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India's e-shoppers look beyond discounts

News, 02 June 2016

BENGALURU: Nine in ten online shoppers in India say they are prepared to look beyond the discounts on offer and to pay a premium for services such as faster delivery times and easy returns, according to a new survey.

The early years of e-commerce in India were characterised by huge discounts as fledgling sites sought to attract customers wary of the new channel, a practice that led to the government recently cracking down on the practice.

But Digital Retail 2020: Rewriting the Rules, a report from Google and AT Kearney which surveyed 3,000 primary consumers and sellers across 20 cities, suggests consumers are ahead of the government as they already value non-price factors highly.

Specifically, Exchange4Media reported, 46% of online buyers said that they would be willing to pay extra charges for faster delivery, while 37% would do so for hassle-free returns and 35% for extended warranties.

This development is in part due to the growing presence of women shoppers online – their numbers are predicted to grow fivefold to 75m by 2020 and their share of spend will double – who welcome flexible delivery times and easy returns as they are more likely to be shopping for apparel.

More generally, the number of online shoppers is expected to more than treble to 175m by 2020. And around one third of these will drive two thirds of online spending, the report said.

The effect will be to make the online channel an essential one for the organised retail sector; the report forecast that e-tailing could account for as much as 25% of its sales by 2020.

"As the internet continues to grow, digital presence is paramount for brands and organised retail," stated Ajay Gupta, Partner with AT Kearney.

"It will influence 50% of all purchase decisions be it in discovery or comparison", he added. "Our data reveals that [the] majority of buyers will continue to purchase online even if there are no discounts.

"With the right game plan and focused efforts the e-tailing industry will grow at a healthy CAGR of 40%+."

Data sourced from Exchange4Media; additional content by Warc staff