News & Analysis

Indians Continue to Buy Online, But… 

A recent report says that most purchases revolved around smartphones, electronics, daily needs and groceries in the absence of new trends

India’s tryst with eCommerce continues to be strong with more consumers buying online during 2022 across three key segments of electronics, daily needs and groceries. What began as a necessity during the Covid-19 pandemic, appears to have become a habit now, according to data provided by Counterpoint Research. 

In a report, the research agency says consumers continued to shop online during 2022 in spite of retail chains and malls reporting full recovery in sales amidst higher footfalls compared with the previous two years of the pandemic forced shutdowns. Multiple research firms have brought up this trend in their reports. 

FMCG companies report highest online sales

In fact, sales data shared by several FMCG companies indicate that the offline channels did not actually gain market share from the digital marketplaces during the year in spite of markets reopening and all restrictions on movement being withdrawn. However, the key point here is that only select segments accounted for most of the eCommerce growth. 

Counterpoint Research says that smartphones were the largest category accounting for close to half the total sales this year. In terms of percentages, it accounted for 48% of the sales in 2021, up from 41% in 2019. In 2022, this number went up to 49%, which may also suggest a gradual tapering off in this segment, given that discounts and special offers too have reduced. 

Coming to consumer electronics, digital sales accounted for 34% for all televisions, 21% for washing machines, 45% for water purifiers and 81% for vacuum cleaners. However, what is interesting is that when contacted, several large electronics stores told us that overall annual sales numbers grew significantly in 2022.

Digital commerce is here to stay, but…

That digital is here to stay is quite obvious, especially given the efforts made by the federal government through initiatives like the Open Network for Digital Commerce (ONDC) to encourage digital transactions in the smallest of cities and towns of India. In fact, the ease of transaction on digital has pushed up market penetration in some parts of India.  

Even the top FMCG companies such as Tata Consumer Products and Marico have reported growth in eCommerce led sales during their third quarter earnings. In fact, some said this was the fastest pace of growth with contributions from digital now going up to 10% of total sales at a time when on-ground sales in rural markets has slowed down considerably. 

India’s retail industry saw a 19% rise in sales over pre-pandemic levels during the April-November 2022 period riding on the back of strong performance of segments such as quick service restaurant and footwear. Region wise, the eastern part clocked the highest growth at 21% over 2019.

However, the beauty, wellness and personal care industry only saw a 7% growth as against the same period in 2019. “Consumers are back to shopping in stores, and it’s something they enjoy even as they continue to buy online,” said Retailers Association of India CEO Kumar Rajagopalan. 

On the outlook for 2023, the RAI CEO said the country is expected to grow better than all other key markets across the world. Omnichannel retail has become the norm for retailers and added that concepts like ONDC will enable millions of small retailers to participate in digital commerce.

Another interesting trends in 2022 related to fashion and apparel. With the expansion of international chains like Tim Hortons in India and apparel brands like Victoria’s Secret, and Uniqlo from July to December 2022 pushed retail space consumption, specifically in tier II cities leading to growth in retail spaces in these cities.

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