India e-commerce to develop 27%; Reliance to seize half of on-line grocery gross sales: Goldman

New Delhi, July 21

India’s e-commerce enterprise is predicted to develop at a compound annual development charge (CAGR) of 27 per cent to achieve USD 99 billion by 2024, Goldman Sachs mentioned projecting that Reliance Industries would seize half of the net grocery gross sales via its Facebook.

In a report  titled ‘Global Internet: e-commerce’s steepening curve’, Goldman Sachs mentioned the COVID-19 pandemic has pushed a doubling of penetration of e-commerce globally with classes reminiscent of shopper packaged items driving as a lot as three years of penetration development in three months.

“We forecast India e-commerce will reach USD 99 billion by 2024, growing at a 27 per cent CAGR over 2019-24, with grocery and fashion/apparel likely to be the key drivers of incremental growth in our view,” it mentioned.

Online penetration of retail is predicted to achieve 10.7 per cent by 2024, versus 4.7 per cent in 2019.

“The biggest near term theme in India internet, in our view, is the foray of Reliance Industries (India’s largest market-cap company with presence across sectors such as energy, telecom, and retail) into e-commerce, and the company’s tie-up with WhatsApp for online grocery,” it mentioned.

Facebook has picked up a 9.99 per cent stake in Jio Platforms, the subsidiary of RIL that homes the nation’s youngest however greatest telecom firm in addition to an array of apps. RIL’s e-commerce enterprise, JioMart plans to make use of Facebook’s WhatsApp to attach native grocery shops with clients.

Goldman Sachs mentioned Bigbasket and Grofers accounted for greater than 80 per cent of the market in 2019 in on-line grocery.

Online grocery has been rising at over 50 per cent year-on-year for the final couple of years, however with the outbreak of COVID-19 leading to shift to on-line, and the current entry of RIL, the expansion will speed up to 81 per cent CAGR throughout 2019-24, it mentioned.

“We believe RIL’s partnership with Facebook could result in the company becoming a market leader in the online grocery space, with more than 50 per cent share by 2024,” it mentioned.

“Having said that, we do see grocery as a large category for two or more players to co-exist over time.” Growth in India’s e-commerce, the brokerage mentioned, is prone to come from higher penetration into classes reminiscent of grocery/FMCG, bettering fee ecosystem and ease of buying via WhatsApp and many others.

“We expect non-grocery e-commerce penetration to see a sharp increase of 500 basis points over the next two years to reach 16.1 per cent by 2021,” Goldman Sachs mentioned including the final 500 foundation factors of the rise took 4 years.

While on-line penetration in classes reminiscent of shopper electronics is pretty excessive at about 40 per cent as of 2019, there exists important development in classes like attire, home equipment, well being and private care, the place on-line penetration in India stays materially decrease in comparison with friends reminiscent of China.

“As far as incremental growth in e-commerce is concerned, we expect grocery to be the biggest driver with 40 per cent contribution to incremental e-commerce GMV (gross merchandise volume) between 2019 and 2024,” it mentioned.

Grocery in India is a USD 380 billion class as of 2019, making up for 60 per cent of the whole retail market.

“However, online penetration currently stands at less than 0.5 per cent (absolute size USD 2 billion), one of the least among categories,” it mentioned projecting the net grocery market in India to develop 20x over the subsequent 5 years, to achieve USD 29 billion in worth (5.1 per cent penetration) by 2024.

It noticed the next acceptance of on-line purchases amongst Indian shoppers, particularly since COVID-19, as one of many key drivers.

Other drivers embrace RIL’s foray into the area leveraging its massive offline distribution capabilities and talent to order groceries via WhatsApp – a platform with greater than 400 million customers in India.

“Overall, we forecast online grocery orders to grow from 300,000 per day in 2019, to more than 5 million per day by 2024,” it mentioned.

Goldman Sachs mentioned the coronavirus pandemic has pushed acceleration within the adoption of numerous applied sciences and shopper behaviours, chief amongst them being e-commerce.

“What started at first with panic buying, hoarding and nest feathering out of necessity has turned into an array of adaptations that have driven e-commerce penetration from 16 per cent of retail spending in the US in 1Q19 to over 40 per cent in May driven by year- over-year growth of nearly 70 per cent,” it mentioned.

Globally, e-commerce would develop 24 per cent, it added. — PTI 

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