India’s e-commerce market is expected to record nearly $33 billion in sales this year

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When Walmart closed a deal to acquire a 77% stake in Flipkart, India’s leading online retail platform, for $16 billion last month, its motivation was clear. The US retailer wanted to conquer India’s e-commerce market, powered by the belief that the market was primed for staggering growth.

And grow it shall. According to eMarketer, a market intelligence firm, online retail sales are expected to rise by nearly a third to $32.7 billion aided by the growth of the discount hungry-middle class and continued smartphone and internet penetration. This makes India’s e-commerce market the fastest growing in the Asia-Pacific after those of China and Indonesia.

Room to grow

As Walmart was closing its Flipkart detail, it forecasted that India’s e-commerce sector would grow four times as fast as the overall retail sector over the next five years. The product segments that will contribute to this growth are mainly groceries and fashion.

India’s e-commerce market has tripled in size since 2015. While the rate of growth becomes harder to top each year as the market expands, e-commerce sales will still comprise only 3% of the total retail sales in India this year. Hence, there’s a lot of room to grow. In fact, online sales are expected to more than double between 2018 and 2022, reaching $72 billion.

More people are shopping online in India than ever before. By the end of the year, around a quarter of the population will be shopping online. This proportion is expected to rise to nearly 42% by 2022.

Companies with big pockets

This growth is also being driven by the companies that are primed to benefit from it. Amazon, Flipkart and the Alibaba-backed Paytm Mall are spending big money on offering discounts to consumers and improving their logistics and supply chain infrastructure. Their heavy competition with one another for the top spot in the market will result in lower prices for Indian shoppers in the near term.
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