Here's how consumers prefer to shop in India

BI Intelligence

This story was delivered to BI Intelligence "E-Commerce Briefing" subscribers hours before appearing on Business Insider. To be the first to know, please click here.

E-commerce is on the rise amongst urban internet users in India, with nearly half of them now shopping online, according to a new report by The Boston Consulting Group. Moreover, digital channels are becoming more influential to Indian consumers, as 70% of respondents report that information they’ve gotten online has swayed a purchase decision.

The report also revealed which shopping channels Indian consumers prefer — online-only, mixed path, and offline-only — for different types of purchases.

• Omnishopping only accounts for 5% of all purchases, but 16% of total retail sales. Many mixed path sales are a result of purchases for bigger ticket items, that customers typically like to research in advance and purchase after viewing them in-store.
• Meanwhile, purchases resulting from an offline-only shopping journey make up the majority of purchases at 78%. However, its share of retail sales is lower at 58%, likely due to purchases of items that need little research and are low cost. For instance, 94% of fresh and packaged food transactions occur through offline only purchase journeys.
• Sales resulting from a purely online shopping journey accounted for 16% of transactions, but 26% of total retail sales. These types of purchases usually include items that require less research, and are well established in India, such as movie or airline tickets, and small appliances.

The study also found that impulse shopping was a significant factor for some categories. For instance, 40% of online purchases of fast-moving consumer goods, like detergent and packaged foods, were unplanned purchases, likely resulting from special deals. Additionally, more than half of online fashion purchases are impulse buys.

E-commerce companies looking to boost sales in India should increase promotional offers, or look to have a physical space for certain goods. E-tailers could look to capitalize on shoppers' tendency to make impulse purchases by offering appealing limited-time deals online. Moreover, they could consider partnering with local brick-and-mortar retailers, such as Alibaba has done with Starbucks in China, or creating showrooms for large appliances, to increase sales in high-value product categories.

Emerging markets are going to be essential for e-commerce growth, as retailers in developed markets may soon reach saturation in terms of consumer growth.

For example, almost half of US households now have a Prime membership, diminishing Amazon's growth potential in the country. Meanwhile, in China, the world's largest e-commerce market, nearly half of the population is actively making online purchases, leaving little room for growth. 

However, India, Southeast Asia, and Latin America are worth keeping an eye on. E-commerce penetration rates in these areas hover between 2-6%, presenting a huge opportunity for future growth as online sales gain traction. Moreover, these regions are expected to grow at compound annual growth rates (CAGRs) of 31%, 32%, and 16%, respectively, through 2021.

Stephanie Pandolph, research analyst for BI Intelligence, Business Insider's premium research service, has compiled several e-commerce snapshots, which together highlight the most notable emerging markets in various regions. In full, the report:

• Explores the e-commerce industry in India, Southeast Asia, and Latin America.
• Highlights the leading country in each region, as well as key e-commerce players there. 
• Outlines the challenges and opportunities each region faces.
• Gives insight into how these emerging markets may shape the future of e-commerce.

 Interested in getting the full report? Here are two ways to access it:

1. Subscribe to an All-Access pass to BI Intelligence and gain immediate access to this report and over 100 other expertly researched reports. As an added bonus, you'll also gain access to all future reports and daily newsletters to ensure you stay ahead of the curve and benefit personally and professionally. >> Learn More Now
2. Purchase & download the full report from our research store. >> Purchase & Download Now