Online shopping has never really been synonymous with “luxury,” but new research has found that online luxury stores in India could shape the country’s economy for years to come.
According to The Indian Express, a recent ASSOCHAM study suggests that online luxury stores in India will earn approximately $35 billion in revenue in 2016 alone. By 2020, the study anticipates the market to double, accounting for a staggering $70 billion.
There are several key growth drivers that have helped to shape the luxury online shopping market in India. Western culture has had a dramatic influence on India, leading to a notable rise of consumerism in the luxury segment.
While much of this progress can be attributed to wealthy clientele from overseas, Indians have also embraced this high-end culture. About 140 million Indian people are now using the internet, and 75% of these users are young people who like to experiment with luxury brands.
Since using the internet became commonplace in modern culture, luxury brands all over the world have seen a considerable uptick in sales. Now, consumers are aware of more high-end brands and can purchase expensive items right from their own sofa.
E-commerce sales will reach nearly $500 billion by 2018, and another factor that contributes to this growing market is the rising middle class, particularly in India. Instead of just advertising to the elite families in India, luxury brands can target teenagers and college students who now have enough disposable income to afford pricier goods.
Online shopping in India has completely rejuvenated several Asian businesses, but things are not going as smoothly for some U.S. retailers. According to Business Insider, clothing company Urban Outfitters is actually losing revenue despite a considerable increase in online sales.
In a quarterly earnings call, Urban Outfitters CFO John Conforti admitted that online sales “continue to outperform stores,” increasing by double digits. However, the disparity between the two revenue streams has become so great that operating a brick-and-mortar store now results in a deficit for the company.
Urban Outfitters is not known as a luxury brand, but it’s worth noting that the company is now making an effort to focus on direct-to-consumer sales, much like the thriving businesses in India.
E-commerce will only expand from here, so it will be interesting to see how traditional brick-and-mortar brands in the U.S. react to the changing times.