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The pandemic has been a watershed moment for India’s online retail market as consumers increasingly turned to digital platforms for payments and purchases.
According to a report by Bain & Company, the Indian e-retail segment witnessed a growth of 25 per cent to touch the $38 billion-mark in FY21. In contrast, the $810 billion retail market shrank by 5 per cent during this period. With this, India has the third-largest online shopper base with 140 million online shoppers after China and the US.
The e-commerce segment witnessed an even higher growth in the top eight metro cities where one in three people shopped online atleast once last year.
India’s e-retail market is expected to continue to clock a growth of 25-30 per cent per annum to reach $120-140 billion by FY26, outgrowing the modern trade segment, the report added.
To be sure, modern retail stores, also known as the supermarket chains, were hit the hardest during the lockdowns. The report noted that while modern trade will see a bounce back, e-commerce is expected to outgrow the modern trade retail segment.
Sources of growth
The report titled, “How India Shops Online 2021”, pointed out that the growth of the e-retail segment will be largely driven by smaller towns that account for four out of five new shoppers, besides addition of women shoppers and older shoppers.
“E-retail categories have seen disparate growth and recovery patterns through the past 12–18 months of the pandemic: The mobiles and electronics categories witnessed a one-time growth spurt but frequent-use categories such as grocery, household, and personal care categories continued to see acceleration. However, discretionary categories such as fashion and travel products saw relatively slower growth but have started rebounding in 2021,” the report pointed out.
Arpan Sheth, Partner, Bain & Company, said, “We expect a few mega-trends as e-retailers onboard the next wave of online shoppers. There will be emergence of digital ecosystems, explosion of voice, vernacular and video-led commerce, social commerce, direct-to-consumer (D2C) and omni-channel commerce. Online channel is becoming a must-play and must-win frontier for brands, who will have to make a focused effort and invest to gain scale in e-retail.”
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