Do you know what the e-commerce market in India looks like? Or what are the top growth drivers, trends, and strategies for this country? If not, it’s a good thing you’ve come to us because today, we’re going to give you the highlights from the IBEF report about e-commerce in India. Let’s go!
Indian E-commerce Overview
But for starters, some data.
E-commerce in India will reach US$ 99 billion by 2024, growing at a 27% CAGR between 2019 and 2024, with groceries and fashion/apparel likely to drive incremental growth.
The Indian e-commerce market is predicted to grow by 21.5% in 2022, reaching US$ 74.8 billion. And it’s expected to reach US$ 350 billion by 2030, driven primarily by the grocery and fashion/apparel sectors.
Source: IBEF’s E-commerce report.
During the festive season of 2021, Indian e-commerce platforms generated sales worth US$ 9.2 billion gross GMV (Gross Merchandise Value). Moreover, between 2021 and 2025, sales of e-commerce are expected to reach Rs 8.8 trillion (US$120.1 billion) at a CAGR of 18.2%. Retail penetration online is expected to reach 10.7% by 2024, up from 4.7% in 2019.
Additionally, in FY21, India had 150 million online shoppers, which is expected to reach 350 million by FY26.
Source: IBEF’s E-commerce report.
By 2030, India’s digital sector is expected to grow multi-fold and reach US$ 1 trillion.
In its ‘Digital India’ campaign, the Government of India aims to create a trillion-dollar online economy by 2025. In 2027, the Indian online grocery market is expected to reach US$ 26.93 billion, up from US$ 3.95 billion in FY21. And in 2020, India became the eighth-largest e-commerce market, trailing France and ahead of Canada, with a turnover of $50 billion.
Source: IBEF’s E-commerce report.
Advantage of India
There’s a lot we can say about India, especially that there are such factors working in its favor:
- attractive opportunities – India’s e-commerce market experienced strong sales growth in 2021 and is expected to grow by 21.5% in 2022.
- growing demand – India’s social commerce has the potential to expand to US$16 –20 billion in FY25, implying a CAGR of 55 -60%.
- policy support – In India, 100% FDI is permitted in B2B e-commerce. As per the new guidelines on FDI in E-commerce, 100% FDI under automatic route is permitted in the marketplace model of e-commerce
- increasing investment – e-commerce sector received US$ 15 billion of PE/VC investments in 2021, which is a 5.4 times increase YoY. Moreover, after raising US$ 300 million in Series F funding in February 2022, Xpressbees became a unicorn with a US$ 1.2 billion valuation.
Market Overview
The Indian e-commerce sector is ranked 9th in cross-border growth in the world, according to the Payoneer report. And it’s expected to grow at 17.3% by 2022. E-commerce transactions soared by 77% in 2020-21, with transactions from tier 2 and tier 3 cities experiencing the fastest growth ever. What’s more, a 23% increase in gross merchandise value was recorded by e-commerce during the festive season, amounting to US$ 9.2 billion. Additionally, Indian e-commerce is projected to increase from 4% of the total food and grocery, apparel, and consumer electronics retail trade in 2020 to 8% by 2025.
Source: IBEF’s E-commerce report.
Rising Internet Users
As a result of the ‘Digital India’ program, India’s internet connections increased significantly to 830 million in 2021. Since 2018, wireless internet data usage has increased seven times. And India’s internet penetration has increased from 4% in 2007 to 45% in 2021.
Source: IBEF’s E-commerce report.
Online Retail Market
By 2030, the online retail market in India is expected to reach 37% of the total organized retail market. By FY26, the e-retail market is expected to reach US$ 120-140 billion. In 2020, with 140 million online shoppers, India had the third-largest online shopper base after China and the US. Within the next five years, the Indian e-retail industry is expected to surpass 300-350 million shoppers, driving online Gross Merchandise Value (GMV) to US$ 100-120 billion.
Source: IBEF’s E-commerce report.
Online Retail vs. Total Retail in India
Due to the gradually growing internet penetration in India, E-retailers in India have many opportunities to capitalize on. The percentage of retail sales conducted online is expected to reach 10.7% by 2024, up from 4.7% in 2019. As of 2025, 220 million Indians are expected to shop online.
Source: IBEF’s E-commerce report.
E-tailing Market by Business Model
A zero-inventory model adheres to the standards and directions of the marketplace model. E-commerce marketplaces provide consumers and merchants with a digital platform without the need to warehouse products. With the help of logistics companies and financial institutions, marketplaces help merchants with the shipment, delivery, and payments.
On the other hand, inventory-led models are those shopping websites where buyers select online from a range of products owned by the online shopping company. The website then handles the entire process end-to-end, from product purchase to warehousing to delivery.
Key players in the e-tailing market are:
Source: IBEF’s E-commerce report.
Trends and Strategies
Policies and various initiatives give a boost to the industry. Therefore, e-commerce trends and strategies in the country have emerged.
- Ancillary services
- Agreement and partnership
- Expansion
- Personalized experience
- Assisted commerce
- Subscription for e-commerce
- Adaptation in product categories
- Digital marketing
- Geographic focus
- Fundraising
- New e-commerce portals
- Merger and acquisition
Growth Drivers
The top growth drivers for e-commerce are government initiatives, increasing awareness, and investments.
Source: IBEF’s E-commerce report.
👉 Government initiatives like Digital India are constantly introducing people to online modes of commerce.
👉 As the awareness of using the internet is increasing, more and more people are getting drawn to e-commerce.
👉 India is the land of occasions, and Increasing FDI inflow, domestic investment, and support from key industrial players are helping the growth of E-commerce.
What’s more, we can count on a few factors that have an impact on driving e-commerce growth. Among them are:
- Growth of logistics and warehouses
- Internet content in local languages
- Mobile commerce
- Payment modernization
- Consumer spending
- Employment generation
Over to You
We certainly can’t say that nothing is happening in the Indian e-commerce market! On the contrary. By 2034, Indian e-commerce is expected to surpass the U.S. as the world’s second-largest e-commerce market. This is not a big surprise, after what you’ve just read and given that there are many opportunities ahead for Indian e-commerce.
Don’t miss out on any of the highlights by signing up for our newsletter!
