INDIAN E-COMMERCE INDUSTRY
INDIAN E-COMMERCE INDUSTRY
E-commerce has transformed the way business is done in India. The
Indian E-commerce market is expected to grow to US$ 111.40 billion
by 2025 from US$ 46.2 billion as of 2020. Much of the growth for
the industry has been triggered by an increase in internet and
smartphone penetration. As of September 2020, the number of
internet connections in India significantly increased to 784.6
million, driven by the ‘Digital India’ programme. Out
of the total internet connections, 61% connections were in urban
areas, of which 97% connections were wireless.
The Indian online grocery market is estimated to reach US$ 18.2
billion in 2024 from US $1.9 billion in 2019, expanding at a CAGR
of 57%. India's e-commerce orders volume increased by 36% in the
last quarter of 2020, with the personal care, beauty and wellness
(PCB&W) segment being the largest beneficiary. India's
consumer digital economy is expected to become a US$ 800 billion
market by 2030, growing from US$ 537.5 billion in 2020, driven by
strong adoption of online services such as e-commerce and edtech
in the country.
According to Grant Thornton, e-commerce in India is expected to
be worth US$ 188 billion by 2025. With a turnover of $50 billion
in 2020, India became the eighth-largest market for e-commerce,
trailing France and a position ahead of Canada. According to
NASSCOM, despite COVID-19 challenges/disruptions, India's
e-commerce market continues to grow at 5%, with expected sales of
US$ 56.6 billion in 2021. Propelled by rising smartphone
penetration, launch of 4G network and increasing consumer wealth,
the Indian E-commerce market is expected to grow to US$ 200
billion by 2026 from US$ 38.5 billion in 2017. Online retail sales
in India is expected to grow 31% to touch US$ 32.70 billion in
2018, led by Flipkart, Amazon India and Paytm Mall.
Indian consumers are increasingly adopting 5G smartphones even
before roll out of the next-gen mobile broadband technology in the
country. Smartphone shipments reached 150 million units and 5G
smartphone shipments crossed 4 million in 2020, driven by high
consumer demand post-lockdown. According to a report published by
IAMAI and Kantar Research, India internet users are expected to
reach 900 million by 2025 from 622 million internet users in 2020,
increasing at a CAGR of 45% until 2025. In festive season CY20,
the Indian e-commerce GMV was recorded at US$ 8.3 billion, a
significant jump of 66% over the previous festive season.
Similarly, the Indian e-commerce market recorded ~88 million users
in festive season CY20, a significant jump of 87% over the
previous festive season. For the 2021 festive season, Indian
e-commerce platforms are anticipated to generate over US$ 9
billion gross GMV (Gross Merchandise Value), a 23% increase from
last year’s US$ 7.4 billion.
In September 2021, CARS24, India's leading used car e-commerce
platform, has raised US$ 450 million in funding, comprising a US$
340 million Series F equity round and US$ 110 million in debt from
various financial institutions. In September 2021, Amazon launched
Prime Video Channels in India. Prime Video Channels will give
Prime members a seamless experience and access to a variety of
popular video streaming services. In September 2021, Bikayi, a
mobile commerce enabler, raised US$ 10.8 million in a Series A
funding round, led by Sequoia Capital India. Flipkart, India's
e-commerce powerhouse, announced in July 2021 that it has raised
US$ 3.6 billion in new funding from various sources including
sovereign funds, private equities and Walmart (parent company). In
June 2021, Flipkart added a new fulfilment centre (FC) in Dankuni,
West Bengal. The FC is spread over 2.2 lakh sq. ft. and has a
potential to create 3,500 direct jobs.
In June 2021, Grofers, the grocery delivery start-up, reportedly
entered the unicorn club, after raising US$ 120 million from
Zomato, the food delivery platform. In June 2021, Mastercard
invested an undisclosed amount in Instamojo, a payments firm, to
help digitise online stores and process their payments more
seamlessly. In May 2021, Amazon introduced a video streaming
service within its shopping app called MiniTV for users in India.
MiniTV features web series, comedy shows and content on tech news,
food, beauty and fashion.
In May 2021, Flipkart strengthened its grocery infrastructure to
cater to customer safety and demand across India. In this quarter,
it is planning to further expand its fulfilment centre capacity
for grocery by over 8 lakh square feet across Delhi, Kolkata,
Chennai, Coimbatore and Hyderabad.
In May 2021, Flipkart announced that it is in talks with
sovereign funds, private equity majors and other investors to
raise up to US$ 2 billion at a valuation of US$ 30 billion. In
April 2021, Flipkart announced a commercial alliance with Adani
Group to improve the company's logistics and data centre
capabilities and create about 2,500 direct jobs. In April 2021,
Flipkart announced to acquire Cleartrip, an online travel
technology firm. Flipkart announced to purchase 100%
shareholding of Cleartrip as the company expands its investments
to broaden its digital commerce offerings for customers.
In April 2021, Kirana commerce platform ElasticRun raised US$
75 million in a round led by existing investors—Avataar Venture
Partners and Prosus Ventures. In March 2021, Amazon acquired
Bengaluru-based retail tech start-up Perpule for Rs. 107.6
crore. In March 2021, Purplle, an online beauty store, raised
US$ 45 million from Sequoia Capital India, Verlinvest, Blume
Ventures and JSW Ventures. In March 2021, Captain Fresh, a B2B
marketplace for seafood, raised US$ 3 million in seed capital
led by Matrix Partners India and Ankur Capital. In March 2021,
the Confederation of All India Traders (CAIT), which represents
80 million traders and 40,000 trader associations, announced the
launch of a mobile app for its e-commerce portal, ‘Bharat
E-market’. The association aims to get more small traders to
sell online easily through smartphones.
Since 2014, the Government of India has announced various
initiatives, namely Digital India, Make in India, Start-up
India, Skill India and Innovation Fund. The timely and effective
implementation of such programs will likely support growth of
E-commerce in the country. Some of the major initiatives taken
by the Government to promote E-commerce in India are as
follows.
As of September 27, 2021, the Government e-Marketplace (GeM)
portal served 7.65 million orders worth Rs. 140,648 crore to
54,699 buyers from 2.8 million registered sellers and service
providers. In a bid to systematise the onboarding process of
retailers on e-commerce platforms, the Department for Promotion
of Industry and Internal Trade (DPIIT) is reportedly planning to
utilise the Open Network for Digital Commerce (ONDC) to set
protocols for cataloguing, vendor discovery and price discovery.
The department aims to provide equal opportunities to all
marketplace players to make optimum use of the e-commerce
ecosystem in the larger interest of the country and its
citizen.
National Retail Policy: The government had identified five
areas in its proposed national retail policy—ease of doing
business, rationalisation of the licence process, digitisation
of retail, focus on reforms and an open network for digital
commerce—stating that offline retail and e-commerce need to be
administered in an integral manner.
The Consumer Protection (e-commerce) Rules 2020 notified by the
Consumer Affairs Ministry in July directed e-commerce companies
to display the country of origin alongside the product listings.
In addition, the companies will also have to reveal parameters
that go behind determining product listings on their platforms.
Government e-Marketplace (GeM) signed a Memorandum of
Understanding (MoU) with Union Bank of India to facilitate a
cashless, paperless and transparent payment system for an array
of services in October 2019. Under the Digital India movement,
Government launched various initiatives like Umang, Start-up
India Portal, Bharat Interface for Money (BHIM) etc. to boost
digitisation.
In October 2020, Minister of Commerce and Industry, Mr. Piyush
Goyal invited start-ups to register at public procurement
portal, GeM, and offer goods and services to government
organisations and PSUs. In October 2020, amending the
equalisation levy rules of 2016, the government mandated foreign
companies operating e-commerce platforms in India to have
permanent account numbers (PAN). It imposed a 2% tax in the FY21
budget on the sale of goods or delivery of services through a
non-resident ecommerce operator. In order to increase the
participation of foreign players in E-commerce, Indian
Government hiked the limit of FDI in E-commerce marketplace
model to up to 100% (in B2B models).
Heavy investment made by the Government in rolling out fiber
network for 5G will help boost E-commerce in India.
The E-commerce industry has been directly impacting micro,
small & medium enterprises (MSME) in India by providing
means of financing, technology and training and has a favourable
cascading effect on other industries as well. Indian E-commerce
industry has been on an upward growth trajectory and is expected
to surpass the US to become the second largest E-commerce market
in the world by 2034. Technology enabled innovations like
digital payments, hyper-local logistics, analytics driven
customer engagement and digital advertisements will likely
support the growth in the sector. The growth in E-commerce
sector will also boost employment, increase revenues from
export, increase tax collection by ex-chequers, and provide
better products and services to customers in the long-term. Rise
in smartphone usage is expected to rise 84% to reach 859 million
by 2022.
E-retail market is expected to continue its strong growth - it
registered a CAGR of over 35% to reach Rs. 1.8 trillion (US$
25.75 billion) in FY20. Over the next five years, the Indian
e-retail industry is projected to exceed ~300-350 million
shoppers, propelling the online Gross Merchandise Value (GMV) to
US$ 100-120 billion by 2025.
According to Bain & Company report, India’s social commerce
gross merchandise value (GMV) stood at US$ 2 billion in 2020. By
2025, it is expected to reach US$ 20 billion, with a potentially
monumental jump to US$ 70 billion by 2030, owing to high mobile
usage.
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