India’s ecommerce market size has a potential of $500 billion

Today’s post on GetElastic “The State of Ecommerce in India” talks about the ecommerce potential in India. The infographic is very interesting in that post. It compares the ecommerce market size in US & India. The graphic starts of by questioning the statement ‘India’s ecommerce is BOOMING’. Main points are,

  • India’s population (1.2 billion) is thrice the size of US.
  • But India has low internet penetration (100 m), low credit card penetration, slow internet speeds, logistics issues.
  • Current ecom market size in India is $10 billion which the post says is way too small to be happy about.
  • US ecom market size is SIXTEEN times bigger.
  • Current ecom growth rate is 47% CAGR (Compound Annual Growth Rate). At this rate of growth India’s ecom size would reach from current $10 billion to $100 billion in six years (2017)
  • If US had 1.2 billion people their ecom market size would have been $500 billion today.

Indian ecom sites that are having global recognition seem to be Flipkart, Infibeam, Makemytrip (listed on Nasdaq) and funnily the graphic for Amazon says “Moving to India” (instead of “starting its India operations”). Well, the way everyone is talking about ecom in India (i.e. “hype”) you never know if global players will shut shops in Western countries and “move to India”.

Why Will India’s Ecom Grow?

  • Tier-2 cities will play a bigger role.
  • GDP will grow by 5 times by 2030.
  • 98% rise in internet usage in rural areas (with cash on delivery, ecom will be a reality for Tier-3)
  • Mobile internet usage to increase by end of 2012 (current estimates: 150 million mobile internet users)
  • Every year urban population increases by 90 million.
  • 45 million debit cards issued annually.
  • We will see alternate payment models coming in India.
  • VCs flavor of the day in India is ONLY ecommerce.

Valuations in India

Ecommerce portals in India are having great valuations today. VCs who were “not” able to invest into the good ones have started bashing the valuations (simply because they missed the bus). But then few startups (less than a year old) have unrealistic valuations which could hurt the entire eco-system.

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