Indians wary of buying online despite major investments AMAZON OFFERS TO BUY 60% STAKE IN FLIPKART

Despite retail giants Walmart and Amazon willing to invest billions of dollars in the e-commerce sector, India has one of the lowest online shopper penetration.

According to internetfocused consultancy RedSeer Consulting, only 20 per cent of online users in India do online shopping against 55 per cent in China and 80 per cent in the United States.

“India has one of the lowest online shopper penetration in comparison to other countries which signifies that a small share of internet users is buying online,” said RedSeer.

However, it said the penetration in metro and tier1 cities is growing at a faster pace than tier-II cities.

In metro, 32 per cent of the broadband users do online shopping and in tier-I the percentage is 27 per cent. In Tier-II, the number is just 8 per cent.

RedSeer said that the annual spend per shopper on online shopping is also still very low in comparison to the US and China.

It said that this is not so much a sign of worry as Indian e-commerce is on a growth phase and the new consumer coming to the platforms, shops for lower price standardised products. “We feel going forward the online shopper penetration will increase and the e-tailer will be able to provide a good experience resulting in the consumer buying more,” it said.

According to RedSeer, an online user in India spends around $205 in a year on e-commerce site. In China an online user spends $1,800 annually on online shopping and in the US, the figure hits $2,000.

Retail giant Walmart is in advance talks to acquire majority stake in Flipkart, which will be an extension of its domestic battle with arch rival Amazon, whose expansion is the biggest threat to the retail icon.

According to reports, Walmart will buy at least 55 per cent of Flipkart in a deal that will value the company at $20-21 billion. Bengaluru/Mumbai, May 2: Amazon.com has made a formal offer to buy a 60 per cent stake in Flipkart, a television channel reported on Wednesday, threatening to complicate Walmart Inc’s bid to buy a majority stake in the Indian e-commerce player.

Sources earlier this month had told Reuters that Walmart was likely to reach a deal to buy a majority stake in Flipkart by the end of June for $10 billion to $12 billion.

The deal would be the Walmart’s biggest acquisition of an online business and would kick off a battle with Amazon in an Indian e-commerce market that analysts forecast will be worth $200 billion per year within a decade.

The tv channel reported that Amazon had offered Flipkart a breakup fee of $2 billion to convince it to discuss an offer which analysts say would bring with it substantial antitrust challenges, as Flipkart and Amazon dominate the e-tailing space in India. — Reuters