Online purchases made through mobile phones are likely to touch $40 million in 2016 from $30 million today, according to a joint study conducted by The Associated Chambers of Commerce & Industry of India (ASSOCHAM) and Grant Thornton.
The study noted that an additional 200 million Indians will access the internet in the next three years, with majority of them coming online through smartphones.
The number of smartphone users in India is projected to exceed 200 million, ranking next to the US as the world’s second largest smartphone market by 2016 due to increasing penetration of affordable smart mobile devices in the country.
With the growing number of smartphone users and major e-commerce players, a number of users relying on app-based platforms will eventually increase in the near future, noted the joint study.
The number of users making online transactions has also grown exponentially, and it is expected to increase from 11 million in 2011 to 38 million in 2015. The government’s plan to rebuild and modernize the Indian postal infrastructure and plan to implement Digital India will also affect the e-commerce sector.
Both of these projects will help in increasing the reach of e-commerce players to generally non-serviceable areas, thereby boosting the growth prospects for their businesses.
In a separate report, research firm International Data Corporation (IDC) reported that 26.5 million smartphones were shipped to India in the second quarter of 2015 – up 44%% from 18.4 million units for the same period last year. This strong second quarter performance saw smartphone shipments grow by 19% following a sluggish first quarter this 2015.
The growth in the smartphone market was helped by vendors using online retail or eTail to penetrate the market. Kiran Kumar, research manager with IDC's India mobile phone team, said e-tailers have opened additional avenues for growth for many vendors in India, who would have otherwise struggled to get a hold in the complex distribution network.
Although India remains a retail dominated market, vendors such as Lenovo and Xiaomi have used online channels in India to rapidly expand their presence. "The share of smartphone shipments through e-tailers increased for most of the key vendors in Q2," added Kumar.
In addition, Chinese vendors have tripled their shipments YoY in India and doubled quarter-on-quarter (QoQ). Lenovo, Xiaomi, Huawei and Gionee alone accounted for 12% of the total smartphone market in the second quarter, double from a year ago.
"As China started to slow down, most vendors from the country have targeted India as the next big growth market for smartphones," said Kiranjeet Kaur, research manager with IDC's Asia-Pacific mobile phone team.