ONLY WAY IS UP

India’s e-commerce sector is a lot smaller than you would think

Quartz india
Quartz india

There’s been much speculation about the size of India’s e-commerce sector, which has lately been lavished with attention and funding from some of the world’s biggest venture capital firms and retailers.

But the numbers are somewhat underwhelming.

India’s e-commerce sector is currently estimated at around $33 billion by US-based research firm eMarketer which shared its numbers with Quartz. This means e-commerce will account for just 2.9% of India’s total retail market in 2018. However, by 2021, it will cross $50 billion, growing around 50% over three years.

Now, consider that the world’s largest e-commerce acquisition was announced in India last month when Walmart bought a majority stake in homegrown Flipkart for a massive $16 billion. The deal value: $22 billion.

The Indian e-commerce sector has several other players valued in billions of dollars. For instance, American e-tailer Amazon’s India arm is reportedly valued at $16 billion and digital payments firm Paytm’s e-commerce business, Paytm Mall, apparently has a valuation of around $2 billion. Another unicorn, Shopclues, was valued at $1.1 billion in 2017.

Given all this, $33 billion doesn’t seem like a lot. Nonetheless, the players are investing heavily.

Amazon is reportedly looking to splurge $2 billion, in addition to the $5 billion CEO Jeff Bezos has already committed to India. China’s Alibaba is also heavily invested, backing Paytm Mall and grocery delivery startup BigBasket.

These investments are perhaps based on the hope that the ongoing spike in internet penetration will push e-commerce growth. Over 337 million Indians—a quarter of the population—are likely to use a smartphone by the end of this year. Just 25% of India’s population will shop online in 2018, but by the end of 2022, that share will grow to 42%, eMarketer estimates.

“…Flipkart, Amazon, and Paytm Mall have been competing fiercely,” said Eric Haggstrom, forecasting analyst at eMarketer. “All three are making large investments, which include improved logistics and payment systems, as well as offering deep discounts, which will fuel future growth in the market.”

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