In the next five years, India’s e-tail market is expected to grow 10 times from its current level to $50 billion, primarily driven by better Internet penetration and higher incomes, according to a report by Swiss financial service firm UBS.
"E-tail is the most recent segment, but its highest growth rates and success will be the key driver of the overall e-Commerce market," said a UBS report.
The Internet & Mobile Association of India (IAMAI) estimates that the overall Indian e-commerce market, of which e-tail is a segment, is currently worth $16 billion.
The report made a specific mention of the Indian Railway Catering and Tourism Corporation (IRCTC) as "the best example" of a successful Indian e-commerce venture.
"We estimate that IRCTC had an estimated total sales of US$ 3 billion in 2014 with an online penetration level of 43 per cent. Its success indicates that the Indian consumer is willing to accept technology if it is a compelling value proposition," the report stated.
The marketplace model of e-tailing will gain prominence "as it is scalable and requires less capital and time than other models".
"Current regulations and the presence of large unorganised sellers (mom-and-pop shops) also support this model," it added.
Multi-product e-tailers (Flipkart, Amazon India and Snapdeal) are moving towards the marketplace model while e-tailers in niche categories such as furniture, baby products and grocery have hybrid business template, the report said.
At the same time, it played down investor concerns about e-Commerce being a bubble in India are "misplaced".
"Analysis of the supply chain for offline retail by category implies adequate margins for e-tail in future," the report stressed.