E­com­merce mar­ket to grow 30% to $200 bn by 2026

Hindustan Times (Delhi) - - FRONT PAGE - Soumya Gupta soumya.g@livemint.com

MUM­BAI: In­dia’s e-com­merce mar­ket will grow 30% CAGR (com­pounded an­nual growth rate) for gross mer­chan­dise value to be worth $200 bil­lion by cal­en­dar year 2026, ac­cord­ing to in­vest­ment bank Mor­gan Stan­ley. In a re­port ti­tled “In­dia’s Dig­i­tal Leap – The Multi Tril­lion Dol­lar Op­por­tu­nity”, Mor­gan Stan­ley said this growth in e-com­merce will help grow mar­ket pen­e­tra­tion to 12% in the next nine years, ver­sus 2% to­day.

Ris­ing num­ber of in­ter­net users, all new to e-com­merce, will help lead this growth, ac­cord­ing to the re­port.

“Our anal­y­sis of some global e-com­merce com­pa­nies high­lights that twothirds of the growth in their e-com­merce sales hap­pened due to new users com­ing on­line and shop­ping, while the bal­ance was driven by ex­ist­ing on­line shop­pers buy­ing more fre­quently and/or driv­ing up or­der val­ues,” the re­port said. In­dia had 60 mil- lion on­line shop­pers in cal­en­dar year 2016, which is 14% of the in­ter­net user base of the coun­try. This will rise to over 50% by 2026, the re­port said.

“What we have seen through pro­pri­etary con­sumer sur­veys in the past is that it takes time for con­sumers to get com­fort­able with a chan­nel,” Parag Gupta, ex­ec­u­tive di­rec­tor, Mor­gan Stan­ley In­dia, said in an in­ter­view. “Gen­er­ally, peo­ple who have been on the in­ter­net for less than 2 years, don’t trans­act on the in­ter­net (in­clud­ing mo­bile bank­ing). So gen­er­ally they are en­gag­ing in ba­sic ac­tiv­i­ties like mes­sag­ing, so­cial me­dia, and search, things that don’t in­volve a mone­tary trans­ac­tion.”

How­ever, once a con­sumer has been on­line for more than five years, they are more likely to buy on­line. Right now, that’s only 30% of In­dia’s 432 mil­lion in­ter­net users.

“The rea­son for that is very sim­ple, be­cause a bulk of the ad­di­tion in the in­ter­net base has hap­pened in the last 3 years,” Gupta said. “That’s when smart­phone pen­e­tra­tion started bal­loon­ing. So a large base of the in­ter­net pop­u­la­tion has been on the in­ter­net for not as many years as re­quired to get com­fort­able with the medium. When does that ma­tu­rity come through? Most likely 2019,” he said, adding that the year can be an in­flec­tion point for In­dia’s e-com­merce mar­ket.

With this com­fort, e-com­merce cus­tomers are also mov­ing to dig­i­tal pay­ments.

“I think a cou­ple of years back, cash on de­liv­ery was over 60% of e-com­merce sales which has now come down to maybe 55-60%. Se­condly, if you look at UPI and dig­i­tal wal­lets, their share has in­creased to 4-7%. A cou­ple of years back, that num­ber used to be just about a per­cent or two,” Gupta said.

MINT/FILE

Right now, only 30% of In­dia’s 432 mil­lion in­ter­net users shop on­line

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