India?s online retail industry market will grow 50-55% over the next three years to reach Rs 50,400 crore by 2016, according to a report by Crisil. This is close to a four-fold rise from the estimated market size of Rs 13,900 crore in 2013.
Online retail was worth mere Rs 1,500 crore in 2008. ?From around 8% share of the organised retail market in India now, online retailing will zoom to around 18% by 2016. But as a proportion to overall retail ? including the massive unorganised segment ? it will be just over 1% at the end of that year. Yet the potential is huge,? says Rahul Prithiani, the director, Industry Research.
Online retailing has seen high levels of growth in the last few years. For example, India?s largest online retailer Flipkart India saw its revenue rise five-fold to Rs 1,180 crore in FY13 from Rs 204.8 crore the previous year. Apparel retailer Myntra saw sales of R212.4 crore and expects to reach a turnover of Rs 800 crore in fiscal year 2014.
Apart from a spurt in online growth, Crisil also sees brick-and-mortar stores focusing on online expansion. Over the past 4-5 years, competition from online retailers such as Flipkart (in books, music and electronics) and Myntra and Jabong (in apparel) has hurt physical retailers, forcing many to also go online ? even as their net store additions have declined, the report notes.
?Physical retailers in India will have to establish their presence online quickly. And, with the right strategies, they can even compete effectively. For instance, to tackle the queue problem at its stores, Wal-Mart allows customers to shop online and opt for either home delivery or store pick-up. Today, Wal-Mart is among the top-5 online retailers in the US with estimated revenues of $10 billion in 2013 from the online segment alone,? the report said.
Currently most retailers have non-store revenue less than 3%. Tata?s Croma launched its online operations in April 2012. ?We are already clocking 80 lakh to 1 crore of top line per week. Our growth has been over 100% y-o-y. Our prepaid order contribution is very high (close to 76%) unlike any other e-tailer,? said Joshi.
Aditya Birla?s Madura Fashion and Lifestyle launched trendin.com last year which sells merchandise from Louis Philippe, Allen Solly, Van Huesen and Peter England. ?Over the last ten months, we have seen a double digit compounded growth on a monthly basis,? said Shivanandan Pare, general manager ? e-commerce. About 35% of the website?s sales come in from Tier III cities.
