E-Commerce

INTRODUCTION

In recent years India has experienced a boom in internet and smartphone penetration. The number of internet connections in 2021 increased significantly to 830 million, driven by the ‘Digital India’ programme. Out of the total internet connections, ~55% of connections were in urban areas, of which 97% of connections were wireless. The smartphone base has also increased significantly and is expected to reach 1 billion by 2026. This has helped India’s digital sector and it is expected to reach US$ 1 trillion by 2030. This rapid rise in internet users and smartphone penetration coupled with rising incomes has assisted the growth of India’s e-commerce sector. India’s e-commerce sector has transformed the way business is done in India and has opened various segments of commerce ranging from business-to-business (B2B), direct-to-consumer (D2C), consumer-to-consumer (C2C) and consumer-to-business (C2B). Major segments such as D2C and B2B have experienced immense growth in recent years. India’s D2C market is expected to reach US$ 60 billion by FY27. The overall e-commerce market is also expected to reach US$ 350 billion by 2030 and will experience 21.5% growth in 2022 and reach US$ 74.8 billion.

MARKET SIZE

The Indian online grocery market is estimated to reach US$ 26.93 billion in 2027 from US$ 3.95 billion in FY21, expanding at a CAGR of 33%. India's consumer digital economy is expected to become a US$ 1 trillion market by 2030, growing from US$ 537.5 billion in 2020, driven by the strong adoption of online services such as e-commerce and edtech in the country.

The B2C E-commerce is expected to grow steadily over the forecast period, recording a CAGR of 8.68% during 2023-27. According to a recent report by Redseer, India’s e-B2B market is projected to reach a GMV of US$ 100 billion by 2030.

According to Grant Thornton, e-commerce in India is expected to be worth US$ 188 billion by 2025.

INVESTMENTS/DEVELOPMENTS

Some of the major developments in the Indian e-commerce sector are as follows:

Walmart is preparing to spend over US$ 2.5 billion in India as the retailer doubles down on the opportunities it sees in India’s e-commerce and payments markets.
Hyperlocal e-commerce startup, Magicpin announced that its daily order volume has zoomed 100-fold to 10,000 per day from over 100 within a month of joining thew government-promoted Open Network for Digital Commerce (ONDC) network.
In June 2022, Amazon India signed an MoU with Manipur Handloom & Handicrafts Development Corporation Limited (MHHDCL), a Government of Manipur Enterprise to support the growth of artisans and weavers across the state.
India’s eCommerce sector received US$ 15 billion of PE/VC investments in 2021 which is a 5.4 times increase year on year. This is the highest investment value received by any sector ever in India.
In February 2022 Xpressbees a logistics ecommerce platform become a unicorn valued at US$ 1.2 billion in 2022. The firm raised US$ 300 million in its Series F funding.
In February 2022, Amazon India launched One district One product (ODOP) bazaar on its platform to support MSMEs.
In February 2022, Flipkart launched the “sell back program” to enable trade in smartphones.
In January 2022, Walmart invites Indian sellers to join its US market place with an aim of exporting US$ 10 billion from India each year by 2027.
In January 2022, Flipkart has announced expansion in its grocery services and will offer services to 1,800 Indian cities.
In November 2021, XPDEL US- based ecommerce announced expansion in India.
In September 2021, CARS24, India's leading used car e-commerce platform, has raised US$ 450 million in funding, comprising a US$ 340 million Series F equity round and US$ 110 million in debt from various financial institutions.
In September 2021, Amazon launched Prime Video Channels in India. Prime Video Channels will give Prime members a seamless experience and access to a variety of popular video streaming services.
In September 2021, Bikayi, a mobile commerce enabler, raised US$ 10.8 million in a Series A funding round, led by Sequoia Capital India.
Flipkart, India's e-commerce powerhouse, announced in July 2021 that it has raised US$ 3.6 billion in new funding from various sources including sovereign funds, private equities and Walmart (parent company).

ROAD AHEAD

The E-commerce industry has been directly impacting micro, small & medium enterprises (MSME) in India by providing means of financing, technology and training and has a favourable cascading effect on other industries as well. The Indian E-commerce industry has been on an upward growth trajectory and is expected to surpass the US to become the second-largest E-commerce market in the world by 2034. Technology-enabled innovations like digital payments, hyper-local logistics, analytics-driven customer engagement and digital advertisements will likely support the growth in the sector. India is also planning to introduce Open Network for Digital Commerce (ONDC). ONDC will enable e-commerce platforms to synchronize search results on all the e-commerce platforms and display products and services from every platform. This will further boost business for MSMEs and help fuel India’s e-commerce growth. The growth in the sector will further encourage employment, increase revenues from export, increase tax collection by exchequers, and provide better products and services to customers in the long term.

INTRODUCTION

MARKET SIZE

INVESTMENTS/DEVELOPMENTS

ROAD AHEAD

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