The electronic retail (e-retail) sector in India is likely to grow 250 per cent in the next three years, a Crisil report said on Monday.
“Over the next three years, e-retail industry is expected to continue its strong run, growing over 2.5 times to Rs 1.8 trillion by fiscal 2020,” the global analytics firm said in the report.
Crisil expects online grocery segment to lead the growth in the e-retail sector, with 65-70 per cent compound annual growth rate during FY17-FY20 and almost quadruple over the next three years to Rs 100 billion in terms of revenues.
“The online grocery segment… has lately seen an uptick in the number of players as well as investor interest,” the report said.
However, “in the overall food retail industry, the penetration of online food and grocery segment stands at a miniscule 0.1 per cent, indicating significant growth potential”, it added.
Going ahead, investments in technology, new strategies such as introducing private labels, same day and next day delivery, and business-to-business food services would help the sector grow, according to the report.
A major focus area for e-retail players to ensure continued robust growth would be geographical diversification in terms of revenue, it said.
“Online shopping activity has not been broad-based, with the top 10-15 cities still accounting for over 75 per cent of total sales.”
Apart from grocery, the continued focus of major players on existing business segments such as apparel and fashion will drive growth, it said.