New Delhi, November 21 2014: India’s e-tailing market is at an inflection point and will see rapid growth to become a $15 billion market by 2016, finds a study by Google and Forrester.
The country India will have 100 million online shoppers by 2016, with half this number made up of new buyers from Tier 1 and tgier 2 cities.
The annual online shopping growth trends report, compiled by Forrester Consulting, using Google search trends reveals that online shoppers base will grow 3x by 2016. The confidence to shop online was on the rise as 71% non-buyers from Tier 1 and 2 cities said they plan to shop online in next 12 months. The findings also revealed that women buyers in Tier 1 cities were more engaged in online shopping, and outspend men by 2x. Women were also responsible for driving growth in categories like Apparels, beauty & skincare, home furnishing, baby products and jewelry. This research finding was consistent with search query trends seen on Google with search query volume for Apparels growing at (64% yoy), Baby Care (53%yoy), Beauty & personal care (52%yoy) and home furnishing growing at 49% year on year.
Women, key to online shopping
The report also projected that 40 million women are estimated to shop online in India by 2016. 2/3rd of online shoppers highlighted Convenience and Variety as major reasons to shop online in addition to discounts. Over 60 percent respondents also felt that buying online was directly correlated with social status.
Mobile phones emerged as an important access device for online shoppers with 1 out of 3 online buyers transacting on their mobile phones in Tier 1 and Tier 2 cities. In Tier 3 cities, 1 in 2 buyers said they use mobile phones to purchase products online. This was also reflected in Google search trends with mobile phones queries growing 3x in last three years. Today, over 50 percent of shopping queries were coming from mobile phones, this share was as low as 24% just two years back.
Says Nitin Bawankule, Industry Director for Ecommerce, Local and classifieds, Google India: “The consumer confidence to shop online has grown significantly in last year and a half, and our objective was to understand the factors that are driving this growth and arrive at indicators that will help propel the Industry forward. As the report indicates, behavior of the Indian online buyer is fast mirroring buyers in more developed markets as more subjective product categories have started to see significant growth. The e-tailing Industry needs to act now to cater to this strong user growth trend. Improved customer experience across all touch points, easy to use mobile apps can create a strong pull for non-buyers to shop online in Tier 1 and 2 cities. Women buyers are set to become the most significant contributor to the growth of online shopping and there is a huge opportunity waiting to be unlocked in this user segment.”
Amongst the challenges, 62 percent buyers said they were not satisfied with their online shopping experience. 67 percent buyers also highlighted that the current return process was too complicated and expensive. Trust was a major issue with Non buyers, 55 percent non buyers did not trust the quality of products sold online, 63 percent said they were concerned about the safety of transacting online and 65 percent said, they don’t feel comfortable sharing personally identifiable information online. 66 percent of total respondents said that poor connectivity was also a major barrier for them to shop online.