Business: Online shopping in India may zoom to $500 billion in five years
Virendra Pandit
New Delhi: This year’s online shopping in India to mark the Diwali season is estimated to have crossed the USD 9 billion mark (Rs.67,500 crore) while the overall festival-eve business was double this amount, about Rs.1.25 lakh crore. This means that online shopping has now cornered half of the entire Diwali season’s business.
According to a recent report by Grant Thornton, annual overall e-commerce in India is expected to be worth USD 188 billion by 2025. With a turnover of USD 50 billion in 2020, India became the eighth-largest market for e-commerce, trailing France and a position ahead of Canada.
But online shopping is supplanting even e-commerce. E-commerce and online shopping are different. While e-commerce refers to a company operating a business online, online shopping refers to the selling and purchasing of goods and services on a platform offering multiple choices. An online shopper often uses customer-friendly apps and can compare products and prices faster before placing an order.
This spurt of online shopping can be attributed to the continuing fear of the coronavirus and the ease of online shopping, thanks to the expansion of smartphones and the internet.
The buyer’s preference is clearly shifting from offline to online, particularly among the mushrooming middle classes who live in urban condominiums as gated communities.
According to fresh reports, however, the total online consumption by this segment alone in India will increase by 2.5 times to a whopping USD 500 billion by 2026.
By then, India is likely to see its gated community households increasing from 16 million now to 24 million in major cities. Their average annual spend per household will correspondingly go up 2.5 times, from the current USD14,000 to 20,000, translating into an overall online buy amounting to nearly USD 480 billion.
This will make India second only to the USA, which will have 125 million gated community households with an average of USD 25,000 per household spending, according to a report quoting the Bengaluru-based market research firm RedSeer.
It said nearly 95 percent of the 16 million gated community households in India’s major cities are now shopping online. In contrast, about 45 percent of non-gated households shop online. That means 70 percent of all buyers now prefer online buying.
“By 2026, the total consumption in Indian gated communities will increase by 2.5 times reaching USD 500 billion,” according to a media report.
With 45 percent of spending and 32 percent of the population in the top-50 cities of India, gated communities have emerged as a significant part of the country’s consumers.
In the next five years, the spending power of each Indian gated community household will be near that of identical households in Germany and the United Kingdom.
Because of the restrictions imposed on controlling the Covid-19 pandemic in the last couple of years, gated communities flocked to online shopping everywhere, thus giving an unprecedented boost to it.
