India's e-commerce industry is likely to reach $99 billion in size while the online penetration of retail is expected to more than double to around 11 per cent by 2024 from 4.7 per cent in 2019, according to Goldman Sach's review of e-commerce markets globally.
In a report titled 'Global Internet: e-commerce's steepening curve', the brokerage said that the e-commerce industry's growth rate in India, for each of the next four years, would outdo the same of developed countries like the US, the UK, Europe, Brazil, and China.
"We forecast India e-commerce will reach $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," the report said.
It further highlighted that online grocery will be the biggest growth driver for e-commerce in India. The segment is expected to progress gradually growing 20 times over five years to reach $29 billion in size (presently under $2 billion).
Facebook has picked up a 9.99% stake in Jio Platforms, the subsidiary of RIL that houses the country's youngest but biggest telecom company as well as an array of apps. RIL's e-commerce venture, JioMart plans to use Facebook's WhatsApp to link local convenience with customers.
Goldman Sachs in the report underscored that Bigbasket and Grofers accounted for more than 80% of the market in 2019 in online grocery.
Online grocery has been growing at over 50% year-on-year for the last couple of years, but with the outbreak of COVID-19 resulting in a shift to online, and the recent entry of RIL, the growth will accelerate to 81% CAGR during 2019-24, it said.
"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% share by 2024," the report pointed out. It added, "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 said, is likely to come from better penetration into categories such as grocery/FMCG, improving payment ecosystem and ease of shopping through WhatsApp, etc.
While online penetration in categories such as consumer electronics is fairly high at about 40% as of 2019, there exists significant growth in categories like apparel, appliances, health, and personal care, where online penetration in India remains materially lower when compared with peers such as China.
"As far as incremental growth in e-commerce is concerned, we expect grocery to be the biggest driver with 40% contribution to incremental e-commerce GMV (gross merchandise volume) between 2019 and 2024," the report underlined.
Grocery in India is a $380 billion category as of 2019, making up for 60% of the total retail market.