Why India’s Interest in Cross-border Shopping is Skyrocketing

Why India’s Interest in Cross-border Shopping is Skyrocketing

India is experiencing a surge in growth in cross-border eCommerce spend. Healthy rates of GDP growth are accompanying an increase in online commerce, and it’s clear that Indians are not satisfied with what’s on offer at home. In fact, India is rivalled only by Japan when it comes to the rate of growth in cross-border online shopping activity.

Previously, we looked at the phenomena of small, wealthy markets being the most enthusiastic cross-border shoppers. Countries including Israel, Ireland, and Austria have some of the world’s highest rates of cross-border eCommerce activity, as more and more wealthy households access goods they can’t easily find locally.

It also tends to be brands and products not available locally that are the main draw for India’s online shoppers. Indians are notorious bargain-hunters, and they value sites that offer free shipping, even from overseas. They also show a preference for platforms accepting payment in rupees.

India is a massive market, yet the reasons for buying online from overseas may be similar to smaller markets: a lack of consumer retail opportunity at the local level. The retail landscape in India doesn’t always allow customers to access what they want. This phenomenon can also be seen in other fast-growing markets, such as Nigeria. Consumer needs in these markets are growing faster than the domestic consumer sector growth can fulfil.

Two women dressed in the traditional Indian Saree are walking through the narrow streets - cross-border

Cross-border eCommerce in India reached approximately $500 million in 2016 and is estimated to reach $2 billion by 2020.

Around half of this shopping is done on U.S.-based eCommerce sites, with the rest split between the UK and China. Marketplaces such as Amazon and Walmart-owned Flipkart bring overseas brands and products to Indian consumers.

High-volume sellers like these have been effective at lowering prices on many consumer goods. For price-conscious Indian buyers, this has been a major factor when it comes to driving them away from smaller, local retailers and towards bigger companies that are able to offer much lower prices.

Unusual device use

When buying from overseas, Indian consumers tend to use alternative devices, as compared to consumers in other markets who tend to purchase via desktop or laptop. In Japan, Belgium, Canada, France, and Germany, over 70% of overseas shopping is done on a laptop or desktop. In India, fewer than half of consumers shop this way.

Indian consumers also tend to favour cash-on-delivery, and that’s a major factor holding back the growth of eCommerce in the country. COD is a retailer’s least-favourite payment method, because it’s much harder to get paid, more risky, and more costly overall.

However, this something many retailers are prepared to work around if growth opportunities are promising enough. In fact, DHL recently launched a COD service for cross-border eCommerce in South-East Asia to accommodate this preference.


Although consumers may be hungry for foreign brands, there are unfortunately many pitfalls. India’s government recently implemented protectionist measures in favour of domestic eCommerce players.

Amazon and domestic but foreign-owned Flipkart are adversely affected by the changes. These new measures mean foreign investors cannot run their own online platforms, meaning they cannot sell anything directly to consumers, except for food.

This is just the latest in a series of measures taken by India’s government to tighten the eCommerce sector. This includes an attempt to get eCommerce marketplaces such as Amazon to store all consumer payment data in-country.

Because of India’s alluring eCommerce growth rate, it’s likely that international players will still attempt to get involved. They’ll just have to operate in more complex business structures in future. Opponents argue that consumers will be adversely impacted, facing higher prices and less choice.

India’s protectionist stance may be designed to protect the small, private businesses that continue to make up the country’s domestic retail landscape.

But the recent change to the business environment is likely to put a dent in the growth of eCommerce. PwC estimates the change will curb online sales by some $46 billion by 2022 and slow the growth of online retail.

Other characteristics of the Indian market are also likely to be off-putting. Not only do many buyers insist on COD, but they also seem to return goods at a higher rate as compared to other markets. Cash on delivery supports higher rates of return, and data shows that inexperienced online shoppers (of which India has many) are also more likely to return items.

Courier receiving cash payment for parcel delivery - Cross-border

Although cash on delivery is one of the most popular payment methods in India, it’s also plagued with high return rates.

Where payment gateways exist, there is an unusually high rate of transaction failure, and non-standardized addresses make the ‘last mile’ in the delivery process a particular challenge in this market.

RELATED: Cracking the eCommerce ‘Last Mile’ Conundrum in Emerging Markets

It’s likely that the biggest threat to this cross-border bonanza is from India’s own domestic retailers. India’s domestic eCommerce market may reach $64 billion by 2020 and is expected to grow to $200 billion by 2026, eventually overtaking that of the U.S. in 15 years’ time. This growth will be assisted by domestic retailers offering the brands and products Indian consumers currently seek from abroad.

Although India’s market may look promising, it’s an environment that’s still rather hostile to outsiders. Foreign brands looking to India need to explore their options carefully before they commit.

Written by Demetrius Williams
Demetrius Williams
Demetrius Williams is a Digital Marketing Specialist at TranslateMedia and has previous eCommerce experience working with a number of luxury brands in the fashion and beauty industry. He enjoys photography, binge-watching Netflix and can often be found roaming around London with a camera in his hand.

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