Ecommerce in India: you ain’t seen nothing yet (INFOGRAPHIC)

More than US$3 billion of funding has gone into online marketplaces in India this year, as they expand and scale up rapidly across the country. While Flipkart and Snapdeal hogged the limelight last year, along with their global rival Amazon, the Alibaba-backed Paytm emerged as a shooting star in 2015. A number of niche sites also attracted eager investors to grow fast.

This year’s Diwali festival sales hogged attention on social media as the leading lights of ecommerce vied with one another to entice consumers with discounts and offers.

And yet, despite all the fireworks online, ecommerce still accounts for less than 1 percent of total retail sales in India, compared to 12 percent in China. Figures compiled by German price comparison app Idealo, which launched in India two months ago, show that B2C (business-to-consumer) ecommerce sales would amount to a little over US$25 billion this year, against nearly US$360 billion in China.

More frugal than the Chinese, and more demanding too

Indians are far more conservative buyers online compared to the shopaholic Chinese. Per capita, the number of ecommerce orders in China is three times greater than in India. At the same time, Indian consumers are more demanding – they expect delivery in 5 days compared to 5.5 in China and 6.3 in Japan. Asia’s most impatient consumers are in South Korea, though.

Ecommerce clearly has substantial room for growth in India. The country will have over 400 million internet users by the end of the year, overtaking the US to be second only to China. But only a quarter of them are shopping online. Hand-wringing by critics over the hyper-valuation of Indian ecommerce startups and their cash burn on discounts to gain market share have to be balanced by the sector’s potential for growth.

Idealo points out that Asia’s share of the global ecommerce market stands at one-third, even though half the world’s internet users are on this continent. The rising smartphone and internet usage has sparked an ecommerce boom in India over the past couple of years, but we can expect steeper growth ahead. India’s ecommerce players are banking on that.

Infographic by Idealo

See: The hottest sectors for venture capital in India this year