Online grocery to lead India’s e-retail growth to $28 Bn by 2020: Crisil

The online retail market in India is expected to grow 250 per cent to touch Rs 1.8 trillion by 2020 fiscal.

Over the next three years, the e-retail industry is expected to continue its strong run, growing over 2.5 times to $28 billion (Rs 1.8 trillion) by fiscal 2020, the global analytics firm Crisil said in a report.

The sector will trigger a drastic change by shifting its focus to business consolidation, realignment and enhancing customer stickiness.

With the rising internet penetration, awareness of online shopping, and lucrative deals and discounts, the number of online spenders will increase in next few years. In the past few years, the online shopping segment has also trebled, reveals report.

Among the online segments, online grocery will be a fastest-growing segment (around 65-70 per cent CAGR between fiscals 2017 and 2020) in e-retail and almost quadruple over the next 3 years to Rs 100 billion in terms of revenues, the report further outlined.

The growth in e-grocery would be driven by investments, new strategies adopted by grocery players like introducing private labels, same day and next day delivery as well as B2B food services.

Also Read: Online retail growth remains flat in past 2 years, declines to 26% in 2017: Forrester

Apart from the grocery, apparel and fashion will drive growth in the online retail market, it added.

However, the online customer base has remained high in the major cities while the growth remains slow in the rural areas, the report mentioned.

Last month, Forrester in its report marked online retail growth over 100 per cent during 2013-15 but it remained flat in 2015-16. In 2017, the share of online retail climbed 2 per cent, while brick & mortar has 7 per cent penetration of the overall retail market.

It also suggested that investment in offline clothing and grocery-focused companies are expected to touch an all-time high in 2018.

It will lead to a rise in digital spending.  The digital spending is expected to grow 2.5 times from $40 billion to $100 billion by 2020, marked a report by Google India and The Boston Consulting Group (BCG) released on Feb 16.

The growth will be inclusive of sectors such as e-commerce ($18-45 billion), travel & hotel ($11-20 billion), financial services ($12-30 billion) and digital media ($200-570 million).

The report can be downloaded here.