The pandemic brought about a “structural shift” in shopping behavior, with more customers and businesses relying on ecommerce. A new report by the Federation of Indian Chambers of Commerce & Industry (FICCI) finds that nearly 75% of consumers indicate that their trust in online marketplaces gives them the confidence to make purchases online, making trust the primary component in online shopping and transaction. The new report also suggests that India’s booming retail industry is projected to cross the one trillion dollar mark by 2025.
The report was released at a time when online retailers are seeking greater clarity on India’s new draft e-commerce rules proposed a ban on flash sales on e-commerce platforms and prevented their affiliate entities from being listed as sellers. The new rules also stirred debate on whether the new draft e-commerce rules would hit major online retailers, Amazon and Walmart-owned Flipkart, who are notably market leaders, but will also be detrimental to the industry’s growth and hit the country’s ecommerce on the whole.
The FICCI report emphasizes that a marked shift in the country’s retail growth story, as purchasing behaviors have progressed from primarily physical to “phygital” buying. It further estimates the online commerce industry to leap from $64 billion in 2020, to $200 billion by 2026.
According to Dilip Chenoy, Secretary General, FICCI, the widespread internet penetration, smartphone growth and cheaper and faster data availability driving mobile commerce, are key drivers of online purchasing. However he believes that rising customer trust in online buying channels play the most important role in ecommerce.
Talking about the importance of trust in the ecommerce space, Chenoy says that the survey says that payment security is the number one trust parameter for online purchasing, followed by return/refund guarantees and clarity of information available. Now, with the advent of the COVID-19 pandemic, a new trust parameter has arisen – that of physical safety beyond the online marketplace supply chain.
Customer centric online marketplace initiatives, in response to the pandemic and otherwise, along with government policies, are giving the Indian consumers a sense of security in the online ecosystem.
The government is attempting to bring in dynamic changes in the retail industry to protect the digital consumer, says Ficci. Online marketplaces are investing in technologies to put in place safety processes and practices, paying attention to customer concerns, and empowering brands and genuine sellers to protect their rights and grow their businesses online.
Measures include seller verification checks, trust seals, better customer service, social proof enablement, brand IP protection, cybersecurity, and AI/ML tools, among others.
According to a survey, 68% more customers shop online now than pre-Covid 19 times. This surge is mainly due to an influx of first-time online commerce users. The online commerce sector grew 117% between February and June 2020, during the lockdown months.
Online marketplaces invested in a host of new safety and hygiene practices to keep customers and employees safe, while extending a lifeline to brick and mortar kirana stores to help them transit to the world of online selling. The evolution of buyer and seller behaviors toward digital during the pandemic is likely to stay and strengthen the three tenets of trust – widespread awareness, enhanced security and active responsibility.
The report also expects ecommerce to contribute nearly 4% of India’s GDP by 2025, and is expected to add another1 million jobs by 2023. The industry has boosted manufacturing, transport, sales and other related activities.
Needless to say, online marketplaces have empowered rural sellers, MSMEs, women, and entrepreneurs to develop their businesses and generate livelihoods. Chenoy believes, creating an ecosystem of trust requires collaborative interventions between the government and online marketplaces. This is also required to strengthen the 3 key tenets of trust – widespread awareness, active responsibility, and enhanced security.
For example, in the draft rule, the government has proposed that e-commerce firms appoint a chief compliance officer, a nodal contact person as well as a resident grievance officer for redressing of the grievances of the consumers on the e-commerce platform and will have 72 hours to respond to legal requests.
Nearly 70% of consumers surveyed indicated that if more safety interventions are implemented, they would shop via online marketplaces more often. Along with greater customer and seller awareness, a new holistic policy framework can harness the true potential of online commerce.
Chenoy adds that the report is an attempt to understand the current state and future projections of the sector and highlight our belief that the joint actions by stakeholders, along with greater customer vigilance, will take online commerce to the next level and will subsequently play an ever increasing role in helping the Government achieve the 5 trillion Dollar economy.