The report also says that over 50 million new buyers are expected to come from Tier 1 and 2 cities, and women buyers will lead the growth
BestMediaInfo Bureau | Delhi | November 24, 2014
Consumer confidence to shop online will continue to rise and India will have 100 million online shoppers by 2016, according to Google’s annual online shopping growth trends report, compiled by combining an extensive research conducted by Forrester Consulting and Google search trends. The report revealed that India’s e-tailing market is at an inflection point and will see rapid growth to become a $15 billion market by 2016.
The research conducted by Forrester Consulting by interviewing 6859 respondents, covering both online buyers and non-buyers in 50 cities/towns, revealed that the online shopper base will grow three times by 2016, and over 50 million new buyers will come from Tier 1 and Tier 2 cities. The confidence to shop online was on the rise as 71% non-buyers from Tier 1 and 2 cities said they plan to shop online in the next 12 months. The findings also revealed that women buyers in Tier 1 cities were more engaged in online shopping, and outspend men 2x times. Women were also responsible for driving growth in categories like apparels, beauty & skincare, home furnishing, baby products and jewellery. This research finding was consistent with search query trends seen on Google with search query volume for apparels growing at 64% y-o-y, baby care 53% y-o-y, beauty & personal care 52% y-o-y and home furnishing growing at 49% y-o-y.
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. Two-third of online shoppers highlighted ‘convenience and variety’ as major reasons to shop online in addition to ‘discounts’. Over 60% 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 phone queries growing three times in the last three years. Today, over 50% shopping queries were coming from mobile phones – this share was as low as 24% just two years back.
Nitin Bawankule, Industry Director for E-commerce, Local and Classifieds, Google India, said, “The consumer confidence to shop online has grown significantly in the 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, behaviour of the 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. Improved customer experience across all touch-points and easy to use mobile apps can create a strong pull for non-buyers to shop online in Tier 1 and 2 cities. Women buyers are set to become the most significant contributors to the growth of online shopping and there is a huge opportunity waiting to be unlocked in this user segment.”
Amongst the challenges, 62% buyers said they were not satisfied with their online shopping experiences. 67% buyers also highlighted that the current return process was too complicated and expensive. Trust was a major issue with non-buyers – 55% non-buyers did not trust the quality of products sold online, 63% said they were concerned about the safety of transacting online and 65% said they don’t feel comfortable sharing personally identifiable information online. 66% of total respondents said that poor connectivity was also a major barrier for them to shop online.