Online shopping this year will set the economy rolling with a massive rise in consumer spending and employment opportunities, says a report
With extravaganzas like GOSF by Google, Big Billion Day by Flipkart or Savings Day by Snapdeal, the Internet shopping has become the latest ‘it’ thing in economy. And the coming year looks even more promising both for the consumer as also the entrepreneurs, with the average annual spending on online purchases projected to increase by 67 per cent to Rs10,000 from Rs6,000 per person, according to an ASSOCHAM-PwC study.
In 2014, about 40 million consumers purchased something online and the number is expected to grow to 65 million by 2015 with better infrastructure in terms of logistics, broadband and Internet-ready devices fuelling the demand in e-commerce. The sector attracted the attention of investors, including top global firms and leading industry leaders like Azim Premji and Ratan Tata. The brands like Flipkart and Snapdeal are enjoying edge over global players like Amazon, adds the study. Online apparel sales continue to capture a greater share of India retail e-commerce sales, as the category, along with the computer and consumer electronics sector, help fuel overall market growth.
The e-commerce industry, valued at $17 billion, growing at an compound annual growth rate of about 35 per cent each year will cross $100 billion in the next five years, finds the study. Computer and consumer electronics, apparel and accessories, which account for the bulk of India retail e-commerce sales, will contribute 42 per cent of the total retail e-commerce sales in 2015 from the current level of 39 per cent. With nearly one-third of Internet users already making purchases online, the e-commerce growth will rely more on increased spending from existing buyers than first-time online buyers. The paper said, online shoppers and buyers starting with a base age of 18 are become more involved with e-commerce in their early teens.
The steady growth in the number of web shoppers also is helping to boost online sales. Many consumers will prefer the web to bricks-and-mortar retailers in large part because of online deals, about 52 per cent of shoppers said they made purchases online rather than in stores because online retailers offered better deals, adds the paper. Other factors contributing to the growth of e-commerce include aggressive merchandising and discounting from flash sale and daily deal, more online loyalty programmes and increasing popularity of smartphones and tablet computers among consumers which lead them to spend more on online shopping.
WHAT’S FUEllING itIJ
Online shoppers are also now finding it easier to shop than ever before due to improvements in mobile and tablet shopping capabilities. India’s travel and tourism are the second fastest growing travel and tourism industry in the world. Seventy five per cent of total travel-related business has migrated to e-commerce. The main businesses are online — air ticket booking, train ticket, bus ticket, hotel booking, tour packages and movie booking. Among this, online air ticket booking contribute the major part, adds paper.
The industry estimates that the total spend on warehousing and sortation centers could be as high as three to six per cent of top-line revenues, which represents a cumulative spend of over 450 to 900 million USD of spend in warehousing till 2017-2020. The industry is expected to spend an additional 500 to 1,000 million USD in the same period on logistics functions, leading to a cumulative spend of 950 to 1,900 million USD till 2017-2020.
It is also estimated that currently over 25,000 people are employed in e-retailing warehousing and logistics. Even with efficiency improvements in individual performance and productivity (IPPs) in the delivery networks, it is estimated that there will be an additional employment of close to 1,00,000 people in these two functions alone by 2017-2020, representing an increase in employment.