Online impulse buys and high rates of offline shopping

The Boston Consulting Group has revealed in a new study that almost half of India’s urban population are now shopping online, making India’s e-commerce CAGR the highest in Asia. The five year compound annual growth rate (CAGR) for the Indian e-commerce market predicted for 2016 to 2021 is far higher than other Asian countries, as predicted by Forrester, 2017. Where South Korean e-commerce CAGR is at 13 per cent and China’s and Japan’s at 10 per cent the Indian CAGR is at 31 per cent. This shows how fast the market is developing in the region, although it is also because the e-commerce market in India is younger than in the other countries mentioned. Nevertheless, more and more Indian consumers are starting to shop online and fashion is the second biggest online seller.

Digital channels, although far from the main platform on which Indians shop, do play a significant role in their decision making. A total of 70 per cent of surveyed consumers noted that digital channels influenced their purchasing decision, even though they may have made their final purchase offline. Sales from online shopping only made up only 16 per cent of transactions but 26 per cent of the total retail revenue. This shows that consumers often make more expensive purchases online. Where offline purchases made up 78 per cent of total purchases, they only made up 58 per cent of the total revenue, due in part to the fact the groceries, which are cheaper than fashion and electronics, are overwhelmingly purchased offline (94 per cent).

Fashion has exploded online in India in the past few years and this has led to an increase in impulse buys. Over half of online fashion purchases are classified as impulse buys by The Boston Consulting Group, showing that the industry is certainly benefitting from the online market. This is also reflected in the large numbers of fashion retailers that are expanding online, Duke Fashions and Catwalk, to name but a few.