The shift to online shopping has not only become a preference but a transformative force, giving rise to e-commerce that has redefined the essence of buying and selling.
Several large e-commerce companies have been ramping up investments across India’s online shopping ecosystem to capitalise on the growing potential. This includes large online marketplaces such as Amazon, Walmart-backed Flipkart, Meesho and others along with Open Network for Digital Commerce (ONDC).
India’s e-commerce market is expected to vault past $160 billion by 2028, from an estimated $57–$60 billion in 2023, as online shopping has accelerated after the Covid-19 pandemic, according to a report by Bain and Co, which tracked consumer spending on e-commerce.
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The market is projected to grow 17–20 per cent in 2023 from a year ago, albeit at a slower pace than the 25-30 per cent in 2019-2022, with high inflation hurting demand for discretionary goods, Bain said in a joint report with e-commerce major Flipkart.
Flipkart, Amazon and others
After a relatively muted start in terms of user consumption in the first half of the year, e-tailers like Flipkart and Amazon saw an uptick in demand leading up to and during the festive sales.
India added 120 million online shoppers between 2019 and 2022, while spending per customer on e-retail doubled over the three years, signifying greater engagement as well as spending per shopper. Besides, shoppers who signed up in 2019 have doubled their engagement, frequency of purchases and spending on digital platforms during the period, according to the report.
Interestingly, customers in smaller cities are leading the adoption of online shopping, with seven out of 10 buyers from tier II and III cities. A third of online shoppers in India now belong to the Gen Z-Alpha consumer cohort, the report added. About a third of online shoppers come from low-income or low-middle-income cohorts. Simultaneously, there is a growing base of mature shoppers, it said.
Online retailers could see their festival season sales rise by 20 per cent to over ₹90,000 crore this year as a result of consumer spending gradually normalising after several quarters of tepid growth in the sector and better margins due to rising ticket sizes of purchases and higher ad spends by brands, according to market research firm Redseer.
The Gross Merchandise Value (GMV) for online festival sales in 2023 (for the period between October 1 and November 15) stood at an impressive $11 billion, up 16 per cent during the same period a year ago.
Flipkart has reportedly seen a 15-20 per cent increase in its gross merchandise value (GMV) at₹33,000-₹36,000 crore during the festival season sale this year. During the initial week of this year’s festive season sales on e-commerce platforms, the GMV witnessed a notable 18 per cent growth, amounting to approximately $4 billion, as reported by Datum Intelligence, a market research firm. Datum Intelligence anticipates that the e-commerce industry will reach an overall GMV of about $9 billion by the conclusion of this year’s festival season.
Commanding a total GMV of $4.7 billion, electronic items such as mobile phones, tablets and laptops accounted for a staggering 42 per cent of the total GMV, signifying the robust demand for electronic gadgets and appliances during festival seasons. Following closely, the fashion category stood out prominently, boasting a GMV of $2.8 billion , contributing significantly with 25 per cent of the total GMV. This notable preference for fashion-related products during festival sales highlights the enduring allure of clothing and accessories as quintessential festival purchases for consumers.
E-commerce giant Flipkart claimed that it witnessed an overall 1.4 billion customer visits over early access and 7 days of its 10th edition of ‘The Big Billion Days’. On the other hand, Amazon India said that during the first 48 hours of the ‘Great Indian Festival 2023’, the online marketplace saw a record 9.5 crore customer visits.
Value commerce marketplace Meesho during its ‘Mega Blockbuster Sale’, which ran from October 6-15, reported 1.6 crore new app installations and onboarded nearly 2 lakh new sellers.
Commenting on Snapdeal’s performance during festive sales, the company’s CEO Himanshu Chakrawarti said that the e-tailer witnessed 25-30 per cent y-o-y growth during the annual sales event.
“On Snapdeal, amongst the new customers that we get almost 30 per cent of them are first time ever e-commerce transactors,” he added.
The buoyant festival sales vividly underscore the ecommerce sector’s enduring influence, evidenced by the consistent y-o-y increase in GMV.
Yet, amid this fast paced growth, challenges persist. From refining delivery experiences to elevating customer service and navigating funding fluctuations, these hurdles need to be addressed for sustained progress.
Key events in 2023
ONDC currently live in over 620 cities and the government-backed e-commerce network is now planning to double down on Tier 2 and beyond in the next iteration of its incentive scheme. E-commerce giant Flipkart claimed that it witnessed an overall 1.4 billion customer visits over early access and 7 days of its 10th edition of ‘The Big Billion Days’.
Amazon India said that during the first 48 hours of the ‘Great Indian Festival 2023’, the online marketplace saw a record 9.5 crore customer visits.
Meesho highlighted that nearly 30,000 sellers became lakhpatis during the e-commerce start-up’s sale event. E-commerce major Flipkart is in talks to raise as much as $1 billion, with parent Walmart committing to inject $600 million.
Things to watch out for in 2024
As more companies enter the D2C space, the sector will command in terms of funding and companies making it to the public markets.
ONDC is eyeing participants – the likes of Urban Company – to join the network to offer such skill-based services and also foraying into financial services
3 party logistic players to benefit from growing e-commerce penetration in the country.