The online fashion retailing market in India may be in its emerging stage, but its growth rate has become more and more impressive over recent years. 聽As an increasing contribution to the country鈥檚 total fashion sales every year, India鈥檚 online fashion retailing market was worth over US$1.8 billion in 2015, and is expected to grow at a significant CAGR of around 63% by 2020, according to Technavio. The growth is mainly driven by the country’s huge population, increasing internet penetration, the development of country鈥檚 infrastructure, and the increasing purchasing power.
India is currently the ninth largest economy in the world, with a population base of 1.3 billion and the urban sector comprising 32% of the total population in 2014. About 62% of India’s GDP contribution comes from urban regions, making the population in urban India the largest and the most potent customer base for the online fashion retailing market.
The availability of a wide array of payment options is believed to be one of the major factors for the market growth. Presently in India, customers can choose different payment methods for online shopping including debit cards, credit cards, cash on delivery (COD), electronic wallets, smart cards, internet banking, demand drafts, and cash on order.
Meanwhile, many banks in the country have also started collaborating with vendors for quick, safe, and secure online transactions. The availability of a broad range of secure payment options and the extensive use of credit cards to make purchases will lead to the strong growth of the online fashion retail market in India.
Other preferential demographic factors such as a dense population, growing income levels, and a youth-centric population, which is the prime consumer category of the online fashion retail market in India, are also contributing to the growth of the market. Realizing these positive aspects, many large traditional stores have already established their online retail platforms.
However, compared to others of聽world鈥檚 largest online fashion retailing markets like the US and China, online retail penetration in India, especially online apparel retailing, is still low due to the lack of adequate infrastructure, presence of a large unorganized retail sector, and concern about online fraud.
Unlike the US, where users generally prefer prepayment for online retailing due to the high penetration of credit cards and electronic payment modes, Indian consumers are cautious of making prepaid orders due to trust issues over online payments. In developed countries like the US, the focus is on the speed of delivery whereas Indian e-commerce today is about discounted pricing.
Also, internet penetration in India is still low in comparison to other emerging and developed countries, which is restraining the growth of the online retailing market in the country. On the other hand, however, that also means these is still huge potential for the market growth in India.
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