With an increasing number of Indians making online purchases, search engine Google and global management consulting firm AT Kearney have jointly released a report titled ‘Digital Retail in 2020: Rewriting the Rules’. The report talks about how e-tailing is set to become a significant contributor to the organized retail sector, with as much as 25 per cent of the contribution to be expected from e-tailing by 2020, which will reach $60 billion in gross merchandising value.
As per the report by Google and AT Kearney titled ‘Digital Retail 2020′, the total number of online shoppers is expected to grow to 175 million by 2020, with one-third customers driving two-thirds of total online shopping spends.
The study points out that lifestyle will be the largest online category by 2020. Also, customers will be driven by product assortment and convenience as key purchase drivers rather than discounts. Besides, the e-tailing industry will have customers who will pay willingly for select premium services and that 50 per cent of organised retail will come through digital in 2020.
The study goes on to say that personal computers (PCs) will continue to be relevant for select customer segments, as well as categories such as jewellery, furniture, and furnishings.
Value-added service will be a key differentiator and over 90 per cent of the online buyers will be willing to pay for premium value-added services, it added.
“Over 46 per cent of online buyers (interviewed) said they will be willing to pay extra charges for faster delivery; 37 per cent for hassle-free return and 35 per cent were willing to pay more for extended warranty,” the report said.
Besides, lifestyle (apparels and accessories) as a category is expected to overtake consumer electronics to become the largest online segment by 2020 at 35 per cent of the total online spends. Consumer electronics is expected to be at 20 per cent by 2020.
Ajay Gupta, Partner with AT Kearney, said as internet continues to grow, digital presence is paramount for brands and organised retail.
The report forecast a 5-times growth in number of women shoppers by 2020 with their share of online spend more than doubling.
Niche categories like home (furniture and furnishing) and personal care is expected to see high adoption due to assortment and convenience of purchase, especially in tier-II cities.
About 55 per cent of online volumes will be driven by cashless transactions by 2020 as against 40 per cent currently. Mobile wallet share is also expected to double by 2020 to reach 15 per cent from current 8 per cent.
“The next 3-4 years will be critical for the industry to get on the path of sustained profitability.
“As per the report, some of the areas that will accelerate and support profitability include following a focussed approach to drive deeper engagement with 60 million high-value customers as they will drive 2/3rd of the total spends on e-tailing,” Google VP and Managing Director South East Asia andIndia Rajan Anandan said.
The report says that 125 million shoppers will come online by 2020. Moreover, women will more than double their share of online spends to more than 40 per cent in 2020. It further states that online marketplaces will play a bigger role in enabling the growth of the seller ecosystem. The report also predicts that the total number of online shoppers will grow to 175 million by 2020 and that one-third of the customers will drive two-thirds of the total online shopping spends.
Cash On Delivery (COD) will remain a dominant payment mode even though its share of transactions will decrease by 2020, according to the report