E-tailing to reach Rs 50,000 cr in three years

As per a study by Crisil, online retailing, both direct and through marketplaces such as eBay, will triple to

become a Rs 50,000-crores by 2016, growing at a whopping 50-55 percent per year over the next three years. The estimates are over 30 times the size compared to the end of 2007-08. The segment has been growing with revenues surging from around Rs 1,500 crores in 2007-08 to an estimated Rs 13,900 crores in 2012-13, or a compounded annual growth rate of 56 percent.

However, despite the aggressive pace of growth, online retailing still remains a nascent part of the overall e-commerce segment in India where the travel business dominates with about two-third share. But the equation is surely showcasing a change fast enough to pose a threat to brick-and-mortar retailers, not just of books, music and electronics, but also apparel and grocery, Crisil points out.

Though just around 8 percent share of the organized retail market in India now, Crisil study says that online retailing will grow around 18 percent by 2016. But as a proportion of overall retail, including the unorganized segment, the growth will be just over 1 percent at the end of that year. Compared to western countries, India has huge potential, it says. In the US, which is the biggest market for online retail, and the UK, the share of online retail is around 9-10 percent and in a developing market such as China, it is 4-5 percent.

Rising competition in the same space from e-platforms like Flipkart, Myntra and Jabong in electronics, fashion etc has begun impacting the sales at physical retailers. Even in the perishables market, e-commerce companies such as BigBasket and Localbanya are posing as a threat to local retailers because of their quick services. The solution, according to Crisil is physical retailers establishing a presence online.