India is projected to be the fastest growing B2C E-Commerce market in the BRIC countries in the next five years. This conclusion is drawn in a new publication by Germany-based secondary market research expert yStats.com. The report, titled “India B2C E-Commerce Market 2015” also reveals the main challenges faced by online retail in this country, including underdeveloped logistics and low credit card penetration.
B2C E-Commerce in India is driven by its vast population, increasing Internet penetration and scarcity of organized retail especially in small towns and rural areas. Next year, India is predicted to top the USA to become the second largest country worldwide in terms of the number of Internet users, behind China. While China has been the leader among the BRIC markets in terms of online retail growth in the five years to 2014, during the next five-year period India is predicted to take over this position.
Online retail in India has much room for growth. B2C E-Commerce share of total retail sales was estimated at less than 1% in 2014, while the share of Internet users making purchases online was below one quarter. Another sign of immaturity is the high share of online travel in total E-Commerce sales, reaching close to two-thirds according to some estimates. Furthermore, Internet penetration on the 1.3 billion population in India was relatively low in 2014, although showing an improvement from a one-digit figure in 2010. The spread of mobile Internet is expected to especially benefit the state of connectivity in this country, while also driving M-Commerce sales up.
Apart from low Internet penetration, some major challenges faced by B2C E-Commerce in India include underdeveloped logistics infrastructure and low credit card penetration. Online merchants’ profitability suffers from the necessity of accepting cash on delivery and offering free shipping. The top three E-Commerce companies in the country, Flipkart, Snapdeal and Amazon India develop their own logistics capabilities using recently obtained investment. Other E-Commerce players that benefited from investment pouring into the Indian market include marketplace operator ShopClues, online classifieds website Quikr and online accommodation booking website Oyo Rooms.