Retail

India’s Ecommerce Impact Is Tiny But Not For Long

India has been the next bastion of growth for eCommerce companies, including Amazon and Alibaba, but the market is still in its infancy, accounting for just 1 percent of the world’s spending online.

That’s according to Seeking Alpha which, in a broad report looking at the state of eCommerce in India, said the low penetration rate of eCommerce in the country is mainly due to the low number of Internet users compared to its total population.

With only 34 percent of India’s population online, it’s a tiny sliver when compared to the 90 percent of people that use the internet in the U.S. The number of people using the internet is also lower than China, where Seeking Alpha said the penetration rate stands at 52 percent.

While the penetration rate has slowed the growth of eCommerce, it also provides a big opportunity as more people in the country come online. After all, as Seeking Alpha pointed out, internet usage was just 7.5 percent of the population in 2010, and it’s now at 34 percent, which marks a faster growth rate than China and even the U.S. The growth in India is expected to continue for some time.

The report pointed to a study conducted by The Future of Internet in India, which found more than 730 million people will eventually use the internet in India, which means more than 250 million new users. But it’s not only an increase in the number of people using the internet, but also the reliance on it.

According to the report, people in India will increasingly rely on the internet for all sorts of things, including eCommerce. Seeking Alpha noted that by 2020 India’s online retail market will be valued at more than $60 billion. By 2034, one study predicts the market will exceed $2 trillion. If that proves true, India will surpassed the U.S. in terms of market value when it comes to eCommerce.

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