Free shipping and secure payment methods are driving more Indian consumers to shop from international e-retailers, making India one of the fastest-growing nations in cross-border e-commerce, according to PayPal Holdings Inc. and U.K. research firm Ipsos MORI.
The two firms recently issued a report that estimates India’s online cross-border spending will jump 78.5% in 2016 from an estimated 547 billion rupees ($8.21 billion) in 2015 to 976 billion rupees ($14.61 billion). Total e-commerce spending in India, including travel, is expected to grow 51.5% in 2016 from about 3.273 trillion rupees ($49.2 billion) in 2015 to 4.959 trillion rupees ($74.24 billion) in 2016. PayPal and Ipsos surveyed 23,000 consumers, in 29 countries who were 18 or older and owned an Internet-enabled device. They interviewed 808 Indian consumers.
India’s high growth rate for cross-border online shopping is second only to that of Nigeria, which is expected to grow 85% in 2016. Shopping on international websites is most prevalent in Ireland, Austria and Israel, and consumers most frequently shopped at China-based and U.S.-based retailers when shopping across borders, the report found.
Of the 10 million consumers that shop online in India, 3.8 million shop internationally. Most international orders in India are made on desktops and laptops (53%), followed by smartphones (30%), tablets (11%) and other (6%). 27% of orders are from U.S.-based retailers, followed by 11% from retailers in China and 10% in the United Kingdom.
With India’s online consumer base expanding so rapidly, it’s no wonder its cross-border orders are rising as well. By 2017, total online spending in India is expected to grow to 7.029 trillion rupees ($105.74 billion), a 261% increase from 1.948 trillion rupees ($29.3 billion) in 2014, according to the study.
“Our research reveals that the advent of technology is slowly diminishing borders for online shopping,” Vikram Narayan, country manager and managing director of PayPal India says. “With the number of online shoppers set to grow exponentially, it will lead to an increase in the number of shoppers who shop from global retailers with an online presence.”
Consumers view free shipping and a safe way to pay as the top drivers for cross-border shopping, the report says. Among online shoppers in India, 36% shop domestically and internationally, 2% only shop internationally and about 62% stick to shopping on domestic websites. Top barriers for Indian consumers to shop internationally are high shipping costs and difficulties in making returns. Problems with returns was cited as a key hurdle by 42% of Indian shoppers surveyed who say they’ve returned a cross-border product—the highest percentage from the 29 countries PayPal and Ipsos studied. Additionally, the most-cited reasons for abandoning carts on e-commerce sites were high shipping costs (45%), long delivery times (35%) and the preferred payment option was not available (30%).
India’s economy is growing at a rapid pace, with its government reporting Monday that India’s economy grew 7.4% year over year in the second quarter that ended Sept. 30. This is a high growth rate in comparison to other large economies—countries with a gross domestic product over $100 billion—in the world, outpacing high-growth countries like China, which grew 6.9% over the same period. India’s Q2 growth is up from 7.1% in the first quarter of 2015, but down from the 8.4% in Q2 2014, according to the data released.
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