The e-commerce market in India is strong and growing stronger with predictions that it will be worth approximately US$200 billion by 2027 – it currently stands at US$84 billion. Latest data say, India ranks 44th in e-commerce penetration with 50 per cent of the Indian population shopping online. The average retail e-commerce revenue per user in India increased from US$48.3 in 2017 to US$73.81 in 2020 and is set to continue increasing to US$76.4 in 2024 as e-commerce becomes increasingly accessible to a wider population. The number of e-commerce users is expected to grow by 41 per cent to 920 million users in India by 2023.
With approximately 100 million online shoppers and over 450 million internet users, there is a lot of scope for e-commerce retailers. Internet penetration is currently at 50 per cent, which points to potential for more shoppers to come online in the future – making India a very attractive market to build an ecommerce presence in.
With digital development exploding in the Asia Pacific region, it is no surprise that the fastest growing online retail market is India, followed by Spain and China. Digital retail development in India is strongly connected to the constantly improving online access, especially in mobile-first online communities that have long struggled with the traditional fixed broadband connections due to financial or infrastructure restrictions but enjoy the advantages of cheap mobile broadband connections. Part of this has also to do with strong government initiatives alongside reduced Smartphone and data plan prices that make the internet more accessible to a wider population of the country. Electronic and Media are the strongest categories in India, followed by Fashion, Food, and Personal Care. A study revealed that 70 per cent of online consumers are strongly influenced by ideas and information they’ve ‘gleaned through digital channels prior to purchase’.
COVID-19 has unlocked doors for global trade in innovative ways. According to global financial services firm and leading cross-border payments platform Payoneer, India is amongst the top 10 countries in cross-border e-commerce growth. Global cross-border commerce is fast emerging as the next big growth opportunity for the Indian e-commerce industry. Cross-border spending made up the majority (74 per cent) of total e-commerce sales in India with 37 per cent of online shoppers purchasing cross-border in 2019.
Cross-border e-commerce sets the excellent market value and a great outcome of its sale. A Global E-commerce Study states that at least 73 per cent of Indian consumers shop cross-border, though many of them abandon the orders due to high price on shipping.
As online shopping becomes more prolific, personalisation will be a key driver. Mobile commerce (m-commerce) or buying on mobile devices, tablets or smartphones is becoming increasingly popular in India and touted to be a ‘game changer’ for e-commerce. Cell phone shipments in India expanded by 8 per cent year-on-year to arrive at 50 million units in the principal quarter of 2020, driven by sure shipments of all cell phone sellers on the lookout. Consumers are becoming more comfortable purchasing services and products through mobile apps, making m-commerce a significant opportunity for retailers and brands to explore. Cross-border e-commerce brands selling in India are facilitating both younger generations with an excellent m-commerce experience, as well as accommodating alternative payment methods such as cash on delivery to also capture the older generation.
India has an advanced digital retail payments infrastructure contributing to the fast growth of digital retail payments. Younger consumers are also pushing digital retail payment methods forward with 68 per cent under the age of 25 using platforms like Paytm and PhonePe for retail payments. Older generations still prefer to use the Cash on Delivery option and hesitate to pay digitally when shopping online.
Direct-to-Consumer (D2C) brands and independent sales channels have been trending alongside e-commerce. Retail companies are doing away with distributors and middlemen and connecting directly with consumers through e-commerce platforms. This allows them to not only reduce costs and overheads but also get a closer understanding of their consumer’s buying patterns, deal with product enquiries and directly provide customer service. By offering enhanced customer experience, brands get deeper insight into their shopping behaviour. This allows D2C brands to customise their products for different markets catering to local cultural differences, and thus succeed in diversifying into different countries.
As exports from India reached a high of US$35.4 billion in July 2021, the momentum augurs well to capture the massive headroom for growth that exists. With strong long term growth projections cross-border e-commerce, it is time that Indian businesses focus their attention on going global.
Additionally, the centre under the Department of Industrial Policy and Promotion (DIPP) in 2018 strategised its FDI policies in order to increase participation of foreign players in the Indian e-commerce space. It hiked the FDI cap to 100 per cent through automatic route in Single-Brand Retail and up to 51 per cent in Multi-Brand Retail via government approval route with subject to other conditions.
Most importantly, the evolving e-commerce ecosystem in India which includes the marketplace, logistics providers and government agencies need to work in close coordination to ensure the Indian market’s competitiveness matches with those of other markets from around the world. The ability for Indian sellers to manage fulfilment and complete transactions through a range of integrated logistics as well as payment on trusted open marketplaces enables a frictionless experience. This will give immense confidence to small sellers and large retailers as well as buyers to participate in the global cross-border e-commerce market thereby contributing to a vibrant two-sided marketplace.