The year 2020 saw a massive shift for India’s ecommerce industry, largely driven by the Covid-19 pandemic. The sector not only recovered after the nationwide lockdown, but also witnessed the most successful festive sales period ever.
As per a report by India Brand Equity Foundation (IBEF), the Indian ecommerce industry has been on an upward growth trajectory and is expected to surpass the US to become the second largest ecommerce market in the world by 2034. Indian ecommerce sector is poised to reach US$99 billion by 2024 from US$30 billion in 2019, expanding at a 27% CAGR, with grocery and fashion likely to be the key drivers of incremental growth. Online shoppers in India are expected to reach 220 million by 2025.
The sector saw big upsides from new online shoppers, existing shoppers buying more food and grocery, and mature shoppers moving more of their spending to online platforms. Online grocery, e-pharmacy and social commerce are the segments that are expected to see a bulk of the action in 2021.
The growth in ecommerce will also drive allied industries such as logistics, supply chain, agri-tech and omnichannel sales solutions, which have already received higher investments in 2020.
Despite creating milestones, however, analysts note that India’s online retail sector failed to match the growth of e-commerce in mature markets such as the United States and China this year. According to a Forrester Research, commerce sales are estimated to have increased by only 7-8% in 2020, compared to almost 20% in China and the US, whose governments made full use of contactless buying options to bolster the economy even while enforcing shutdowns to battle the Covid-19 outbreak, suggesting India’s ecommerce sector still has a long way to go in terms
The overall online sales in Asia Pacific is however expected to grow from $1.5 trillion in 2019 to $2.5 trillion in 2024, with a CAGR of 11.3%, according to Forrester, which estimates that online retail sales in this region is expected to get a boost from new buyers due to COVID-19, but in most countries including India, consumer spending will take a hit due to the slowdown of economies.
Satish Meena, senior forecast analyst at Forrester Research said in the report, “Growth of ecommerce was less than 10% because we lost a lot of momentum during those three months (of the lockdown) and the companies were not ready to deliver essential goods.”
Catalysts for growth
However, industry observers are upbeat about the growth and development of the ecommerce sector in the coming years. According to them, the e-commerce industry has leapfrogged tremendously in the past few years and has been subject to manifold new trends. The global pandemic, has served as a growth catalyst.
Pankaj Sachdeva, Vice President, Innovation and India at Pitney Bowes said, “India’s ecommerce will witness accelerated innovation for on-the-go shopping through mobile and social selling, omnichannel experience, virtually assisted shopping, and on on-demand fulfillment and delivery including supply chain optimization, warehouse robotics, carrier route optimization, and drones for faster delivery. Collaboration tools including voice and video collaboration and immersive technologies such as AR/VR for office environments will see a sharp upsurge.”
While on one hand, large players, including Amazon and Flipkart, will continue to witness strong sales growth, increasingly traditional retail players are getting on to the ecommerce bandwagon. The entry of Reliance Industries in the market with Jio Mart has already created a spark. Likewise, instant messaging platform WhatsApp, which has enabled payments included features like a product cart, is set to woo customers. As Meena said, “Investors are no longer going to invest in a replica of Amazon in India, but will if someone is trying a different model of selling.”
Going forward, many more players who can offer more personalized experiences to customers by leveraging new age technology will come into the scene. As Rajiv Kumar, Founder & CEO, StoreHippo, said, “This is a new beginning for smaller players as well as big brands that are going D2C. The trend is not about just discounts but a completely personalized me-tail experience. Your brand needs to offer an omnichannel buying experience so that the customers can buy from your ecommerce website, mobile phones, social media or maybe right from your blog page. The present challenge is to offer a seamless buying experience with fast deliveries to your customers.”
He believes that smart technologies and solutions like SaaS-based, mobile-first, turnkey ecommerce platforms combined with hyperlocal ecommerce, faster deliveries and agile payment solutions will lead the way to ecommerce brand building in 2021 and beyond.
Apoorv Bhatt, Co-Founder, and CEO, Eolstocks.com too believes that the mind-set of consumers towards digital commerce and payments have changed for good in the last one year. India’s retail sector which is mostly unorganized and largely dominated by small and independent stores is seeing increased digital adoption.
“Affordability and ease of access have driven shoppers from Tier 2, 3 and 4 cities in India to shift to online retail; the festive season being a testimony to this trend. The Smartphone segment has been leading the e-commerce sales this year and will continue its upward growth trajectory with India emerging as one of the top manufacturing hubs as well as consumer markets,” he said.
In other words, the small and medium sellers in India continue to ensure stock availability through B2B trade platforms. In addition to this, with rising demand from Tier-2 and Tier-3 cities, the adoption of technologies in last-mile delivery solutions can improve sales.
The future seems both promising and challenging for the Indian ecommerce industry. This year, the sector is likely to witness new policy proclamations, especially the new ecommerce policy. Also, the industry will see more small players getting into the nooks and corners of the country. There will be intense competition among major players as well, especially with Amazon, Flipkart, JioMart and Tata, set to capture their own pie in the market. This leads to huge market opportunity for the Indian ecommerce industry in the days to come.