The Indian E commerce Industry has seen lot of ups and downs and rapid market shifts.
Zafeer Ahmed, Managing Director at XRE Consultants
In recent years India has experienced a boom in internet and smartphone penetration. According to sources, as of June 2023, the number of internet connections in India significantly increased to 895 million, driven by the ‘Digital India’ program. The smartphone base has also increased significantly and is expected to reach 1.1 billion by 2025. 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.
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The Indian E commerce Industry has seen lot of ups and downs and rapid market shifts. Companies like Snapdeal cam performed and vanished. However, companies like flipkart (acquired by Walmart in 2018), Amazon India, emergence of Paytm Mall, and Myntra has played a significant role in the growth of ecommerce sector.
The market size of ecommerce industry in India way back in 2014 was merely 14 Billion US $ which went to a sharp rise of around 39 Billion US $ with a significant increase of 65% in just 3 years. The market share then dipped to 21 Billion US $ seen a decrees of around 60%.
And then came the COVID-19 which accelerated the adoption of ecommerce and quick commerce industry with diverse product categories and order value segments catering to evolving consumer preferences, and the domination of metropolitan cities presenting significant opportunities for retailers and key players to capitalize on the rapidly expanding market and the industry zoomed to 67 million US $ with a sharp rise of more than 200%. After Covid 19 in the year 2022 the revenue growth went down to 0.7% which fell significantly as compared to 54% and 33% in the year 2020 and 2021.
Having experienced this, the Indian E commerce Industry was again on a growth trajectory post year 2022 and have reach 123 Million US$ in the year 2024 as compared to 84 Million US $ in the year 2022.
The Indian ecommerce platforms achieved a significant milestone, hitting a GMV (Gross Merchandise Value) of US$ 60 Billion in the fiscal year 2023, marking a 22% increase as compared to previous year. There are lot of support from the government side to promote the growth of the industry like 100% FDI is allowed in B2B e commerce and under the automatic route is permitted in the marketplace model of E commerce.
There is a lot of increase in the investments in the ecommerce sector which will further support the growth of the industry like the indigenous e commerce giant Flipkart is poised to raise US$ 1 billion in a new funding round with its parent company Walmart anticipate to contribute US$ 600 Million.
The India Quick E-Commerce (Quick Commerce) market is poised for exponential growth, projected to reach US$ 19,932.5 million driven by rising internet and smartphone penetration, convenience of quick delivery, and accelerated adoption during COVID-19, with diverse product categories and order value segments catering to evolving consumer preferences, and the domination of metropolitan cities presenting significant opportunities for retailers and key players to capitalize on the rapidly expanding market.
According to a Deloitte India Report, as India is moving towards becoming the third-largest consumer market, the country's online retail market size is expected to reach US$ 325 billion by 2030, up from US$ 70 billion in 2022, largely due to the rapid expansion of e-commerce in tier-2 and tier-3 cities.
The e-commerce industry in India has evolved significantly over the years, facing various ups and downs. The future looks promising, with continued growth in warehouse space consumption, deeper market penetration, and technological advancements. However, the rise of quick commerce presents new challenges. E-commerce companies need to innovate and adapt their strategies to compete effectively in this dynamic landscape.
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