Key Trends That Will Shape E-Commerce Industry In 2021

According to IBEF, India's e-commerce market is expected to reach $111 billion by 2021 and $200 billion by 2026

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E-commerce, which was started as an experimental and innovative model of shopping, has leapfrogged into a huge market over the last few years, especially after the pandemic. As internet penetration and digitization skyrocket, huge opportunities are being created for unique business models in the space. 

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According to IBEF, India's e-commerce market is expected to reach $111 billion by 2021 and $200 billion by 2026. Here are the trends that the industry will see in 2022, as shared by experts. 

Kirana Tech

According to reports, an estimated 14 million Kirana stores in India control more than 90 per cent of India’s $600 billion food and grocery market. “The Kirana is the King of India’s food and grocery sector. This has never been more apparent than during the Covid pandemic when the local familiarity, unparalleled proximity and indomitable spirit of Kirana entrepreneurs shone through for consumers and brands alike,” said Ashish Jhina, COO and co-founder, Jumbotai.l

Covid has compelled Kiranas to adopt technology. “In 2021, we saw Kiranas all across the country adopting e-commerce to source their products at a never before seen rate. A significant factor behind this accelerated transformation is the rapid expansion of B2B e-commerce platforms that provide a significantly wider selection, faster and reliable delivery, better fill rates, working capital financing and the convenience of ordering online whenever required,” he added. 

Jhina believes that a transformation of Kiranas into digitally-enabled omnichannel grocery stores has begun, and this will only accelerate in the coming year. However, what kind of impact will the rise of quick commerce have on Kirana stores?

Quick Commerce

According to RedSeer management consulting, quick commerce is estimated to be a $30 Mn market in 2021 and is expected to grow up to 15x to reach $5 Bn in 2025. Like social commerce, quick or instant commerce is also a business model that has gained popularity after the pandemic. 

Ola recently started the 15-minute grocery delivery in Bengaluru, Swiggy delivers in 15-30 minutes via its InstaMart service,  Grofers (now rebranded as Blinkit) has pivoted to instant delivery of groceries within 10 minutes, Dunzo promises to deliver in 19 minutes in Bengaluru through Xpress Mart and BigBasket has the BB Express, which claims to deliver essentials within 60 minutes. We also have Amazon Fresh that has expanded to many cities this year and promises to deliver in 2 hours and Flipkart in 90 minutes under its Flipkart Quick service. Satvacart and Zepto raised funding recently. Will this affect Kirana stores?

“Traditional Kirana stores have the advantage of having existing relationships with customers in the neighborhood and larger product categories and SKU mix. While the operational overheads of Kirana stores remain extremely low, giving the cushion of sustainability and a very long runway as an arsenal to compete,” said Padmaja Ruparel, co-founder, Indian Angel Network and founding partner, IAN Fund.

Supply Chain Tech

The use of technologies such as chatbots for automated communication in the supply chain is on the rise. "However, it is still far from mimicking actual conversation. This is where I see the potential of large language models like GPT4 or other similar models bein very helpful. Many companies, particularly in the logistics space, will immediately find use for these models," said Shantanu S. Bhattacharyya, chief data scientist, Locus.

Another trend that Bhattacharyya feels is catching on in the supply chain for e-commerce sector is the use of blockchain. A lot of regulatory overhead will be avoided as the adoption of blockchain goes mainstream, particularly in cross-border supply chain touchpoints.

Rollup Commerce

Another key trend that made heads turn this year was the rise of Thrasio style startups, or what is called the rollup commerce. In a short duration, many startups in the space raised huge rounds of funding. Last month, Mensa Brands became the fastest Indian unicorn. This month NCR-based UpScalio made its fourth investment in Autofurnish and GlobalBees is reportedly in talks to raise $100 million at unicorn valuation. Earlier this week, the Good Glamm group made its fifth addition to the group with the acquisition of MissMalini Entertainment. 

“Many of the Thrasio-based startups have completed their funding rounds and have started acquiring brands and we could see the acquisition pace pick up in 2022. The next year could be sort of a litmus test for the investors in this space as the startups would go on to prove their business models on which huge amounts of funds have been raised,” said Ankur Bansal, co-founder and director, BlackSoil.

He also added that some of these companies are likely to go for a bigger equity round or lever up their balance sheet with significant debt by early 2022 in order to expand operations of acquired brands as well as take over new ones.

Alka Goel, founding partner, Alkemi Growth Capital, believes that the pool of acquirable companies is limited, which is bound to have one of two effects - companies will be forced to ascribe a higher valuation (with an increase in competition) or there may be a delay in the pace of acquisitions. “For younger companies, of course, it is a boon as they have many more exit options,” she said. 

Direct-To-Consumer (D2C)

Experts agree that 2022 will be a year of growth and evolution for the D2C segment, which will lead to fierce competition. “For the next year, the competition in the market is expected to rise further, with more and more brands adopting the D2C route which has also altered customer expectations. Nowadays, consumers expect a frictionless post-checkout experience that includes tech-first solutions such as one-step check-out, pre-filled addresses, and RTO predictions, among other aspects of the customer journey,” said Saahil Goel, CEO and co-founder, Shiprocket.

 According to the Unicommerce emerging e-commerce segment report, D2C brands are expected to expand into tier-2 and tier-3 cities even more and thus expected to open up multiple warehouses to be able to cater to this demand. 

“To engage with the evolving consumer needs, we expect to see a lot more innovation in customer engagement models such as more evolved engagement on mass platforms such as WhatsApp, VR/AR led models, live commerce, etc. Similarly, the post-purchase experience will increasingly become a focus area with D2C brands ensuring most of their deliveries happen within 24 hours. We expect to see increased investment in technology and processes to ensure D2C brands can sustain the growth momentum,” said Kapil Makhija, CEO, Unicommerce. He added that D2C brands will continue to find niches in terms of product, service, positioning etc. to be able to attract consumers and tackle competition.

India is the eighth largest market for e-commerce with a revenue of $46 billion in 2020 and this is estimated to grow at more than 30 per cent YoY, which opens up a huge opportunity for different business models to flourish. In addition to this, technology will continue to be the backbone of existing companies and new startups spearheading the e-commerce revolution, especially in Tier II, Tier III and rural areas. 

S Shanthi

Written By

Entrepreneur Staff

Shanthi specializes in writing sector-specific trends, interviews and startup profiles. She has worked as a feature writer for over a decade in several print and digital media companies. She is also a mom who looks forward to playing a game of cards with her tween daughter every evening after work.