Select Theme
 

INDIA'S E-COMMERCE SURGES: FUELED BY COVID-19 | Digital Marketing Lab

August 27, 2021

India has always been an appealing eCommerce market because of its large population, even if only a small percentage of its citizens have access to the internet or adequate income. According to the World Bank, only 3% of the population owns a credit card.

However, eCommerce is on the rise in India. Covid-19 has wreaked havoc on the country in the last year, resulting in a large number of hospitalizations and deaths. Customers remained at home and learned to shop online.

Demographics

According to Statista, India’s internet penetration rate in 2021 has been 45 percent. With a population of 1.4 billion people, that equates to 630 million internet users – a tremendous amount that is 45 million higher than in 2020.

With 96 percent of internet users between the ages of 16 and 64 possessing a smartphone, India’s population is largely reliant on mobile devices. According to the research firm GSMA Intelligence, approximately 79 percent of the population has a mobile connection. According to Global Web Index, a statistics provider, just 56% of people own a desktop or a laptop. 

India has one of the lowest mobile internet access costs in the world. Indians with internet connections are increasingly using mobile payment services like Samsung Pay to make eCommerce purchases.

Travel, rideshares, and lodgings are the most popular online purchasing categories, accounting for $35.2 billion in 2020, yet purchases plummeted 54 percent between 2020 and 2021 owing to the pandemic, while food and personal care climbed by 55 percent. In 2020, the largest category of physical items, electronics, and physical media, generated $14.6 billion in revenue.

Sales

According to eMarketer, retail eCommerce sales in India will reach $66.76 billion in 2021, a 27 percent increase from 2020.

Ecommerce increased by 36% year on year in the fourth quarter of 2020. According to Kearney, a management consulting organization, the most successful categories were personal care, beauty, and wellness, which rose by 95 percent year over year. Brands used the epidemic to focus on direct-to-consumer techniques, avoiding shops. As a result, Direct-To-Consumers’ (DTC) eCommerce revenue increased by 94% in Q4 2020 compared to the same quarter in 2019.

The following changes in Indian purchasing behavior have occurred as a result of Covid-19:

  • New demand for low-cost goods.
  • An increase in the number of first-time online clients.
  • A significant surge in internet food buying.

New eCommerce consumers in Tier 2 and Tier 3 cities (populations of 50,000 to 90,000 and 20,000 to 49,999, respectively) accounted for much of the growth in Q4 2020, with a 90 percent year-over-year increase in sales due to improved internet penetration, increased awareness, and acceptance of cashless payments. 

Buy-now, pay-later services, which allow customers to pay in monthly installments, are becoming more popular in India and have assisted people in making purchases throughout the pandemic. Amazon Pay Later, for example, debuted in 2020 and now has 2 million Indian subscribers.

Start-Up Flourishes

Since the beginning of the pandemic, the number of Indian start-ups that have achieved unicorn status (a valuation of more than $1 billion) has increased. Many of these are in the field of eCommerce logistics.

In July 2021, Zomato, a food delivery startup, had a successful initial public offering. It raised $1.3 billion and was valued at $12.2 billion.

Swiggy, a restaurant, and food delivery network, raised its most recent round of capital last month. It has raised $3.7 billion in total and is now valued at $5.5 billion. According to a Swiggy founder, grocery deliveries account for roughly 25% of the company’s income, with aspirations to rise to 50% in the next few years to compete with Zomato. Because the typical restaurant delivery fee in India is only $5, delivering goods helps generate revenue.