The Indian e-commerce market is set to overtake the US and become the second largest in the world in less than two decades, going head-to-head with China for the numero uno position, according to a report by global payments firm Worldpay.
The report said the e-commerce market is expected to grow exponentially with emerging markets leading the charge - particularly India, where the segment is predicted to mature by 28 percent per year from 2016 to 2020.
"According to Worldpay projections, India will be the world's second largest e-commerce market by 2034, thanks to massive surges in Internet penetration, a swelling millennial population and the rising uptake of mobile phones," it added.
Ron Kalifa, Vice Chairman at Worldpay, said the research found a number of trends that point to India's potential for "astounding e-commerce growth in the next two decades".
"The market is predicted to reach $63.7 billion (roughly Rs. 4,33,322 crores) by 2020 and overtake the US by 2034. This enormous development will in turn open up enormous opportunities for companies who sell online," he said.
However, it is essential that merchants stake their claim today in order to win over India's commerce-hungry population and capitalise on future e-commerce growth, he added.
"Leading companies such as Amazon and Alibaba are already making their move, indicating a clear incentive for merchants to gain their foothold within India's budding eCommerce market as soon as possible," Kalifa said.
Worldpay analysed 30 markets around the world, including India, China, Hong Kong, South Korea, Singapore and Australia in Asia-Pacific. The Global Payments Report is compiled using a combination of Worldpay's data and insights as well as external findings and secondary data.
The report said much of India's eCommerce growth will be the result of rising Internet penetration as roughly 350 million Indian citizens are already online and that number is expected to nearly double to 600 million by 2020.
Another major factor driving e-commerce growth in India is the huge uptake of mobile phones. India is the world's biggest consumer of mobile phones with the price of data plans running two times cheaper than in China and three times cheaper than in the United States, it said.
As the country's middle class switches over to 3G and 4G networks, both offered at affordable prices, India is expected to see more mobile shopping, especially amongst millennials.
"Young people shopping via smartphones are already responsible for sharp increases in India's online spend; and with 70 per cent of the population below the age of 35, millennials are expected to continue driving rapid digitisation even further," it said.
Transfers and cash currently dominate the online payment landscape, with 27 percent of the market preferring bank transfers, followed by cash on delivery at 22 percent.
However, as the country's payment infrastructure develops, new methods are expected to rise in popularity. E-wallets, the most popular payment method worldwide, are slated for rapid growth in India.
Although just 8 percent of India's online shoppers use an e-wallet today, the country's mobile wallet market is projected to reach $5.1 billion in 2020, according to Worldpay.
"As more Indians get access to the Internet and bank accounts, they will in turn develop confidence in buying online - at which point we can expect to see a decline in cash on delivery, accompanied by a rise in new, alternative payment methods such as e-wallets," Kalifa said.