By now, we all are aware that mobile commerce accounts for a major chunk of ecommerce traffic in India. However, every now and then a research report reinforces the growing power of m-commerce, just like the latest study conducted by research firm Forrester.
Online sales through mobile phones to reach $51 billion by 2020
US based research and advisory firm, Forrester revealed that almost 50% of the $12 billion annual online sales in India happens through mobile phones. Whereas, in the US and China, m-commerce’s contribution is 34% and 48%, respectively.
The report also affirmed that m-commerce is expected to cross desktop-based online transactions in 2016 and is set to grow five-fold to $51 billion by 2020.
Factors that contributed to m-commerce’s growth in India
- High penetration of smartphones in tier 2 and 3 cities
- Rising aspirations and value consciousness of buyers
The report stated, “One unique component of India’s e-commerce market is just how quickly it expanded to tier 2 and tier 3 cities across the country. Only 8% of the 1.3 billion populace lives in the top eight tier 1 cities (Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, Mumbai and Pune), where e-commerce penetration is already high. Today, leading online retailers Jabong, Myntra and Amazon report half their revenues from tier 2 and tier 3 cities. While the tier 2 and 3 cities have low PC and broadband penetration, they also have fewer brick-and-mortar stores, giving e-commerce a chance to fill the gap.”
Other findings of the report with respect to the Indian ecommerce market:
- India along with 4 other Asia-Pacific countries, namely China, Japan, South Korea, and Australia will fuel global e-commerce growth
- India is the fastest growing as well as the smallest e-commerce market in the Asia-Pacific region
- Popularity of cash-on-delivery (COD) is a challenge for ecommerce firms
- FDI restrictions in B2C ecommerce is another challenge that will affect the online industry’s growth
- Complicated logistics and last-mile connectivity is a major roadblock
Categorically addressing the COD trend in India, the report said, “While COD assuages consumer concerns about package delivery and product quality, it has significant implications for online retailers: costlier order fulfilment, greater chance of returns (one Ernst & Young study cited return rates averaged at 40% for COD online purchases in the market), and the risk of fraud by cash collection agents.”
Etailers are focusing on improving their mobile platform
“Starting early 2014, the focus moved entirely towards mobile. We said we will serve all customers, but focus-wise, what we would build for first is the mobile app,” shared Akshay Sahi, Head – Customer Experience, Amazon India.