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India is the fastest-growing online retail market in the world

Anuradha Shukla | Sept. 7, 2017
Online retailers in India experienced a dip in sales due to Modi's demonetisation policy last year but they have now bounced back thanks to cash supply returning to normalcy.

eCommerce (IDG)Credit: IDG

India is the fastest-growing online retail market in the world, according to Forrester's The Indian Online Retail Market, H1 2017 report.

E-commerce sales in India will reach US$64 billion by 2021, growing at a five-year compound annual growth rate (CAGR) of 31.2 percent.

Online retailers in India experienced a dip in sales due to Modi's demonetisation policy last year but they have now bounced back thanks to cash supply returning to normalcy. 

In 2017, online spending grew by 11 percent, and Forrester expects it to grow further in the upcoming festive season. Customers are mostly shopping for apparel, footwear, and grocery online. This trend is similar to last year, when apparel and footwear accounted for 72 percent of all online retail in India.

The report also identified Amazon as Indian online shoppers' favourite online retail destination. 

Even though Flipkart saw a decline in 2017, it is giving Amazon a tough competition, especially as Myntra -- the fashion online retailer which got acquired by Flipkart in 2014 -- consolidates its hold in the fashion category. 

In response, Amazon aims to increase its market share in apparel and footwear, where Flipkart presently dominates. 

It also intends to build a presence in the online grocery category after getting permission to sell food products in India. As such, it has decided to invest US$500 million in developing its supply chain for food retail and in opening food-only outlets to sell locally produced products.

As for Snapdeal, which refused to be acquired by Flipkart, it is working to sustain in this competitive market.

Meanwhile, Chinese retail giant Alibaba is still waiting to enter the market with a full-fledge offering.

 

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