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Online Festive Sales To See 18-20% Jump, Says Report; Here's What's Driving E-commerce in India Online e-tailing festive month sales will be around INR 90,000 crores, says the Redseer report

By S Shanthi

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Online e-tailing festive month sales will be around INR 90,000 crores, 18-20% higher than last year, says a report released today by Redseer Strategy Consultants. This will be driven by about 140 Mn shoppers who are expected to be transacting online at least once during this festive month. The report also says that 2023 marks the 10th year of Indian eCommerce festive season sales.

"Over these 10 years, Indian eCommerce GMV has grown ~20x with a ~15x jump in Annual Transacting Userbase," it said. That is, while in 2014, the industry clocked a GMV of INR 27,000 crores in the whole year, this year the same is expected to be approx. INR 5,25,000 crores. In the process, the number of annual transacting users has jumped 15x. The report also added that this festive season can potentially be the most efficient one ever in terms of margins, with an evolving category mix and higher ads & promotion revenues.

Interestingly, India's first ever Indian e-tailing festive season sales happened in 2014. Hence, this year's sales is the 10th year of the festive season sales. The report says that over these 10 years, Indian eTailing has transformed almost entirely as the annual GMV for the overall e-tailing industry has grown almost 20 times in the period. The 10th festive season sale period is even more significant this year considering the recent slowdown in consumption and the almost 3 years of external shocks on the economy, it added.

Overall, the Indian e-tailing has increasingly become the litmus test for consumer demand in India, the report said. Here are the factors that have led to the growth of India's e-commerce so far.

Trends Driving India's E-commerce Today

Newer and niche categories

The initial years of e-commerce were driven by electronics. Huge discounts and wide options given by the likes of Flipkart and Amazon attracted consumers to try out online shopping, particularly the millennials and GenZ. Today, consumers have moved beyond electronics. "Over the last several quarters, we are seeing enhanced GMV contributions from categories beyond electronics. While electronics sell a lot in the festive period, looking at the bigger picture and comparing the festive sale periods over the last several years, there is a clear trend of category diversification. This is good for the ecosystem as it shows consumers' willingness to purchase multiple categories online and more brands coming to cater to their needs. Continuing with this trend, we expect increasing GMV contributions from non-electronics categories like Fashion, BPC, Home & General Merchandise and more this festive period", said Mrigank Gutgutia, Partner at Redseer Strategy Consultants.

E-commerce adoption beyond Tier 1

India's e-commerce market is expected to reach $ 350 billion by 2030, says IBEF. According to experts, this will be primarily driven by Tier II, III and beyond. E-commerce has democratized shopping for consumers across geographies. Today, consumers in smaller towns have access to brands, both Indian and international. There is even a heightened demand for luxury products in smaller cities and towns.

Cross-border commerce

We are also seeing an uptick in Indian brands selling beyond India. Besides the rise of online payments and easy access to logistics, one of the key reasons behind this is these brands are selling quality products at more affordable prices than their global counterparts. With both consumers and businesses wanting e-commerce to transcend geographical boundaries, the growth in cross-border e-commerce is inevitable, say experts.

The D2C charm

According to a report by Statista, the total addressable D2C market is expected to grow by over 15 times from 2015 to 2025 in India. In 2020, the total addressable D2C market was valued at $33.1 billion. By 2025, the total addressable D2C market is forecast to grow almost threefold and reach $100 billion, with fashion and accessories leading as one of the largest D2C segments in India.

"This growth is being driven by many Indian brands embracing D2C, with once small or non-existent categories like fitness accessories, gardening equipment, and costume jewelry now becoming large enough to have brands being born online first," said Bharati Balakrishnan, Country Head and Director, Southeast Asia and India, Shopify, in an earlier interview.

Use of new-age technology like generative AI

Within the broader field of artificial intelligence, generative AI has turned out to be a particularly exciting area of innovation. The opportunity for generative AI startups in e-commerce, in both domestic and global markets, is huge. "New-age technology solutions like generative AI being more widely adopted in multiple use-cases during the sale period will also lead to better and novel consumer experiences and drive stronger growth momentum," said Redseer report.

Quick commerce and social commerce

Even though both these categories are often written off by many, they are still surviving and thriving. Quick commerce and social commerce are expected to transform customer buying behavior and become more and more common with time. Even though profitability is still a far cry, this behavior change is expected to drive profits eventually.

MSMEs adapt e-commerce

In the recent past, we have seen a massive shift in consumer behavior and business operations. This has prompted many Micro, Small and Medium Enterprises (MSMEs) to embrace online selling, which has in turn driven higher profits for MSMEs. In fact, another report by Redseer said that as e-commerce platforms adopt MSMEs friendly policies, they are expected to drive $50 Bn of e-tailing sales by FY2027. It added that the retail market in India is projected to burgeon to $ 1.4 trillion by 2027, and MSMEs are poised to account for an impressive 65-75% of this market share.

S Shanthi

Former Senior Assistant Editor

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. 

 

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