New Delhi:The number of online fashion shoppers in India will double from 55-60 million today to 130-135 million by 2020, and with a significant shift in the user profile. Mobile is going to be the single biggest driver for the growth of the fashion industry in India, both offline and online.
These are the findings from Fashion Forward 2020, a report launched by The Boston Consulting Group (BCG) along with Facebook India. Umang Bedi, managing director, India & South Asia, Facebook; and Abheek Singhi, senior partner and managing director, BCG, spoke to Mint about the report and its insights. Edited excerpts:
Why did Facebook partner with BCG?
Umang Bedi: Why BCG and Facebook came together was around the fact that we wanted to connect businesses with the trends that we are seeing but we leaned in on fashion and selected that for three core reasons which is really the context of this report on Fashion Forward 2020, which is really a look into the future of where BCG as well as Facebook believe this industry is going to head from an Indian context in 2020.
So the top three trends are first, the consumer is evolving really fast. Second, on Facebook and externally also we found that fashion is at the forefront of the entire categories that are on fire from an e-commerce or offline perspective.
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And the third thing we found that Also, the lines between online and offline were blurring due to consumer behaviour that is enabled by technology.
Coming to the consumer of today, what we found at Facebook is that by 2020, 70% of all internet users in India will buy online, 76% of them would be digital shoppers, which means that may not buy online but will be digitally influenced, but 71% would be actual shoppers transacting online.
So that is the first big data point. Second, while these shoppers buy online, the rate of growth of digital shoppers in India will be the highest when compared to any other market.
If you look at developed nations like the US and the UK, they will be at 1% rate of growth in 2020, we in India will still be growing at 19.6% in 2020 and that too in a country where we only have 30% of the people connected to the Internet because there is that stark digital divide.
Interestingly while users grow, e-commerce growth in sales is also going to grow. So today we are at a humongously crazy growth rate of 76% but that’s off a very small base. Once that base becomes substantial, we believe it will settle down at somewhere 22%. Even at 22% it will be greater than the global average.
Also, today mobile commerce as a percentage of e-commerce is the highest in India. We are at 42% in India today and the global average is 34% and this is predicted to go up to 88% by 2020. So 88% of all e-commerce transactions will happen through a mobile phone or a mobile commerce interface.
So that’s the context: the market is moving fast, the consumer is evolving, mobile is causing that disruption, e-commerce will rise, rate of mobile shoppers will increase and it will drive exponential growth.
Why did you select fashion?
Umang: Here is the interesting insight. BCG and Facebook both found that one out of every three people that are shopping online or externally, buy apparel and fashion so fashion is a good logical entry point. Basis what we see, for Facebook users in India the 184 million people plus, 56% highlight fashion as an interest category, and if you break that down to the demographics it is the 18-34 year olds that are driving this category.
So fashion, apparel, shopping, lifestyle, footwear all dominate Facebook—and we heard the same thing from BCG. Even Instagram users are interested in fashion and one out of two users purchase the brand they follow on Instagram.
According to BCG’s research, what are the big themes from the report?
Abheek Singhi: This report is based on the work that BCG has been doing for the last 2 years in the digital space, and is based on a sample of close to 18,000 consumers that we surveyed. The fashion market in India is currently estimated at $70 billion. Online contributes to about 5% of the total at around
$4 billion. The online fashion market is estimated to treble by 2020, to reach $12-$14 billion. This will translate to a significant 11%-12% share of the total fashion market. Also by 2020, nearly half the fashion buyers will be digitally influenced. Digital influence in fashion has grown more than 5x since 2013. 40%-50% of branded spends are already digitally influenced.
It is estimated that by 2020, 60%- 70% of the branded apparel market will be digitally influenced; that will be equivalent to 2-2.5x the consumer spend on e-commerce. Despite the magnitude of digital influence on fashion, media spends on digital have lagged behind compared to TV and print.
Digital media spends of brands and departmental stores are only 10%-15% of total media spends. Spends by e-commerce players, on the other hand, seem commensurate. In the recent past, many branded apparel players have started dialling up on digital.
This will, however, require a step change in approach. Finally, consumer paths to purchase are increasingly getting complex; around 25% of transactions by online shoppers are made purely online; however 30% have both online and offline touch points.