The Indian internet user base is the third largest in the world but the business to consumer (B2C) e-commerce market is estimated to be only $13 billion. However, a predominantly young user population, lower device and access costs, as well as higher internet speeds and smartphone penetration, is expected to help boost growth.
Given the expected rise in customer base and supporting environment for internet adoption, estimated e-commerce retailing or e-tailing should have a market value of $60 bn by 2020. India has about 250 million internet users, with barely a tenth (25 mn) being online shoppers. This number is expected to double over the next six years.
While 70 per cent of current e-commerce is contributed by the online travel segment, with the rapid rise of various niches such as classifieds (Olx, Quickr) and e-tailing (Flipkart, Snapdeal), one may expect the share of other segments to increase. Given the potential, funding for some of the larger Indian e-commerce companies has not been a problem and should help these firms expand operations.
For investors, though, there are very few listed options. Investors should remember that valuations are rich for most of these companies and a correction in share prices could be a good time to consider these.
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