India set to take over ecommerce reins from US by 2034 - study

While India accounts for less than 1% of the world’s ecommerce spend today, the country’s online retail market is set to grow by a significant 28% per year by 2020, making it worth USD 63.7 billion at the indicated years end, according to The Global Payments Report, issued by the payments services provider WorldPay, retailtimes.co.uk reports.

This growth will be driven by a combination of technological change, rising income levels and favourable demographics. Around 730 million Indians will be internet users by 2020 – 250 million higher than today. Many of these new users will be mobile-first, with India both the world’s fastest growing smartphone market and one of the cheapest places to access the mobile internet with data plans 2 x cheaper than in China.

Furthermore, with wages in India rising by 10% in 2016, according to research by Korn Ferry, the average Indian consumer’s spending power will increase significantly in the coming decade. These new, richer, internet-enabled consumers will also be ripe to participate in the online economy as, with almost 70% of its population under the age of 35, India has the largest youth population in the world.

All of these factors add up to make south Asia the next centre of explosive ecommerce growth after China, whose share of the world online retailing market will reach its peak in 2034, accounting for 50% of global spend, according to Worldpay’s projections.

Indian online shoppers behave very differently from their counterparts in the US and China. For example, by 2020, 39% of Indian online shoppers will be paying for goods and services online using direct bank transfers, while in the US and China 28% and 46% of shoppers respectively will be paying using eWallets such as PayPal or Alipay, the research reveals.

Another strong signal that the Indian ecommerce market is at a tipping point can be seen in the decline of cash on delivery as a form of payment for online purchases. Cash on delivery accounts for just over a fifth (22%) of payments for online goods in 2016, but this will decline to 9% of purchases by 2020, the WorldPay research highlights.