With affordable smartphones and internet penetration, Indian consumers are increasingly switching to online retail for their daily needs. Industry analysts expect the e-commerce market to accelerate its growth in the coming year.
Online Retail Continues Expansion
The series of lockdowns in the past year and a half have put online retail in the spotlight for many sectors and consumer groups. The truth, however, is that the Indian e-commerce market was already on an upwards spiral, emphasized by the widespread internet adoption rates across Bharat and the Government’s Digital India initiative.
Digital literacy and appreciation for the shopping convenience have led to a market growth of 12.2% in 2020, according to latest reports. More importantly, the trend is estimated to accelerate in the current year (16.8%), bringing total e-commerce payments to about Rs 4.5 trillion ($61.5 billion).
The GlobalData analysis forecasts a further acceleration between 2021 and 2025 to an average 18.2% growth, ultimately reaching Rs 8.8 trillion ($120 bn at current rates) by 2025.
Beyond Clothes and Groceries
In a paradigm change, an increasing number of traditionally in-store sectors have shifted towards online sales, including Indian online lottery, media and gambling sites like 10Cric, but also household goods and supplies.
In fact, online sales have largely softened the blow for many segments which have suffered physical distancing and closures. Consumers have openly embraced internet shopping channels, diverse payment options and flexible delivery standards.
E-commerce had first gained traction in Tier-1 cities as young and affluent shoppers boosted online gaming, entertainment, tech items and trendy goods. But when travel restrictions and local lockdowns limited consumer options, even sensitive areas like healthcare were added to the online grocery list.
E-Commerce Leaders Remain the Same but Competition Grows
Earlier this year, one of the largest processing and payments companies, FIS, had cited similar figures in its 2021 Global Payments Report. India’s online retail market was already given at around $60 billion in 2020, while its growth was estimated to reach a total of 84% in the next 4 years, hitting $111 by the end of 2024.
The stable growth in the coming years is expected to be upheld by a further rise in mobile shopping. The FIS Global overview, naturally, accounts for all pandemic related trends and consumption changes. Providing a decisive push in the latest wave of the nation’s digital transition, healthcare awareness has prompted more consumers to give e-commerce a chance.
Expanding demographics have included more age and social groups, reached by a variety of retail and marketing channels, including social media and professional messaging feeds. Undeniably, however, the leaders in Indian e-commerce have been the same – Amazon, Flipkart and BigBasket. They have all recorded consistent increases in order volumes.
While even many global retailer platforms have not made it in the recent past, a lot of Indian startups are struggling in an increasingly demanding market. Growing competition and s series of government restrictions on non-essential items are making online operations difficult yet inevitable.
Ease of Payment Still Key
In large parts of the Union, cash on delivery is still the preferred payment method. Non-cash payments have grown considerably in the past few years, realizing their potential and enabling e-commerce companies to diversify payment channels.
Digital wallets outpace bank cards almost three times, while together they account for more than a half of all payments in 2020, according to the FIS report. Experts predict digital wallets to affirm the leadership and alone reach 47% by 2024.
Postponed payments and installments also make online shopping more accessible. User experience relies on the ability to personalize, check out and pay for one’s choices, and online merchants are likely to be increasingly flexible on such options.
