E-Commerce Business.
The anticipated gross merchandise value of the Indian e-commerce market is projected to reach US$ 350 billion by 2030.
Outline
- INTRODUCTION- MARKET SIZE
- INVESTMENTS/DEVELOPMENTS
- GOVERNMENT INITIATIVES
- SUCCESS GROWTH
- E-COMMERCE INDUSTRY REPORT Dec, 2023
- MAJOR HUBS OF E-COMMERCE
- INDUSTRY CONTACTS
- SUMMARY
- FAQs
INTRODUCTION
In recent years, India has witnessed a surge in internet and smartphone adoption. The number of internet connections soared to 830 million in 2021, largely fueled by the 'Digital India' initiative. Approximately 55% of these connections were in urban areas, with a staggering 97% being wireless. The smartphone user base has also expanded significantly and is projected to hit 1 billion by 2026. This growth has propelled India's digital sector, expected to achieve a valuation of US$ 1 trillion by 2030. The rapid increase in internet users and smartphone penetration, alongside rising incomes, has catalyzed the expansion of India's e-commerce industry. E-commerce has revolutionized business practices across various sectors, including business-to-business (B2B), direct-to-consumer (D2C), consumer-to-consumer (C2C), and consumer-to-business (C2B). Notably, segments like D2C and B2B have witnessed remarkable growth in recent times. India's D2C market is forecasted to reach US$ 60 billion by FY27. The overall e-commerce market is poised to hit US$ 350 billion by 2030, with a projected growth rate of 21.5% in 2022, reaching US$ 74.8 billion.
MARKET SIZE
The Indian online
grocery market is projected to soar to US$ 26.93 billion by 2027, marking a significant leap from its FY21 valuation
of US$ 3.95 billion. This growth is anticipated to be driven by a robust compound
annual growth rate (CAGR) of 33%. Moreover, India's
consumer digital
economy is on track to burgeon into a US$ 1 trillion
market by 2030, surging from US$ 537.5 billion in 2020.
This expansion is propelled by the widespread adoption of online services, including
e-commerce and edtech,
across the country.
Furthermore, the Indian e-commerce sector is poised for substantial growth, with a projected CAGR of 27%, aiming to reach US$ 163
billion by 2026. In FY23, the Gross Merchandise Value (GMV) of e-commerce attained US$ 60 billion, marking a
notable 22% increase compared to the
previous year. Similarly, in FY22, the GMV of e-commerce amounted to US$ 49 billion.
India's Business-to-Business (B2B) online marketplace is poised to become a US$ 200 billion opportunity by 2030. With a staggering user base of over 800 million, India stands as the world's second-largest internet market, witnessing a remarkable 125.94 lakh crore UPI transactions in 2022 alone. According to a Deloitte India Report, as India progresses towards becoming the third-largest consumer market globally, the country's online retail market size is projected to soar to US$ 325 billion by 2030, marking a substantial increase from US$ 70 billion in 2022. This surge is largely attributed to the rapid expansion of E-Commerce, particularly in tier-2 and tier-3 cities.
Data reveals
that the e-commerce market's share in Tier-3 cities
surged from 34.2% in 2021 to
41.5% in 2022. B2C E-commerce is anticipated to exhibit steady growth over the
forecast period, with a projected
Compound Annual Growth Rate (CAGR) of 8.68% during 2023-27. A recent report by Redseer suggests that
India's e-B2B market is expected to achieve a
Gross Merchandise Value (GMV) of US$ 100 billion by 2030.
Furthermore, according to Grant Thornton, India's e-commerce sector is forecasted to reach a valuation of US$ 188 billion by 2025. In 2020, with a turnover of US$ 50 billion, India emerged as the eighth-largest market for e-commerce globally, trailing behind France and one position ahead of Canada. Fueled by increasing smartphone penetration, the advent of the 4G network, and rising consumer wealth, the Indian e-commerce market is anticipated to swell to US$ 200 billion by 2026, up from US$ 38.5 billion in 2017. Following China and US, India boasts the third-largest online shopper base, reaching 150 million in FY21 and projected to hit 350 million by FY26.
Indian consumers are embracing 5G smartphones at a rapid
pace, even prior to the rollout of next-gen
mobile broadband technology in the country. Smartphone shipments reached 169 million in 2021, with 5G shipments
witnessing a staggering 555% year-on-year growth over 2020. In 2020, smartphone shipments totaled 150 million units,
with 5G shipments surpassing 4
million, driven by heightened consumer demand post-lockdown. According to a report by IAMAI and Kantar Research,
India's internet user base is expected to reach 900 million by 2025, up from approximately 622 million in 2020,
representing a robust Compound Annual Growth
Rate (CAGR) of 45% until 2025.
Lastly, India's
e-commerce festive season sales are projected to amass a gross merchandise value of US$ 10.88 billion
in 2023, marking
an 18-20% increase
compared to the previous year.
INVESTMENTS/DEVELOPMENTS
Here are some significant developments in the Indian e-commerce sector:
● In October 2023, iThink Logistics, a tech-driven logistics platform, partnered with India Post to enhance e-commerce deliveries in remote areas.
● Amazon CEO Mr. Andy Jassy announced a commitment to invest US$ 26 billion in India by 2030, with US$ 11 billion already invested.
● In July 2023, Canada and India's postal departments collaborated to facilitate
e-commerce exports and establish an International Tracked Packet Service (ITPS).
● As of May 2023, the Indian government's open e-commerce network ONDC expanded its operations to 236 cities and onboarded over 36,000 merchants.
● Amazon India introduced its Amazon Prime Lite membership plan in June 2023, aimed at offering affordable benefits to Indian shoppers.
● Walmart announced plans to invest over US$ 2.5 billion in India, focusing on e-commerce and payments markets.
● Hyperlocal e-commerce startup Magicpin experienced a surge in daily order volume after joining the ONDC network, reaching 10,000 orders per day in June 2023.
● In June 2022, Amazon India signed a memorandum of understanding (MoU) with Manipur Handloom & Handicrafts Development Corporation Limited (MHHDCL) to support artisans and weavers in Manipur.
● India's e-commerce sector witnessed US$ 15 billion of PE/VC investments in 2021, marking a significant increase year-on-year.
● In February 2022, logistics e-commerce platform Xpressbees became a unicorn with a valuation of US$ 1.2 billion after raising US$ 300 million in its Series F funding round.
● Amazon India launched the One District One Product (ODOP) bazaar on its platform in February 2022 to support MSMEs.
● Flipkart introduced the "sell back program" for trading in smartphones in February 2022.
● Walmart invited Indian sellers to join its US marketplace in January 2022, aiming to export US$ 10 billion worth of goods annually by 2027.
● Flipkart expanded its grocery services to cover 1,800 Indian cities in January 2022.
● XPDEL, a US-based e-commerce company, announced its expansion into India in November 2021.
● CARS24, a leading used car e-commerce platform, raised US$ 450 million in funding in September 2021.
● Amazon launched Prime Video Channels in India in September 2021 to offer Prime members access to various streaming services seamlessly.
● Bikayi, a mobile commerce enabler, secured US$ 10.8 million in Series A funding led by Sequoia Capital India in September 2021.
● Flipkart raised US$ 3.6 billion in new funding from sovereign funds, private equities, and Walmart in July 2021.
GOVERNMENT INITIATIVES
Since 2014, the Government of India has introduced several initiatives aimed at fostering growth across various sectors, including E-commerce. These initiatives include Digital India, Make in India, Start-up India, Skill India, and the Innovation Fund. Effective implementation of these programs is expected to bolster the E-commerce landscape in the country.
Here are some notable initiatives undertaken by the Government to promote E-commerce in India:
2. Open Network for Digital Commerce (ONDC): The Department for Promotion of Industry and Internal Trade (DPIIT) is reportedly leveraging ONDC to streamline the onboarding process of retailers on e-commerce platforms. This initiative seeks to establish protocols for cataloguing, vendor discovery, and price discovery, ensuring equal opportunities for marketplace players.
3. National Retail Policy: The government's proposed national retail policy focuses on areas such as ease of doing business, rationalization of licensing processes, digitization of retail, and reforms. It emphasizes the integration of offline retail and e-commerce administration.
4. Consumer Protection (e-commerce) Rules 2020: These rules, notified by the Consumer Affairs Ministry in July, mandate e-commerce companies to display the country of origin alongside product listings. Additionally, companies must disclose parameters used to determine product listings.
5. MoU with Union Bank of India: GeM signed an MoU with Union Bank of India in October 2019 to facilitate a cashless, paperless, and transparent payment system for various services.
6. Digital India Initiatives: Under the Digital India movement, the government launched initiatives like Umang, Start-up India Portal, and Bharat Interface for Money (BHIM) to drive digitization.
7. Invitation to Start-ups on GeM: In October 2020, Commerce and Industry Minister Mr. Piyush Goyal invited start-ups to register on the GeM portal and offer goods and services to government organizations and PSUs.
8. Equalization Levy Amendments: In October 2020, the government amended the equalization levy rules, mandating foreign companies operating e-commerce platforms in India to have Permanent Account Numbers (PAN). It also imposed a 2% tax on the sale of goods or services through non-resident e-commerce operators.
9. Increase in FDI Limit: To encourage the participation of foreign players in E-commerce, the Indian government raised the limit of Foreign Direct Investment (FDI) in the E-commerce marketplace model up to 100% in B2B models.
10. Fiber Network for 5G: Significant government investment in rolling out a fibre network for 5G is expected to bolster E-commerce growth in India.
SUCCESS GROWTH
The E-commerce
industry in India has significantly impacted micro, small, and medium enterprises (MSMEs) by providing
financing, technology, and training, thus creating a favourable cascading effect across various industries. India's
E-commerce sector has been witnessing
substantial growth and is projected to surpass the United States, becoming the world's second-largest E-commerce market
by 2034. Technological innovations such as digital
payments, hyper-local logistics, analytics-driven customer engagement, and
digital advertisements are expected
to drive growth in the sector. Additionally, India is planning to introduce
an Open Network for Digital
Commerce (ONDC), which will enable
synchronization of search
results across all E-commerce platforms and display products and services from every platform. This initiative is poised
to further boost business for MSMEs and fuel India’s E-commerce growth, consequently leading to increased employment,
higher revenues from exports,
enhanced tax collection, and improved products and services for customers in
the long term.
Over the past three years, India has witnessed a surge in online shoppers, with 125 million new shoppers joining the digital market. An additional 80 million are expected to join by 2025, according to a report by Kantar. The Indian E-commerce sector is set to expand into various markets, with the country's e-retail market registering a Compound Annual Growth Rate (CAGR) of over 35% to reach Rs. 1.8 trillion (US$ 25.75 billion) in FY20. Over the next five years, the industry is projected to attract around 300-350 million shoppers, driving the online Gross Merchandise Value (GMV) to US$ 100-120 billion by 2025. According to a report by Bain & Company, India's social commerce GMV was approximately US$ 2 billion in 2020 and is expected to reach US$ 20 billion by 2025, with a potential surge to US$ 70 billion by 2030, largely attributed to the widespread use of mobile devices.
References: Media Reports, Press releases, Business
Standard, Economic Times, LiveMint, Times Now, Times of India
Major Hubs for E-commerce
1.
Karanataka
2.
Delhi
3.
Maharashtra
4. Tamil Nadu
5. Andhra Pradesh
Industry Contacts
Summary
The e-commerce industry in India has experienced remarkable growth in recent years, driven by factors such as increasing internet and smartphone penetration, government initiatives, and technological advancements. India's e-commerce market is projected to become the world's second-largest by 2034, with significant contributions from segments like online groceries, B2B marketplaces, and social commerce. The government has played a crucial role in fostering this growth through initiatives like GeM, ONDC, and policy reforms to promote transparency and ease of doing business. Moreover, substantial investments from both domestic and international players underscore the sector's potential. With a burgeoning online shopper base and the advent of 5G technology, India's e-commerce landscape is poised for further expansion, promising benefits such as employment generation, increased exports, and improved customer experiences. The future outlook for India's e-commerce industry appears robust, supported by evolving consumer preferences, digital infrastructure development, and conducive regulatory frameworks.
FAQS:
● Answer: The Indian e-commerce market is expected to reach a GMV of US$ 350 billion by 2030.
What factors are driving the growth of the Indian e-commerce industry?
● Answer: Factors such as increasing internet and smartphone penetration, government initiatives, technological advancements, and evolving consumer preferences are driving the growth of the Indian e-commerce industry.
Which segments of the e-commerce market are expected to contribute significantly to its growth?
● Answer: Segments like online groceries, business-to-business (B2B) marketplaces, and social commerce are expected to contribute significantly to the growth of the Indian e-commerce market.
How has the government contributed to fostering growth in the Indian e-commerce sector?
● Answer: The government has introduced initiatives like GeM (Government e-Marketplace), ONDC (Open Network for Digital Commerce), and policy reforms to promote transparency and ease of doing business in the e-commerce sector.
What is the role of technological advancements in the growth of the Indian e-commerce industry?
● Answer: Technological advancements, such as digital payments, hyper-local logistics, analytics-driven customer engagement, and digital advertisements, are playing a crucial role in driving growth in the Indian e-commerce industry.
What are some key investments made in the Indian e-commerce sector?
● Answer: Significant investments have been made by both domestic and international players in the Indian e-commerce sector to capitalize on its potential for growth.
How is the online shopper base expected to evolve in India?
● Answer: India's online shopper base is expected to witness significant growth, with millions of new shoppers joining the digital market, driven by factors like increasing internet penetration and changing consumer behavior.
What are the anticipated benefits of the growth of the Indian e-commerce industry?
● Answer: The growth of the Indian e-commerce industry is expected to generate employment, increase exports, enhance tax collection, and improve products and services for customers in the long term.
How will the advent of 5G technology impact the Indian e-commerce landscape?
● Answer: The advent of 5G technology is expected to further propel the growth of the Indian e-commerce landscape by enabling faster and more efficient connectivity, enhancing the overall online shopping experience for consumers.
What is the overall outlook for the future of the Indian e-commerce industry?
● Answer: The future outlook for the Indian e-commerce industry appears robust, supported by evolving consumer preferences, digital infrastructure development, and conducive regulatory frameworks, promising continued growth and innovation in the sector.
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