Lifestyle will be largest online category by 2020: Google and AT Kearney Report

By afaqs! news bureau , afaqs!, New Delhi | In Digital | June 01, 2016
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The jointly done study is titled 'Digital Retail 2020:Rewriting the Rules'. Respondents comprise internet users and non-users across 20 Indian cities, across tiers.

The search engine Google and the 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 organised 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.

The report, which claims to be the largest-ever consumer study in e-tailing, has taken into account over 3,000 consumers for its survey that involved qualitative interactions like personal interviews, as well as focus group discussions (FGDs) using the proprietary model. The proprietary model predicts e-commerce spends across categories, income segments, and geographies in 2020. Respondents comprise internet users and non-users across 20 Indian cities, across tiers.

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.

Commenting on the key findings of the report, Rajan Anandan, vice-president and managing director, Google, South East Asia and India, says, "The e-tailing industry in India is at an inflection point and will touch 175 million online buyers by 2020. But, the next three-to-four years will be critical for the industry to get on to the path of sustained profitability."

Rajan Anandan

As per the report, the areas that will accelerate and support profitability include a focussed approach to drive deeper engagement with 60 million high-value customers as they will drive two-thirds of the total spends on e-tailing. Innovative delivery models and creating an omni-channel presence will help bring on board new online shoppers and help grow the overall share of e-tailing from the organised retail industry in India.

Ajay Gupta, partner, AT Kearney, adds, "As the internet continues to grow, digital presence is paramount for brands and organised retail. It will influence 50 per cent of all purchase decisions, be it in discovery or comparison. Our data reveals that the majority of buyers will continue to purchase online even if there are no discounts. With the right gameplan and focussed efforts, the e-tailing industry will grow at a healthy compound annual growth rate (CAGR) of 40 per cent+."

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.

See the full report below.

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