Internet retail in India has the potential to reach a value of USD 76 Bn by 2021: Technopak

According to a whitepaper published by the management consulting company, Technopak, Indian Internet retail sector has the capability to grow more than hundredfold in the next 9 years to reach a value of USD 76 Bn by 2021.

Indian eCommerce industry is going relentlessly, and Internet retail forms an important part of it. Although in 2012, the size of India’s eCommerce market was USD 10 Bn, while that

of the Internet retail market was USD 0.6 Bn, this is changing now. The report says that due to the growing Internet user base in India, the Internet retail sector is going to grow as well.

According to the report, the growth of Internet retail is going to be complementary to the growth of offline retail stores. This means that even though it is going to grow a hundred times, the traditional retail is still going to hold a major share in 2021. The retail market is going to grow from USD 490 Bn in 2012 to USD 1440 Bn in 2021, and in that, Internet retail’s share is going to increase to 5.3% from 0.1% currently.

The primary reason for the growth of Internet retail in India is the growth of Internet users, across all the diverse areas in India. And this trend is attributed to India’s demography, Indians are predominantly young and in 10 years, over 40% of Indian population would have been born after Internet’s inception and thus Internet penetration would be high. Also, urbanization is another factor, by 2020, 35%, or 465 Mn, of Indians will reside in urban India, compared to the current 31% (375 Mn), the standard of urban living will result in a add to the growth of Internet Retail.

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Internet access is no longer dependant on the availability of computers anymore. Mobile phones are acting as the key player in the spread of Internet in India. Even those having basic phones are able to access the Internet. After surfing, emailing and chatting, online shopping is just a few steps away. Although the spread of Internet available devices is inevitable, the maximum penetration is going to be seen in the smartphone market, with an increase of 1025% by the year 2020, in the number of smartphone users in India.

Impact of the growth of Internet Retail

The research lists four major effects of this rapid growth of Internet Retail in India

1. Generation of employment

This includes increased employment opportunities in logistics, warehousing, technology and for in-house operations of the companies.

2. Facilitation of the growth of allied industries

The whole of Internet Retail ecosystem is not just about the retailers selling online, it has other sectors involved as well, which include logistics, marketing companies, consumers, warehousing, packaging material suppliers, call centers, vendors, transportation providers and so many more. The relation is symbiotic, growth of Internet Retail will influence these other spheres as well.

3. Promoting entrepreneurship

Besides providing an easy platform for budding entrepreneurs to reach the consumers, Internet retail is also adding to the growth of merchandise vendors and service providers

4. Reduction of transaction costs

Internet retail doesn’t involve the costs incurred by running a physical store. Also, the usual hierarchy of offline retail involves goods going through manufacturers, vendors, wholesalers, retailers etc. causing an increase in the selling cost. The overhead expenses are less in Internet retail.

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As mentioned earlier, the growth of Internet retail is not going to be at the cost of brick-mortar retail in India. The above donut charts highlight the distinction of categories sold online in India and US, it is clear that there isn’t much variety in consumer purchases made in India. This is because Internet Retail is still growing, and ‘67% of India’s total retail is comprised by Food & Grocery’, and there has yet not been a successful model developed for large scale storage and shipping of perishables in India by Internet retailers.

Also, the release says, that even though other categories like apparel, footwear, electronics are already doing well online, the impact on brick-mortar sales isn’t significant. The rise of Internet retail will complement existing corporatized retail.

Thereby, the growth of Internet retail will bring in something good for everybody, right from the consumers to the country’s economy. With eCommerce being accepted all over, Internet retail is going to be even better with its potential to create wide scale opportunities in India.

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