According to a report by global research and advisory firm, Forrester Research, India's online retail spending is expected to grow at a compound annual growth rate (CAGR) of more than 50 per cent over the next five years as more Indian consumers start purchasing online and reach $16 billion by 2018, which is an eight-fold increase from 2013.

The report titled ‘India Online Retail Forecast, 2013 to 2018’, expects the consumer base in India to grow. In 2013, the country's population was 1.28 billion with every sixth person having internet access. This means, over 16 per cent are online users of which only 14 per cent or 28 million users are online buyers. Forrester expects the online buyer population in India to grow to 128.5 million by 2018, which will represent 23 per cent of the total online population of India in 2018. 

The report states that the Indian online retail market is in a nascent stage, yet it is growing rapidly. Despite all of the existing challenges related to underdeveloped logistics and supply chain operations, poor last-mile connectivity, delivery rejections at the doorstep when cash on delivery payments are used, and low conversation rates, online retail in India grew by 67 per cent in 2013. 

Mobile commerce in India contributed 10 per cent to 15 per cent of online retailer transactions. 

The report says that the Tier-II and -III cities are ripe for picking courtesy the relative absence of the organised retail segment in these markets, which represents an opportunity for online retailers since the so-called unorganised retail sector does not have the same product selection as larger chains. 

Forrester’s report further says that Indian e-tailers continue to gain customer trust by offering high quality services like quick troubleshooting facilities, strengthening their mobile presence and engaging customers through social media.

Source: FirstBiz