Ecommerce
India's e-commerce market is expected to reach US$ 64 billion by 2020.

Indian Ecommerce Industry Analysis

Latest update: August, 2018

  • The Indian e-commerce industry has been on an upward growth trajectory and is expected to surpass the US to become the second largest e-commerce market in the world by 2034.
  • The e-commerce market is expected to reach US$ 64 billion by 2020 and US$ 200 billion by 2026 from US$ 38.5 billion as of 2017.
  • With growing internet penetration, internet users in India are expected to increase from 481 million as of December 2017 to 829 million by 2021.
  • Rising internet penetration is expected to lead to growth in ecommerce.
  • India’s internet economy is expected to double from US$125 billion as of April 2017 to US$ 250 billion by 2020, majorly backed by ecommerce.
Growth

Notes: CAGR - Compound Annual Growth Rate,. F-forecast
Source: Media sources, Aranca Research

  • Internet penetration in India grew from just 4 per cent in 2007 to 35.03 per cent in 2017, registering a CAGR of 24.23 per cent between 2007 and 2017.
  • As of December 2017, internet penetration in India’s urban areas stood at 64.84 per cent and 20.26 per cent in the rural areas.
  • Urban India with an estimated population of 444 million as per 2011 census, already has 295 million using the internet as of December 2017.
  • Rural India, with an estimated population of 906 million as per 2011 census, has 186 million internet users as of December 2017. There is therefore a great opportunity for increasing penetration in the rural areas.
  • Analysis of ‘Daily Users’ reveal that both in Urban and Rural India, the younger generations are the most prolific users of internet.
  • Rising internet penetration is expected to drive ecommerce growth in India.
Growth

Source: Economic Times, Live Mint, Aranca Research

Last Updated: August, 2018

The Indian e-commerce industry has been on an upward growth trajectory and is expected to surpass the US to become the second largest e-commerce market in the world by 2034. India’s e-commerce industry is expected to grow from US$ 38.5 billion as of 2017 to US$ 200 billion by 2026. India’s internet economy is expected to double from US$125 billion as of April 2017 to US$ 250 billion by 2020, majorly backed by ecommerce. Online shoppers in India are expected to reach 220 million by 2025. Average online retail spending in India was US$ 224 per user in 2017.

E-commerce industry in India witnessed 21 private equity and venture capital deals worth US$ 2.1 billion in 2017 and 40 deals worth US$ 1,129 million in the first half of 2018. E-commerce startups in India received US$ 786.87 million of funding in the first half of 2018. Online retail sales in India are expected to grow by 31 per cent to touch US$ 32.70 billion in 2018, led by Flipkart, Amazon India and Paytm Mall. Online retail is expected to contribute 2.9 per cent of retail market in 2018.

Much growth of the industry has been triggered by increasing internet and smartphone penetration. Internet penetration in India grew from just 4 per cent in 2007 to 34.42 per cent in 2017, registering a CAGR of 24 per cent between 2007 and 2017. In Q1 2018 overall internet penetration in India was 38.02 per cent. The number of internet users in India is expected to increase from 493.96 million as of March 2018 to 829 million by 2021. The e-commerce retail logistics market in India is estimated at US$ 1.35 billion in 2018 and is expected to grow at a 36 per cent CAGR over the next five years.

A young demographic profile, rising internet penetration and relative better economic performance are the key drivers of this sector. The Government of India's policies and regulatory frameworks such as 100 per cent foreign direct investment (FDI) in B2B e-commerce and 100 per cent FDI under automatic route under the market place model of B2C e-commerce are expected to further propel growth in the sectors. As of August 2018, the government is working on the second draft of e-commerce policy, incorporating inputs from various industry stakeholders.

Indian Ecommerce Industry Report (August, 2018)

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Indian Ecommerce Industry Report (July, 2018)

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