Covid-19 may lift India's e-commerce market to around $85 billion by 2024

Presently customers are shifting from the “survival mode'' to adjusting to the new reality of the post-Covid-19 world. They are buying affordable goods and moving away from more expensive brands.
Though the transaction volumes on e-commerce platforms such as Amazon, Flipkart and Snapdeal have returned to the level of pre-Covid time, high-value transactions are expected to take place by next year. 

Right now these players are burning a lot of cash to retain customers who are spending money mainly on low-value transactions as their purchasing power has been impacted by Covid-19, according to the analysts and industry insiders.

However, they said the pandemic is expected to help uplift India's e-commerce market almost threefold to around $85 billion by 2024, despite other sectors being impacted severely. Other e-commerce players which are expected to witness a rapid increase for various services include Grofers, BigBasket and Lenskart. Presently about 80 per cent of order volume has picked up.

“Right now people are buying a lot of low ticket items from platforms such as Amazon and Flipkart which you would usually buy from the local market because people don’t want to go out. That is why the order volumes have increased,” said Satish Meena, a senior forecast analyst at Forrester Research. Customers in India are conserving cash due to Covid-19 impact unlike other places such as the US where there is a lot of stimulus from the government. "But we are expecting the customers (in India) to start spending on big-ticket items (such as laptops, smartphones and appliances) by next year,” said Meena.

According to industry insiders and analysts, the market opportunities for online commerce in the country are expected to touch $200 billion by 2028 from $30 billion in 2018. Presently customers are shifting from the “survival mode'' to adjusting to the new reality of the post-Covid-19 world. They are buying affordable goods and moving away from more expensive brands. 

“Brands do help you to create a certain image when you are outside, but if you want apparel to wear at home, it doesn’t matter which brand it is,” said a senior official at an e-commerce company.

Presently cash burns are really high for players such as Amazon and Flipkart which are on a hiring spree to cater to the volumes and be able to retain the customers and experiment more. Amazon expects to spend $4 billion just on Covid-19-response. Amazon CEO Jeff Bezos had said the money would be spent on personal protective equipment (PPE), cleaning for facilities, higher wages for hourly teams, and expanding its own Covid-19  testing capabilities.

“Customers want to avoid stepping out unless it's very critical. We are helping customers who are stuck in that situation, and we are able to play a small part in helping  (cater) to their needs,” said Gopal Pillai, vice president for seller services at Amazon India. “We are also mitigating the risks that small businesses are facing because there is a reduced footfall in the local offline traffic,” said Pillai. He is driving a key mission at the e-commerce giant which is to enable local shops all across the country sell online, supporting them with the required technology and training among others.

A key highlight of Walmart-owned fashion retailer Myntra’s End of Reason Sale (EORS) which concluded on Wednesday was the integration and collaboration with 400 offline stores of more than 60 brands, enabling them to go live with their inventory on the Myntra platform. The items are being shipped directly from the brands’ stores to the consumer’s doorsteps. About 15,000 Kirana partners under Myntra’s MENSA Network (Myntra’s Extended Network for Service Augmentation) will fulfil deliveries across 300 tier-2 and 3 cities, which will also help in augmenting their earnings. About 3.5 million customers shopped during EORS, with over 700,000 first-timers, 56 per cent of who are from tier-2 cities and beyond. The top tier-2 and 3 cities include Guwahati, Bhubaneswar, Dehradun, Imphal, Aizawl and Panchkula. The most popular men’s product has been T-shirts and the most sought after product by women has been kurtas.

Amid the pandemic, online retailers are also experimenting a lot to help reduce the access barriers to e-commerce. Flipkart on Wednesday enabled three new languages on its platform - Tamil, Telugu and Kannada as part of its vision to make online commerce more inclusive and accessible for Indian language users. The introduction of 3 vernacular interfaces, is in line with Flipkart’s aim of developing state-of-the-art innovations to solve for the various pain points of consumers transitioning to e-commerce. According to industry reports, Indian language internet users are expected to account for nearly 75 per cent of India’s internet user base by 2021. This growing base of language users, primarily from smaller towns, makes it extremely important to enable e-commerce in regional languages to offer a more personalised experience. This will also enable millions of consumers across the country to have an engaging online shopping experience in their native languages.

“We truly believe that language, if solved well, can be an opportunity rather than a barrier, to reach millions of consumers who have been underserved,” said Kalyan Krishnamurthy, chief executive officer of Flipkart Group.

Jeyandran Venugopal, chief product and technology officer at Flipkart said, almost 58 per cent of the firm's user base comes from tier-II cities and beyond. He said the new language interfaces of Tamil, Telugu and Kannada along with Hindi (introduced last year) will further improve users’ e-commerce journeys by making it simpler and more personal.

“The increasing change in consumer behaviour to prefer online shopping has come as a great surprise and relief for online sellers and marketplaces,” said Kapil Makhija, CEO, Unicommerce, an online retail-focused technology platform. He said this will lead to the rising adoption of omnichannel solutions by companies across sectors and focus on digital transformation to significantly improve customer buying experience with the help of relevant technology solutions.

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