Online shopping and ecommerce grows in importance in India

08 December 2016 6 min. read
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India’s rapid growth, across a range of frontiers, appears to be good news for global consumer businesses seeking to access its markets. Internet proliferation, as well as increasing uses of online shopping channels, pose new opportunities to reach consumers. A new PwC study highlights that more people are buying online, with debit cards the most common way to pay for online goods.

The Indian consumer goods market has seen steady growth in recent decades. The country has a relatively young and increasingly technology savvy population, with 40% of the recently breached 1.25 billion inhabitants between 25 and 54, 18% between 15 and 24, and 28% aged below 15. As GDP growth is projected to remain above 7% in the coming years, the country and its young population continues to represent an area of opportunity for businesses.

In line with international trends, more and more people in India are gaining access to the Internet. This year, around 25% of the Indian population had access to the Internet – this is projected to grow significantly by 2018, to 32%, or 411.1 million people.

Online shopping

Online shopping in India

The rise of the consumer class in India, as well as continued proliferation of internet access, is lifting online shopping, opening up a new domain through which retailers and consumer product companies can meet consumer demand, and expectations. In a new report from PwC and Strategy&, and the Federation of Indian Chambers of Commerce & Industry, titled ‘Shaping Consumer Trends’, the authors explore, among others, changing consumer behaviour within the online space. The survey involved more than 19,000 online shoppers in 19 different territories.

The report finds that the number of people shopping online in India is set to continue its strong growth – although on a still relatively small base. Of those surveyed that do engage in online shopping, behavioural trends has been found to be changing, with more and more people shifting to weekly use of the channel, at 39% in 2015 and up from 33% a year previous; while those using the channel daily for shopping, jumped 3% from 2013 to 12% in 2015.

Frequency of purchases made using mobile devices

The number of people using their smartphone to make a purchase too has been on the rise. With those that shop monthly up from 20% in 2013 to 27% last year, while those that use the device to shop on a daily basis, increased from 12% in 2013 to 24% last year. People using the devices on a daily basis to make purchases saw 6% growth, from 3% to 9% in 2015.

Category-wise online shopping in 2015 in India

In terms of types of products bought online in India, considerable variations in shopping behaviour exists between categories. Books, music, movies and video games and clothing and footwear are the categories with the highest level of online purchases, with 42% and 41% buying between 1% -40% of goods from the categories online respectively. Consumer electronics and computers is another category with high levels of online purchase engagement, with only around 16% of respondents not purchasing online in this category and 6% always buying online in this category. 

Furniture and homeware and household appliances are the categories with the fewest people leveraging online channels to make purchases: around a quarter of respondents state that they don’t purchase one of these two categories online.

Payment behaviour in shopping

Paying for e-commerce

When it comes to making the payment, considerable variation exists between the type of payment system used across regions. In India, a gift card/voucher is more often used than in, for instance, China, or compared to the global average, at 33%, 22% and 21% respectively. Credit cards are used less frequently in India (46%) than in China (62%) or the global average (58%). The most often used system is the debit card, cited by 67% of Indian respondents, compared to 57% globally and 35% among the Chinese. Other payment systems have yet to take off in India, with just 22% saying that they use such a non traditional solution, compared to 71% in China.

According to the authors, Indians are increasingly demonstrating their increased acceptance of mobile-based payment methods, compared to their global counterparts. In comparison with the global average, almost twice the number of respondents in India use their smartphones or mobiles to pay for their purchases. Moreover, the number of consumers accessing promotional codes or reward points on mobiles is higher than the world average. However, as mobile usage increases, there is a growing concern in the country about personal credit-related information being hacked from mobile phones.

What are shoppers using social media for?

Going social

Besides the online channels in which they shop, social media and online communities provide a number of ways of adding additional benefits to shoppers. Particularly millennial shoppers, those aged between 18-35, are relatively active in the space. They use it to keep up with the latest trends, cited by 42% of men and 53% of women, to receive offers, cited by 58% of men and 61% of women, as well as to read product reviews, at 68% for men and 67% for women.

According to a recent report from McKinsey & Company, China's e-commerce market grew to $630 billion last year, with further growth anticipated as tech-savvy shoppers continue to flock the market. In comparison, Europe's B2C e-commerce market this year broke through the €500 billion mark.