Chennai: India’s online retail market is expected to be $170 billion by FY30, growing at a compound annual growth rate (CAGR) of 23 per cent, a report said.
Released by financial services firm Jefferies, the industry which currently holds around 25 per cent of the total organised retail market worth $ 18 billion in India, can potentially increase to around 37 per cent during the period.
The report said individual online shoppers who are spending Rs 12,800 per year are likely to spend around Rs 25,138 by FY30. Consumers are likely to shop online in segments beyond electronics and apparel, it said.
Noting that electronics, including mobile phones, have grabbed the market share from physical retailers, the report said it is largely due to heavy discounting and cashback online in electronics.
“Apparel and electronics have been present as categories in online retail space quite some time now in India, but online grocery is increasingly witnessing new consumers as companies such as Bigbasket and Amazon Pantry are heavily advertising there discounting days, which takes place at the start of every month,” the report said.
It added that new customers will continue to enter the online grocery market, even as categories such as personal care grow their online market share. Jefferies said in the long run convenience will outrun discounts as the key driver while adding a note of caution regarding the quality of products sold online and the issue of data safety and security.
However, it observed that product quality remains a key concern for most of the consumers shopping online, since there have been many instances where consumers have received fake products.
“Quality remains a key issue for consumers while shopping online. Though online retailers are taking steps to address this issue, it will take some time and hence some consumers will continue to stay away from online shopping, especially for big-ticket, branded items. The adoption of online retail should continue at a fast pace, as convenience seems even more important,” it said.