,

E-commerce Market to Account for 2.5% of India’s GDP by 2030-Study Found

The e-commerce market will account for 2.5 percent of the India’s GDP by 2030, growing 15 times and reaching $300 billion, a report by Goldman Sachs said. The current market size of e-commerce is $20 billion.

The report says hyper growth in affordable smartphones, improving infrastructure, and propensity to transact online are key growth factors.

“The Indian e-tailer on average incurs 1.35 times of the GMV (gross merchandise value) sold as expenses, suggesting gross losses of 35%,” Goldman Sachs analysts Rishi Jhunjhunwala, Piyush Mubayi and Venkat Surapaneni said in their report dated May 4. “We believe this is likely to continue till the online shopping penetration reaches a steady state in about 5 years from now.”

Indian e-commerce market retailers such as Flipkart and Snapdeal will need to collectively raise another $20 billion (Rs 1.27 lakh crore) over the next five years to be able to sustain growth,Goldman Sachs said in a report.

“Further, India’s attractive demographics – the youngest population in the world – should lead to over 300 million new online shoppers in the next 15 years, making e-tailing the largest online segment,” it said.

The report identified e-retailing, online travel, digital advertising market and electronic payments as segments that could “potentially catalyse domestic companies into multi-billion dollar businesses”.

Goldman Sachs predicted India will be the second-largest digital market in the world, after China, with the e-commerce market estimated to grow 15 times to $300 billion by 2030, accounting for 2.5% of the GDP by then. The report comes after other investment banks too published reports predicting rapid growth for Indian e-commerce market over next five years.

“India has enough spectrum and telecom infrastructure to provide 3G data coverage to 25-30 percent of the population,” it said, adding that “further, 3G-enabled smart phones are available for $40 with more than 900 phones launches last year”.