Online shopper base in India to reach 100 million by 2016

20 November 2014

India will have 100 million online shoppers by 2016, buoyant on increasing consumer confidence to shop online, and will become a $15 billion market by 2016.

India's e-tailing market is at an inflection point, Google said in its annual online shopping growth trends report, compiled by combining research conducted by Forrester Consulting and Google search trends.

The online shoppers base will treble by 2016 and over 50 million new buyers will come from tier I and tier II cities, according to the survey for which Forrester Consulting interviewed 6,859 respondents covering both online buyers and non-buyers in 50 cities and towns.

''The consumer confidence to shop online has grown significantly in the 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 Indian online buyer is fast mirroring buyers in more developed markets as more subjective product categories have started to see significant growth,'' said Nitin Bawankule, industry director for e-commerce, local and classifieds, Google India.

''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 II and III 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,'' he added.

The confidence to shop online was on the rise as 71 per cent non-buyers from Tier I and II cities said they plan to shop online in next 12 months. The findings also revealed that women buyers in Tier II cities were more engaged in online shopping, and outspend men by two times.

Women were also responsible for driving growth in categories such as apparels, beauty and skincare, home furnishing, baby products and jewellery. This research finding was consistent with search query trends seen on Google with search query volume for apparels growing at (64 per cent YOY), Baby Care (53 per cent), beauty and personal care (52 per cent) and home furnishing growing at 49 per cent.

Looking at the growth trends of the categories, the report also projected that 40 million women are estimated to shop online in India by 2016. About two-third of online shoppers highlighted convenience and variety as major reasons to shop online in addition to discounts.

Over 60 per cent 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 I and Tier II cities. In Tier III cities, one in two buyers said they use mobile phones to purchase products online.

This was also reflected in Google search trends with mobile phones queries growing several times in the last three years. Today, over 50 per cent of shopping queries were coming from mobile phones, this share was as low as 24 per cent just two years back.

Amongst the challenges, 62 per cent buyers said they were not satisfied with their online shopping experience. 67 per cent buyers also highlighted that the current return process was too complicated and expensive. Trust was a major issue with non-buyers, 55 per cent non-buyers did not trust the quality of products sold online, 63 per cent said they were concerned about the safety of transacting online and 65 per cent said they don't feel comfortable sharing personally identifiable information online.

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