Walmart India President and CEO Krish Iyer expects the eCommerce market in India to explode during the next decade.
According to a report in Money Control citing Iyer, the executive expects the online retailing market to see growth of six times to reach 12 percent during the next decade. As it stands, eCommerce represents only 2 percent of the market. The executive said the market will be aided by an increase in the omnichannel format as the gap between physical stores and eCommerce start to close.
During a presentation at the India Food Forum Tuesday (Jan. 5), Iyer was quoted as saying consumption will be aided in the next 10 years by the growth of the GDP in the country. He said India’s GDP is expected to reach $6.3 trillion during the next decade, which translates into a 9 percent compounded annual growth rate. “The second key aspect is the growing middle class, which matters the most for India and will become the largest segment. Around 40 percent of total consumption by 2027 from the current 27 percent will be from the middle class,” Iyer said. The executive noted that if merchants enhance the online shopping experience eCommerce will grow.
Strength in tier II and III towns will also play a role in eCommerce growth. Iyer said he believes tier II and tier III towns are growing and getting stronger and as a result will drive consumption. The executive predicted consumption from the towns could be 45 percent, up from the current 36 percent rate. Iyer pointed to rural areas as a particular area of growth, noted the report.
Walmart is in a battle with Amazon to gain eCommerce dominance in the country. Walmart’s multibillion-dollar acquisition of India-based eCommerce Flipkart is part of its strategy to expand in the country. But Walmart and Amazon face challenges now that new eCommerce rules have taken effect. The new regulation is requiring them to overhaul their ownership structures in India and rearrange partnerships with merchants, raising the costs of operating in the country.