Can eCommerce ever become a threat to physical retail? This has been the question daunting the physical retailers amidst the scenario where the entire retail eco-system is going avid for digital market. In this wild goose of me-too, a couple of brands including the luxury brands have ventured into this new format of retail.
However, different from what is being projected, Sanjeev Gupta, Additional Secretary, DIPP, Ministry of Commerce and Industry presented the other side of eRetail. Addressing at a conference on Redefining Retail, Gupta said, “The fact remains that eRetail will continue to be a miniscule even in 2025 at 8 per cent.”
“We have retail of about $ 728 billion in 2016 of which organised retail constitute only 2 per cent. Whenever we talk of any strategy we ought to think of the 98 per cent as well,” he added.
He presented a data stating that the share of eRetail is at 2.2 per cent making it around $16 billion. By 2020, it is expected to cross the threshold of 50 billion in eRetail which would make it 4.5 per cent. In 2025, estimated 150.8 billion market would constitute to around 8 per cent of the total share. The fact remains that eRetail will continue to be a miniscule even in 2025 at 8 per cent.
Adding to it, he opined, “If we probe further to know what is happening and why are we not in position to get higher numbers, we see that a lot of people are talking about the rising internet penetration.”
As per internet live stats, against 721.4 million in China, India is at 462.1 million thus securing 2nd position in terms of number of internet users whereas US is way behind with 286.9 billion. The trend is clear that India is surging ahead with numbers.
Raising a question, Gupta asserted, “Issue remains that why is it so that we are still at 2.2 per cent and were 0.8 per cent in 2014. The reason is that internet penetration includes 2G as well. The 3G and $g...we are way behind and that’s why it is a challenge.”
“Should we necessarily be doing only the mobile apps,” he asked while adding that whenever it is a question of sales, people tend to be graphic-intensive with lot of pictures, reviews etc. which requires 3G necessarily.
He opined that despite huge change in demographics, a major India resides in rural areas. IMRB study with RAMI suggests that internet penetration in rural area is 13.7 per cent. That is a good number however the fact remains that they are taking into account any kind of internet access by anyone at any point of time. It also includes usage of whatsapp, facebook and 7.4 per cent includes 2G connections.
He also mentioned about a survey through Kisan Call Centres where in a sample size of 3 lakh farmers, 12 per cent had smartphones, out of which only 5 to 6 per cent had access to any kind of internet and only 2 per cent had access to 3G.
There are 2 lakh cellphone sites of 3G, the average radius they covers about 1 kilometer, leading to overlap area which is 0.25 per cent. So, multiple operators exist in this urban area. So, rural areas are left with 2 to 3 per cent.