New Delhi: Annualised GMV for e-commerce companies in India fell 5-10 per cent in the second quarter of 2016 to USD 13 billion, impacted by fewer discounts by players like Flipkart and Snapdeal, research firm RedSeer said today.
"While there was a strong growth pattern in calendar year 2015, the annualised gross merchandise value (GMV) run rate for the Indian e-tailing industry dropped sharply in size in both quarters of 2016 till date," RedSeer Consulting Founder and CEO Anil Kumar told reporters here.
Gross Merchandise Value or GMV refers to the total sales made through an e-commerce platform. The quarterly/monthly GMV figure is projected for the full year to arrive at the annualised GMV run rate.
"However, driven by increasing Internet and smartphone penetration (especially in tier II cities), growing disposal income and increasing comfort with online shopping across categories, the GMV is expected to grow at a CAGR of 50-60 per cent to USD 80-100 billion by 2020," he said.
Talking about the coming quarters, he said, "Q3 is expected to be flat, while by Q4, we should see the GMV going back to about USD 17 billion, helped by the festive season". Kumar attributed the fall in GMV run rate to e-commerce companies offering fewer discounts as part of their efforts to curtail cash burn.
"Going ahead, we may see the discounts being offered under special sale offers instead of being spread out throughout the year," he said.
Asked about consolidation in the e-commerce industry in India, Kumar said, "We expect there will be 2-3 players who would account for 70 per cent of the market."
Over the past few quarters, the online retail industry has seen a large number of acquisitions as well as shutdowns, as some of the companies have struggled to grow amid heated competition and drying up of investor funds.
Recently, Myntra (which was bought by Flipkart) acquired rival Jabong for USD 70 million. Last year, Snapdeal had bought Exclusively.com to strengthen its fashion business. According to RedSeer, the average order value (AOV) will grow marginally from USD 33 (in 2015) to USD 36 (in 2020), while number of monthly transactions per shopper is pegged to grow from 1.5 to 1.9 over the same time frame.
"While the AOV won't go up drastically, the growth will be driven by addition of new users and more consumers shopping online for high frequency categories like fashion and FMCG," Kumar said.
The number of internet users in the country is expected to grow from 370 million in 2015 to 600 million by 2020. Similarly, the percentage of online shoppers is also expected to go up to 16 per cent (96 million) in 2020 from 5.7 per cent (21 million) in 2015.
Kumar said users cite reasons like lack of ease in e-shopping, slow internet speed and lack of reliability of delivery for not shopping online.
"However, most of these current barriers will pose only a limited threat to online shoppers by 2020," he added. Going forward, fashion is expected to become an important category for e-commerce players, accounting for 36 per cent of the market from 20 per cent now.
"Online fashion market has a very low penetration in India, whereas for mature markets like China and US, the penetration of fashion to the overall industry is as high as 30-35 per cent," RedSeer Engagement Manager Mrigank Gutgutia said.
Going ahead, e-commerce companies should work on increasing comfort of shoppers from tier II cities, deepen understanding of customers with respect to their actual shopping needs and localise advertising campaigns to fuel growth, he added.
"They should also continue to invest in reliable and fast delivery to remove a major pain point amongst non-shoppers currently," he added.
Published Date: Aug 24, 2016 07:18 pm | Updated Date: Aug 24, 2016 07:20 pm