Driven by strong growth in e-commerce, digital commerce in India is expected to touch Rs 2.1 lakh crore by end of this year, growing 68 per cent from December 2015, a report has said.
The digital commerce market has grown at a CAGR of 30 per cent between December 2011 and December 2015. It was valued at Rs 125,732 crore by the end of December last year, the IAMAI-IMRB report said.
Online travel continued to account for 61 per cent share of the market at Rs 76,396 crore. This is further expected to grow at a CAGR of around 40 per cent to reach Rs 1,22,815 crore by end of 2016.
Online non-travel, comprising segments like e-tailing, financial service and matrimony and classifieds accounted of Rs 49,336 crore at the end of December, 2015.
The report said online hotel bookings have seen a substantial movement growing 165 per cent year-on-year to Rs 5,200 crore in December last year from Rs 1,965 crore in the year-ago period.
Spending on online railway ticket booking has also grown at around 34 per cent from Rs 16,200 crore in 2014 to Rs 21,708 crore in 2015.
E-tailing, which grew 57 per cent y-o-y, saw mobile phone and accessories (Rs 14,109 crore), PCs (Rs 4,726 crore), consumer durables (Rs 6,452 crore), apparel and footwear (Rs 7,142 crore) continue to dominate the category.
Financial services market grew at a CAGR of about 17 per cent between 2012 and 2015, it said.
"The market reached close to Rs 5,231 crore in terms of transactions as of December 2015. The demand for online utility payment is expected to reach Rs 6,068 crore by December 2016," it added.
Other online services market that include booking movie tickets and tickets for other events, online commuting or cab hire, online grocery and food deliver, stood at Rs 3,823 crore in December 2015, up from Rs 2,025 crore in the previous year.
Also, demand for other online service is expected to grow at a CAGR of 36 per cent to reach Rs 5,207 crore by December 2016, the report said.
The report pointed out that Indian e-tailers will need
to cater to two distinct categories of customers--higher-end, early adopters of online shopping, who will demand premium products and services; new users, who may typically be in tier II and III cities, and may need take more time to become loyal online shoppers.
"Assuming only urban households are currently served by e-tailers, we believe e-tailers are already serving 20-40 per cent of urban households. This is already a decent level of penetration for these companies; future growth in users, thus, will come from new urban population (migrants and new adopters), and rural customers may still take time to come under the fold of e-tailers," it said.
The report noted that the smartphone shipments to India increased steadily over 2011-14, before flattening out in 2015.
"Most of the increase in shipments was driven by utility phones, with the absolute number of shipments of basic and premium phones remaining constant over 2011-15," it said.
By 2025 Indians will spend less on apparel, household goods, personal products because spends on other essential or semi-essential expenses such as transport, communication, healthcare would increase faster.
"This may result in a slower increase in retail, and hence e-tail, spends in India," it said.
