Mass disruptions often act as catalysts for business transformation. The exponential rise in digital adoption and e-commerce in Indian retail is fueled by COVID-19. Over the past two years, lockdowns, social distancing, wider product ranges and convenience have fueled the rise of online shopping.
The “India Retail and Unicommerce’s E-commerce Trends” report includes insights into consumer demand across brick-and-mortar, brick-and-mortar and online retail channels. It also provides industry analysis, along with consumer preferences and shopping platform preferences.
ONLINE RETAILER IS OUT PERFORMING
The FMCG industry is a great example of traditional brands moving online. Leading brands like HUL, Emami, ITC and Marico created extensive digital presences to embrace new opportunities. The online sales channels of these industry leaders are successfully catering to the needs of the new age online shopper.
Data from Unicommerce suggests that the e-commerce industry saw order volume growth of 69.4 percent year-on-year (year-over-year) in 2022. In comparison, the year 2021 saw an increase in order volume of 44.9%.
Faster GMV growth in 2022 has led to a 2.5% annual increase in average order value. Many first-time online shoppers who started their digital commerce journey in 2021 continued to shop online even after the lockdown.
Companies were able to build trust among early online shoppers, which enabled the sale of higher value products.
THE EMERGING SEGMENTS CONTINUE TO GROW STRONGLY
The beauty and personal care segment continues to show strong growth on digital shopping platforms. This segment emerged as a strong contender in the last two years with consistent YOY growth.
Fashion and accessories and footwear have always been the largest contributors to order volume in the overall e-commerce industry. As life returns to normal, fashion and accessories and footwear saw strong growth in order volume of 59.7% and 67.8% respectively.
In the previous fiscal year, home shoppers ordered mostly sports and comfort wear, while this year’s consumers shopped across all product categories.
The electronics and home appliances segment saw relatively slower growth, with 34.7 percent growth in order volume and 29 percent growth in order value in 2022.
The eyewear segment continues to grow steadily YOY, with 66 percent growth in order volume and 60 percent in order value, respectively. The segment is dominated by glasses and sunglasses.
Home decor and furniture, sports equipment, as well as books and stationery, are included in the “Other” category. This segment saw a 75.9% growth in order volumes during 2022.
INCREASING THE FOCUS ON THE BRAND’S WEBSITE TO BUILD BRAND LOYALTY
Further analysis of the changing e-commerce landscape reveals an evolving market. Brands across all segments are building a strong online presence with a focus on selling directly to consumers.
Companies have realized that it is important to invest in strong brand website operations to develop a connection with consumers. Brands are focused on providing a superior shopping experience for consumers using the brand website. Shoppers are now aware of the deals available across multiple channels and prefer to shop accordingly.
Brand websites continue to show stronger growth than marketplaces with 80.4% year-on-year growth in 2022. The markets have grown by 59.6% in the same period.
RAISING BHARAT IN THE NEW E-COMMERCE KAHANI
Shoppers in tier two and tier three cities make up the lion’s share of India’s e-commerce market, with these locations showing twice the growth rate of tier one cities. Annual demand from second and third tier cities is becoming a real growth lever for our e-commerce industry.
The findings indicate that cities in the second tier and tier three have experienced an annual growth of 92.2% and 85.2% respectively. This has come at the cost of lower growth in first-tier cities (47.2%).
Tier 1 cities continue to account for the lion’s share of India’s e-commerce volumes, with a market share of 38.7 percent in 2022.
Maharashtra, Delhi-NCR and Karnataka contribute to the highest e-commerce order volumes. Mumbai and Pune contribute the maximum share of Maharashtra’s order volume.
RISE OF FULFILLMENT CENTERS
The increase in order volume in second and third tier cities has led to the establishment of warehouses and fulfillment centers in smaller towns. Brands with a strong offline presence are deploying omnichannel technology to leverage local stores to fulfill rising order volumes.
Online sellers are emerging from smaller business hubs like Jaipur, Agra, Surat, Ahmedabad and Ludhiana. At the same time, large companies are setting up warehouses and dark shops in cities like Hyderabad, Ghaziabad, Coimbatore and Pune to meet the rising demand from the surrounding regions.