The Indian online retail market will grow at a much slower pace as compared to China, says a new report by Kotak Institutional Equities which estimates gross sales or the value of merchandise sold on ecommerce platforms, referred to as GMV, to reach $28 billion by 2020. India’s online retail market is expected to grow at compounded annual growth rate (CAGR) of 45% between 2017 and 2020, as compared to 116% CAGR growth in China between 2009 and 2015.
Kotak’s estimate is one of the lowest for the market, with earlier reports estimating the market would be worth $50 billion by 2020. Wall Street investment banks Morgan Stanley and Goldman Sachs have been the most upbeat, even upgrading the size of the market in their recent reports.
Google India Chief Rajan Anandan also recently predicted that Indian ecommerce majors have a 10-year wait to become mega businesses with large revenues and profit pools. Anandan said that this is because Chinese etailing giant Alibaba’s GMV took off when GDP per capita in China crossed $4,000 in 2009, which for India is still 10 years away. The prediction comes at a time when online retail sales have flattened, as companies like Flipkart and Snapdeal have pulled back on discounts.
“The ubiquitous mom-and-pop retail shops and low female participation in work force (compared to China and other developing economies) may imply lower demand for the door-step delivery ‘convenience’ provided by ecommerce companies,” said the Kotak report.
Source: Economic Times
