Covid-19 pandemic fuelling e-commerce growth in India
E-com market may grow threefold to $85 billion by 2024
Though the transaction volume on e-commerce platforms such as Amazon, Flipkart and Snapdeal has returned to pre-covid levels, high-value purchases are expected to pick up only next year, say analysts.
However, the Covid-19 pandemic is expected to help the e-commerce market grow threefold to around $85 billion by 2024, and $200 billion by 2028 from $30 billion in 2018.
Though, the order volume has also picked up to 80 per cent of pre-covid levels, e-commerce players are burning a lot of cash to retain customers who are spending money mainly on lowvalue transactions as their purchasing power has been impacted due to the Covid-19 pandemic, say analysts and industry insiders.
“Right now people are buying a lot of low-ticket items from platforms such as Amazon and Flipkart which one would usually buy from the local market because they don’t want to go out. That is why the order volumes have increased,” said Satish Meena, a senior forecast analyst at Forrester Research.
“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.
Presently customers are shifting from the “survival mode” to adjusting to the new reality of the post-covid world. They are buying affordable goods and moving away from 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 burn is really high for players such as Amazon and Flipkart that are on a hiring spree to cater to the volumes and be able to retain the customers. Amazon expects to spend $4 billion just on Covid-19-response.
Amazon Founder and Chief Executive Officer (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.
“The 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.
A key highlight of Walmartowned 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 whom 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 was T-shirts and the most sought after product by women was kurtas.
Amid the pandemic, online retailers are also looking to help reduce the access barriers to ecommerce. 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 three vernacular interfaces, is in line with Flipkart’s aim of developing state-of-the-art innovations to solve the various pain points for consumers transitioning to ecommerce.
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 ecommerce in regional languages to offer a more personalised experience.
“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, CEO 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-2 cities and beyond. He said the new language interfaces of Tamil, Telugu and Kannada along with Hindi (introduced last year) would further improve users’ ecommerce 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 retailfocused technology platform. He said this would 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.