Despite the euphoria around e-commerce in India, a recent study has highlighted that only around 3.9 crore people, a small fraction of the country’s population of over 125 crore, shop online, leaving the country unranked in the list of top 30 nations by online market size.
Global management consultancy firm A T Kearney’s 2015 Global Retail E-Commerce Index, which was released recently, estimates India’s e-commerce market to have grown 27% in 2014 to $3.8 billion.
In 2014, the US, which was the largest e-commerce market as per the report, was $238 billion in size.
Even as there were some positive developments for e-commerce in India during 2014, A T Kearney said, only 69% of the country’s population has “more than limited” access to broadband and mobile internet, which may be one of the reasons for the low penetration of e-commerce in the country.
“India remains unranked (in our 2015 Global Retail E-Commerce Index),” said the US-based firm. “There are only 39 million online buyers in India, a tiny fraction of the more than 1 billion who live in the country. Only 69% of India’s population has more than limited access to broadband and mobile Internet, so the market will still prove challenging for some time to come.”
The firm estimates online spending to grow 21% in India over the next five years, slightly higher than its estimated global average. The Global Retail E-Commerce Index is a study designed to help retailers devise successful global online retail strategies and identify market investment opportunities.
The US ranked first in A T Kearney’s 2015 Global Retail E-Commerce Index, followed by China, UK, Japan and Germany. Some other countries that beat India to make to the list of top-30 e-commerce nations, include, Brazil, Chile, Venezuela, Finland, Saudi Arabia, Argentina and Ireland.
The year 2014 was rather eventful for e-commerce in India as the country not only witnessed massive growth in several home-grown players, but many multinational players showed serious interest in the country. Among other things, Bengaluru-based Flipkart raised close to $2 billion during the year, while Amazon announced investments of $2 billion in the country.
According to Grant Thorton, there were 23 mergers and acquisition (M&A) deals in the e-commerce space in India during 2014, with a combined value of around Rs 3,444 crore. Also, there were 80 private equity deals in the sector in India during the year, with a combined value of around Rs 16,356 crore.