E-Commerce

The Indian e-commerce industry has been on an upward growth trajectory. India's e-commerce market is growing at YoY rate of 5% with estimated revenue of $56.6 billion in FY 2021. The online retail market in India is estimated to be 25% of the total organized retail market and is expected to reach 37% by 2030. By 2034, it is predicted to surpass the United States to become the second largest e-commerce market globally. 

A young demography, increasing internet and smartphone penetration, and relatively better economic performance are some key drivers of this sector. Each month, India adds approximately 10 million daily active internet users- the highest rate in the world; number of smartphones per 100 people has risen from 5.4 in 2014 to 26.2 in 2018. According to 2019 data, it was estimated that one in every three Indians shopped using a smartphone.

In order to tap onto the large market, the e-commerce industry has also seen an increase in innovation across platforms, and ancillary segments such as logistics. The market has become conducive grounds for testing various business models such as inventory, social networks, aggregator, and e-commerce marketplace model, among many others.

Close to 100 per cent of pin codes in India have seen e-commerce adoption. More than 60 per cent of transactions and orders in India come from tier two cities and smaller towns. 97% of postal codes ordered at least 1 item during FY20. The e-commerce trend is gaining major popularity even in the tier-2 and tier– 3 cities as  they now make up nearly half of all shoppers and contribute three of every five orders for leading e-retail platforms. The average selling price (ASP) in tier-2  and smaller towns is only marginally lower than in tier-1/metro cities.

Electronics and apparel make up nearly 70% of the e-commerce market, when evaluated against transaction value. Other upcoming categories are baby products, furnishing, personal care, food and groceries.