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Indian online retail outpaces physical

News, 05 October 2015
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KOLKATA: The online retail sector in India is growing between four and six times as fast as other more traditional retail formats as shoppers flock to online marketplaces, a study has claimed.

A report by property consultant Colliers International and researcher Frost & Sullivan said that online retail grew 40% in 2013-14, compared to the 10-12% registered by organised physical retail and the 6-7% recorded by bricks-and-mortar retail.

And while e-tailing is still relatively new to India and so growing from a low base, it is having a profound impact on the country's retail sector as leading physical retail brands adopt an omnichannel approach and smaller neighbourhood stores get co-opted into the distribution chain for online purchases.

"Retail across channels has the potential to grow over the next two decades," according to Rakesh Biyani, joint managing director, Future Retail.

"Any retailer that will create an omnichannel retail presence will most likely get a bigger share of the growth in consumption," he told the Business Standard.

A separate report from consulting firm TechSci Research suggested that the Indian ecommerce market will grow at a compound annual growth rate of 36% over the next five years, driven by increased penetration of smartphones and continuing significant discounts from the leading ecommerce players who are battling for market share.

Karan Chechi, research director with TechSci Research, observed that a young workforce had little time to indulge in traditional shopping habits and this further increased the potential for online shopping.

TechSci Research also noted that improvements in the payment structure were making a difference. "Consumers in India are gradually shifting towards [the] online space and are shedding their belief of [the] online shopping medium being unsafe," the firm said.

In this context, Colliers International and Frost & Sullivan pinpointed the offer of cash on delivery as a "game changer" for e-tailing.

Data sourced from Business Standard, TechSci research; additional content by Warc staff

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