The e-commerce scenario in India has been evolving by large over the past few years and it is significantly changing how people here. Rising internet users & usage of mobile phones have definitely contributed to the upside. It has impacted the way we communicate and companies do business at large. Let us dive deeper to understand and talk about the evolution of E-commerce in India and the future prospects.
In this regard, it should be noted that over 560 million of the gigantic population in India now has access to the internet, ranked second in the world.
The World and E-commerce
From a broader perspective, ecommerce is now a global phenomenon and every country is putting its best cards forward to tap the underpenetrated markets. E-commerce is doing really well in the APAC region but it will take at least five more years to reach the success rate of European countries.
History of ecommerce in India
The concept of electronic commerce first came in the year 1991, a time when the Internet was not available in India. However, by the late 90s, more and more people became aware of the Internet and they came to know that transactions can be done through this medium.
For most Indians, it remained a luxury until a few years ago. In 2002, when the IRCTC launched an online reservation system, the public started accepting the Internet as something useful. People came to know about the global leader Amazon and this marked the emergence of e-commerce in India.
Flipkart was one of the major companies that contributed a lot towards the e-commerce juggernaut here.
And then came the growth of ecommerce in India when a few years later, Mukesh Ambani, the front man of Reliance Industries, announced the arrival of Reliance Jio. He gave away SIM cards for free and this is when the Internet scenario in the country changed massively.
The user base in India just exploded with this and people started availing from the ecommerce industry, thus poising the industry to thrive with prospects.
From ordering daily essentials such as medicines, milk, and groceries to gadgets, people can now get almost everything delivered at their doorstep with easy return policies. The evolution of e-commerce in India has been pretty interesting till now.
- Drawing comparison with the US and China
However, when compared to foreign countries like the US and China, India is still lagging. In the aforementioned countries, e-commerce has achieved sales of over $150 billion as per a 2014 research by PWC.
In 2020, the online U.S. merchants saw a whopping 44% rise year over year in the States, as per Digital Commerce 360 estimates. Also, retail sales rose to $4.04 trillion, marking the highest growth since 1999. According to Digital Commerce 360 estimates, online spending was 21.3% of total retail sales in the year 2020.
The good news is that the industry in India has boomed significantly over the past few years, thanks to sectors like travel, retail, apparel, durables, and electronics, etc. Various courier companies also shaped of the business.
The same is poised to grow in the upcoming years. Ever since the pandemic has hit the country, people have switched to online purchases because of the convenience and to maintain social distancing. People are now relying on the internet for daily purposes and it is no longer a luxury for middle-class Indians.
Middle class Indians could handle the lockdown in a better way as ecommerce players ramped up their efforts to cater to the public. They could even purchase medicines, sanitizers, masks and other essentials online.
- A shift from regular logistics
The solid emergence of e-commerce will play huge pressure on the supporting logistics functions.
Companies in India need to understand that they cannot compete in the ever-evolving, globalized world of ecommerce just on the basis of volumes.
The realm of competition now includes short delivery timeliness, door-step delivery services, easy return and pickups, refund policies, etc.
Along with the biggies like Flipkart, Amazon, and Myntra, several new small ecommerce companies are also making a name in the market. For the right kind of boom in the industry, more and more Indian companies are now joining the digital market bandwagon.
Thanks to the rising literacy rate and the easy adoption of the Internet, we see a very bright future for the ecommerce industry in the country.
Some experts even say that it is the best thing that has happened to the middle-class Indians with lesser time and high ambitions.
In fact, it has opened doors for small to mid-level entrepreneurs with ambitions and skills. It is a great platform to buy and sell items and keeping it all within the Indian economy.
In this regard, it should be noted that India’s ecommerce order volume rose by 36% in the fourth quarter of 2020, which shows its perspective.
The ecommerce in India is expected to reach$99 billion by the year 2024 (at a CAGR of 27% from 2019 to 2024). The surge is expected to be mainly driven by grocery, fashion, and apparel.
The after-effects of the pandemic will also contribute to the upside.
Over the decades, the country has seen a huge shift in this market from the print literate workforce to radio, television, and telephone and now to the Internet and mobile phone apps.
- Trends to watch out for
- In the coming years, we expect e-commerce to grow significantly on the back of the evolution of the logistics landscape and the growing demand of the general crowd.
- Technology has already started shaping the e-commerce scenario.
- Companies need to keep a few factors in mind such as downstream parcel and large fulfilment centers and warehouses, adoption of state of the art technology, etc.
- The number of companies choosing the virtual world for doing their businesses has climbed to a huge extent in recent years. Even the major portals are making a shift because of obvious The pandemic has been a great contributor to the growth of players in the ecommerce industry.
All these factors poise the Indian ecommerce industry well for long-term growth with room for biggies as well as newbies to make a mark in the market.