E-tail market booming, may hit billion by 2020: Report

The country's e-tail market is expected to grow 10 times from its current level to USD 50 billion by 2020, primarily driven by better Internet penetration and higher incomes, said a report today.

"E-tail is the most recent segment, but its highest growth rates and success will be the key driver of the overall e-Commerce market," said a UBS report. The Internet & Mobile Association of India (IAMAI) estimates that the overall Indian e-Commerce market, of which e-tail is a segment, is currently worth USD 16 billion.

The report made a specific mention of the Indian Railway Catering and Tourism Corporation (IRCTC) as "the best example" of a successful Indian e-Commerce venture.

"We estimate that IRCTC had an estimated total sales of USD 3 billion in 2014 with an online penetration level of 43 percent. Its success indicates that the Indian consumer is willing to accept technology if it is a compelling value proposition," the report stated.

The marketplace model of e-tailing will gain prominence "as it is scalable and requires less capital and time than other models". "Current regulations and the presence of large unorganised sellers (mom-and-pop shops) also support this model," it added.

Multi-product e-tailers (Flipkart, Amazon India and Snapdeal) are moving towards the marketplace model while e-tailers in niche categories such as furniture, baby products and grocery have hybrid business template, the report pointed out.

At the same time, it played down investor concerns about e-Commerce being a bubble in India are "misplaced". "Analysis of the supply chain for offline retail by category implies adequate margins for e-tail in future," the report stressed.