Online shopper base in India to reach 100 million by 2016, Google Forrester Report

Consumer confidence to shop online will continue to rise and India will have 100 million online shoppers by 2016. This was revealed today 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 report revealed that India’s e-tailing market is at an inflection point and will see rapid growth to become a $15 bln 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 online shoppers base will grow 3x 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 next 12 months. The findings also revealed that women buyers in Tier 1 cities were more engaged in online shopping, and outspend men by 2x. Women were also responsible for driving growth in categories likeApparels, beauty & skincare, home furnishing, baby products and jewelry. This research finding was consistent with search query trends seen on Google with search query volume for Apparels growing at (64% yoy), Baby Care (53%yoy), Beauty & personal care (52%yoy) and home furnishing growing at 49% 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. 2/3rd of online shoppers highlighted Convenience and Variety as major reasons to shop online in addition to discounts. Over 60 percent 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 percent of shopping queries were coming from mobile phones, this share was as low as 24% just two years back.

Speaking at the launch of the report, Nitin Bawankule, Industry Director for Ecommerce, Local and classifieds, Google India said, “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. Improved customer experience across all touch points, 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 contributor to the growth of online shopping and there is a huge opportunity waiting to be unlocked in this user segment.”

Amongst the challenges, 62 percent buyers said they were not satisfied with their online shopping experience. 67 percent buyers also highlighted that the current return process was too complicated and expensive. Trust was a major issue with Non buyers, 55 percent non buyers did not trust the quality of products sold online, 63 percent said they were concerned about the safety of transacting online and 65 percent said, they don’t feel comfortable sharing personally identifiable information online. 66 percent of total respondents said that poor connectivity was also a major barrier for them to shop online.