India's e-tail market boom may hit $50 bn by 2020

05 May '15

2 min read

In the next five years, India’s e-tail market is expected to grow 10 times from its current level to $50 billion, primarily driven by better Internet penetration and higher incomes, according to a report by Swiss financial service firm UBS.

"E-tail is the most recent segment, but its highest growth rates and success will be the key driver of the overall e-Commerce market," said a UBS report.

The Internet & Mobile Association of India (IAMAI) estimates that the overall Indian e-commerce market, of which e-tail is a segment, is currently worth $16 billion.

The report made a specific mention of the Indian Railway Catering and Tourism Corporation (IRCTC) as "the best example" of a successful Indian e-commerce venture.

"We estimate that IRCTC had an estimated total sales of US$ 3 billion in 2014 with an online penetration level of 43 per cent. Its success indicates that the Indian consumer is willing to accept technology if it is a compelling value proposition," the report stated.

The marketplace model of e-tailing will gain prominence "as it is scalable and requires less capital and time than other models".

"Current regulations and the presence of large unorganised sellers (mom-and-pop shops) also support this model," it added.

Multi-product e-tailers (Flipkart, Amazon India and Snapdeal) are moving towards the marketplace model while e-tailers in niche categories such as furniture, baby products and grocery have hybrid business template, the report said.

At the same time, it played down investor concerns about e-Commerce being a bubble in India are "misplaced".

"Analysis of the supply chain for offline retail by category implies adequate margins for e-tail in future," the report stressed. (SH)

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