Total online retail sales in 2014 in India were US$8bn as per Morgan Stanley estimate, which was growth of over 100% yoy. Online penetration in the overall retail market increased from ~0.8% in 2013 to 1.5% in 2014, signifying the potential of internet in India. According to KPMG, the total retail market in India is likely to grow to ~US$950bn by 2020, and we estimate that total online sales will grow to US$102bn, implying online penetration of ~11%. Interestingly, online penetration in total retail sales in China in 2014 was ~12%.
The online opportunity could be huge if 10% of the overall consumption pie moves online by 2020. This means that the potential TAM may not just be the total retail market of ~US$950bn but could be US$1.75tn, which would be almost 60% of GDP then. Snapdeal sees rising smartphone penetration, increased adoption in rural India, and lack of physical retail infrastructure as key enablers of the online shift
