bring on board new online shoppers and help grow the overall share of e-tailing from the organised retail Industry in India,” said Rajan Anandan, vice president and managing director, Google South East Asia and India.

The report captures industry dynamics, key consumer insights that will drive the next phase of growth for e-commerce in India. It also states that value added services will be a key differentiator. Over 90% of the online buyers will be willing to pay for premium value added services, over 46% of online buyers will pay extra charges for faster delivery; 37% for hassle-free return and 35% are willing to pay more for extended warranty.

Other areas that the report highlights include an estimated fivefold growth in the number of women shopping online by 2020, Lifestyle (apparels and accessories) as a category will overtake consumer electronics to become the largest online category at 35% of total online spending.

The report was compiled after carrying out research of over 3,000 consumers and qualitative interactions of over 60 plus consumers. E-commerce spend across categories, income segments, and geographies in 2020 were estimated through A.T. Kearney’s predictive analytic solutions. Respondents comprised online buyers (1,380) and non-buyers (1,380), sellers, non-Internet users across 20 cities in India including metros and tier 1, 2 and 3 cities.