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    Tuesday, October 3, 2017

    India to have 475 million online shoppers but market may be struggling now



    Amid devaluations and a financial crisis, Indian e-commerce companies have fought for a brutal year, but experts say that explosive growth is coming.
    It is estimated that the online retail industry in India will grow between 2000 and 200 billion dollars by 2026, from $ 15 billion by 2016, according to a recent report by the financial services company Morgan Stanley. Until then, online retailing will account for 12% of the total retail market in India, up from just 2% in the previous year.
    "This growth is driven by a combination of increased Internet penetration, a drop in data access costs, a shift towards smartphones, and a credit flow to consumers and micro businesses," said Morgan Stanley.
    Today, only about 14% of Indian Internet users buy online, compared to nearly 64% in China, according to Morgan Stanley. But this is likely to change how people will be more comfortable with transaction on the web.
    "An AlphaWise (Paywall) survey conducted in December 2014 showed that Internet users with less than two years of Internet activity were less vulnerable to the transaction," the company said in his report. "However, users with more than five years of internet experience are more likely to have online transactions. As of the 2020 fiscal year, more than half of the Indian Internet population will have matured or become more mature with five years of use, and we believe this is probably a turning point in the online world Shopping. "
    By 2026, Morgan Stanley expects India to have 475 million online buyers, compared to 60 million in 2016.
    What will the Indians buy?
    Mobile phones, electronics and clothing are currently the most popular segments for online shoppers in India. But in the future, groceries, personal and beauty products, furniture and food delivery will also be a larger number of buyers.
    E-commerce in the fast-growing consumer goods space can be up to $ 6 billion by 2020, of less than $ 1 billion, according to a report released recently by Google and Boston Consulting Group.
    By 2020 there is "a very high penetration of more than 10% in categories such as nutraceuticals and color cosmetics, high penetration of 7-10% in categories such as weight management and baby care, moderate penetration of 3-7% in categories such as hair care and underwear low penetration of less than 3% in dairy products and confectionery, "the report said.
    In view of all this potential, it is not surprising that several global companies are trying to exploit the market. In particular, India has become a battlefield for America's largest online retailer, Amazon and China's largest e-tailer, Alibaba.
    Let the fight begin
    While Amazon is working in India through its India Amazon.in arm, Alibaba has made significant investments in Paytm's digital wallet and e-commerce portal Snapdeal. Alibaba's largest shareholder, Softbank, recently acquired a share of Flipkart.
    But winning in India will not be so easy for the two players.
    "India is a more complicated market than China, and Alibaba has no operational experience in the market," said Morgan Stanley. "The results of the Alibaba initiatives are affected by product location, strategy execution and several other factors, some of which may go beyond the control of the company."
    But in the long run, India will be a "material driver" for Amazon's growth, he added. "Amazon India currently has 160 million products on its platform list, compared to more than 400 million for Amazon in the US We expect to significantly increase numbers in India as more traders enter the formal economy and have better access to credit" , said Morgan Stanley.

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