NEW DELHI: Online retailers like Amazon and Flipkart are stepping up their activities in India, in just one sign of the category's increasingly rapid development.

A recent report sponsored by IAMAI, the government agency, stated India's web audience stood at 120m people at the close of 2011, a reach of roughly 10%, meaning considerable room for growth remains.

The latest figures from IAMAI also suggested that 10m people in India now buy goods on the net and pegged ecommerce revenues at Rs46,520 crore ($9.4bn) last year, a 47% annual improvement.

"Nobody knows exactly how fast it will grow, but access to the internet is changing so quickly, and internet retail will definitely be significant in the next five years," Raghav Gupta, a principal at Booz & Co, told the Financial Times.

Flipkart is the biggest player in India's ecommerce segment, and anticipates that its sales should near Rs600 crore in the 2011/12 fiscal year, rising to a forecast Rs5,000 crore in the next two or three years.

"Our target is not just those who shop online. We want to highlight the convenience of e-commerce to traditional offline shoppers and, thus, help grow the market," Sachin Bansal, Flipkart's CEO, said.

Elsewhere, Amazon is expected to open its first Indian fulfilment centre soon, and Mahesh Murthy, founder of Pinstorm, the digital marketing agency, argued the US firm's prospects seemed to be promising.

"India is a tremendously large potential market for Amazon," he said. "In fact, from the metrics we see, Amazon currently gets more traffic from India than Flipkart does, even though the former has no formal presence in India."

Numerous niche platforms have also appeared, like Firstcry, Hoopos and Babyoye in the baby care sector. As with most ecommerce sites, they typically accept cash on delivery, as buyers are often reticent to use electronic payment systems.

Properties offering premium lines from handbags to watches – such as Myntra, 99labels and FashinandYou – have proved similarly popular among shoppers unable to purchase these goods in another way.

"If hinterland consumers want to buy luxury products like perfume or purses or apparel, they have to physically come to Mumbai, so many of them are ordering on the net," Neelesh Hundakari, of consultancy AT Kearney, said. "The internet is a medium that mediates that."

Investors spent an estimated $500m on players in India's online retail industry last year, with firms such as Accel, Helion Ventures, SAIF Partners and Tiger Global a few of the operators backing young start-ups.

Data sourced from Financial Times, Livemint, Business Standard; additional content by Warc staff