THE promise of virgin commercial territory up for grabs, startups vying to lure investors’ money even faster than they burn through it, and Amazon trying to capture all the spoils: the recent scramble for the Indian online consumer has had more than a whiff of the late-90s dotcom boom about it. The exuberance seemed justified. India is the world’s fastest-growing large economy, its consumers increasingly clutching smartphones and fattening wallets. Online shopping, worth just $1bn five years ago, seemed to be growing so fast that it would exceed $100bn by 2020.
The boom has ended not with a pop, as in 2000, but a whimper. Online sales, after more than doubling in 2014 and nearly trebling in 2015, were nearly flat in 2016 (see chart). Analysts are scrambling to lower their forecasts. Given that total retail consumption in India grows by around 18% a year, and internet penetration went up by two-fifths last year, e-commerce if anything looks to be losing ground.