The e-tailing market is expected to reach $15 billion by 2016, with 50 million new buyers to come from tier 1 and 2 cities.
Consumer confidence to shop online will continue to rise and India will have 100 million online shoppers by 2016. This was revealed by Google, in its annual online shopping growth trends report, compiled by combining an extensive research conducted by Forrester Consulting and Google search trends.
The research was conducted by Forrester Consulting by interviewing 6,859 respondents covering both online buyers and non-buyers in 50 cities/towns. The study involved 4,213 males and 2,646 females. There were a total of 3,447 male buyers while 766 non buyers and 2,163 female buyers and 483 non buyers.
The research further revealed India will see over 50 million new buyers from Tier 1 and Tier 2 cities. The confidence to shop online was on the rise as 71 per cent non-buyers from Tier 1 and 2 cities said they plan to shop online in next 12 months. The findings also revealed that women buyers in Tier 1 cities were more engaged in online shopping, and outspend men. Women were also responsible for driving growth in categories like apparels, beauty and skincare, home furnishing, baby products and jewelry.
This research finding was consistent with search query trends seen on Google. Search volume for apparels grew at 64 per cent yoy, Baby Care at 53 per cent yoy, beauty and personal care at 52 per cent yoy and home furnishing at 49 per cent year on year.
Looking at the growth trends of the categories, the report also projected that 40 million women are estimated to shop online in India by 2016. Over 60 per cent respondents also felt that buying online was directly correlated with social status. Mobile phones emerged as an important access device for online shoppers with 1 out of 3 online buyers transacting on their mobile phones in Tier 1 and Tier 2 cities.
In Tier 3 cities, 1 in 2 buyers said they use mobile phones to purchase products online. This was also reflected in Google search trends with mobile phones queries growing 3x in last three years.
Today, over 50 per cent of shopping queries were coming from mobile phones, this share was as low as 24 per cent just two years back.
Speaking at the launch of the report, Nitin Bawankule, industry director for e-commerce, local and classifieds, Google India, says, "The consumer confidence to shop online has grown significantly in last year and a half, and our objective was to understand the factors that are driving this growth and arrive at indicators that will help propel the Industry forward. As the report indicates, behavior of Indian online buyer is fast mirroring buyers in more developed markets as more subjective product categories have started to see significant growth. The e-tailing industry needs to act now to cater to this strong user growth trend."
Amongst the challenges, 62 per cent buyers said they were not satisfied with their online shopping experience. 67 per cent buyers also highlighted that the current return process was too complicated and expensive. Trust was a major issue with non-buyers as 55 per cent non-buyers did not trust the quality of products sold online, 63 per cent said they were concerned about the safety of transacting online and 65 per cent said, they don't feel comfortable sharing personally identifiable information online. 66 per cent of total respondents said that poor connectivity was also a major barrier for them to shop online.