The pandemic has introduced rapid growth in the Indian e-commerce network. Currently, India has the third-largest shopper base globally and is expected to outrun the US to have one of the top largest shopper base within the next two years, according to reports by Bain & Company.
The report, done in collaboration with Flipkart, one of India’s largest online shopping company headquartered in Bengaluru states that the Indian e-commerce market rose to over $40 billion in 2021 and is accelerating to reach $50 billion this year.
With an estimated increase to $150-$170 billion by 2027, it implies around 30 percent annual growth.
In the past, electronics held a vast share of the market including online purchases of phones, laptops and appliances. However, over the next five years this segment is set to face a shift into categories like fashion, groceries and other general merchandise.
Last year, India’s e-commerce market saw over 40-50 million new shoppers, largely purchasing fashion at entry price points.
The government is also playing a role in democratising e-commerce for India through the creation of the Open Network for Digital Commerce (ONDC).
According to the report, India’s e-commerce network has evolved over the past decade in three phases:
- The first phase took place before 2015 when e-commerce was restricted to higher income households and categories such as mobile phones and fashion accounted for over 75 percent of gross merchandise value (GMV).
- 2015-2020 saw the second phase where the e-commerce market face immense expansion due to the rapid growth of smartphone users. This phase saw the emergence and scale-up of categories such as fashion, grocery, pharma, beauty and more.
- The third phase, involved increasingly rapid growth in the e-commerce network from both consumer and vendor sides. Customers transact more frequently and spend more time on increasingly available platforms.
Tech-led innovation is expected to be the core of online shopping growth, technology is already being utilised to deliver upgraded customer experience to customers. Augmented Reality (AR) based shopping is an example of technology enhancing customer experience.
India’s e-commerce network is set to see between a 25-30 percent growth in the next five years as well as a penetration of 9-10 percent, accelerated by various technological, environmental, social and other factors.
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