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Diwali online spending surge expected

News, 22 September 2015

NEW DELHI: As India's ecommerce sector prepares for the busiest time of the year, a Google executive has predicted that online consumer spending could triple this Diwali season.

"Our estimate is that e-commerce in India this Diwali should be 2.5 to three times as much as last year," Nitin Bawankule, director of e-commerce at Google India, told the Business Standard.

"Of the industry's $4.5bn worth of transactions last year, close to $2bn sales took place in that three-and-a-half-month period (September to December)," he said. That translates into spending of $6bn this year if his assessment is correct.

He was unconcerned about relatively weak consumer sentiment, which one economist recently described as "bumping along at a lower level compared with last year". The MNI India Consumer Sentiment Indicator edged upwards slightly in August to 119.1 points from 118.6 in July, the first improvement in four months.

"The class that is buying (goods online) is clearly not the one severely affected by macroeconomic factors. Their salaries and incomes have not come down. They are not affected by a drought, either," said Bawankule.

"So, the people who can afford to buy online and have access to do so will buy. And, they might shift a lot more of their shopping budget from offline to online." Looking further ahead, that trend is only going to increase, he added.

The middle class currently makes up around one fifth of the total population, he pointed out. "That entire middle class will have experienced online shopping in the next three to five years," he stated. "If not every person from the middle class, at least every family will have shopped online at least once a year."

Google is working with consumer product firms like Unilever to take samples of their products to millions of consumers across India and prod them to buy online.

By the end of this year some 60m consumers will be buying online, but Google expects that figure to reach over 200m by 2020.

Data sourced from Business Standard; additional content by Warc staff