Both sellers and buyers go online, with offline under Covid pressure
The pandemic has turned out to be a huge opportunity for Indian e-commerce players, with sales expected to double compared with the previous year.
As per business growth data elicited from brands, e-tailers, e-commerce enablers and analysts, Indian e-commerce, a $27-billion market in calendar 2019, is all set to achieve 40 per cent growth in 2020, compared to 23 per cent growth in 2019.
“Our CY 2020 forecast is more bullish than we had expected for e-commerce at the start of the pandemic,” said Mrigank Gutgutia, Director, RedSeer Consulting. “Our e-commerce market size datasets from June, July and August are all confirming that the market is on track for a very strong second half of the year. Overall, we expect Indian e-commerce to grow 40 per cent in 2020, grossing $38 billion GMV (gross merchandise value), up from $27 billion in 2019.” Indian e-commerce grossed $22 billion GMV in 2018.
Attributing this strong growth to the increasing wallet share of existing e-commerce shoppers and the entry of thousands of new online shoppers in 2020, he said: “We expect the total number of online shoppers to jump from 135 million in 2019 to 160 million in 2020 owing largely to digitisation caused by the pandemic.” More importantly, as a result of the continued challenge faced by offline retail, RedSeer expects online penetration (as a percentage of total retail spend) to jump from 3 per cent in 2019 to 5 per cent in 2020, the highest increase ever recorded for Indian e-commerce in the last decade, driven by the e-grocery category.
Bumper festival season
India’s largest e-grocer, BigBasket, which is present in 35 cities pan India, is gearing up for a bumper festival season sales this year. “As customers resorted to buying online during the lockdown, our sales doubled from February to July, our customer base grew by 80 per cent and our existing customers are buying 25 per cent more,” said Seshu Kumar Tirumala, National Head, Buying and Merchandising, BigBasket.
“AOV (average order value) has increased from ₹1,300 in February to ₹1,500 and will go up further by ₹50-100 during the festival sales. While our customers buy groceries 3.1 times a month, our BBStar loyalty customers buy four times a month on BigBasket. Since we have already achieved so much of growth, we upped our growth targets for FY21 by 40-50 per cent and are well on track to achieve it,” he added.
MaxWholesale, a B2B e-commerce platform for 22,000 kirana stores to source inventory online, has grown its AOV from ₹3,000 pre-Covid to ₹10,000 and expects a 20-40 demand spike around festival sales driven by purchases of healthier/natural snacks, dry fruits, pulses, juices, mithai, chocolates, beverages, etc. “Consumers have shifted from unbranded loose groceries to branded and packaged groceries during the pandemic. From a ₹25-crore revenue last fiscal, we are on track to achieve ₹300 crore this fiscal and are already at ₹125 crore,” said Samarth Agrawal, CEO and co-founder, MaxWholesale.
“The e-grocery category is likely to be the fastest growing in CY20 with 70 per cent YoY growth, which is significantly higher than the CY 2016-2019 average YoY growth rate of 50 per cent for this category,” observed RedSeer’s Gutgutia.
Amit Monga, co-founder of e-commerce enablement firm ANS Commerce, said: “Last year, we had to convince brands to integrate their web stores with their offline stores. This year, since offline has seen just 30-40 per cent recovery, all brands associated with modern retail including fashion, furniture and large appliance brands have allocated 50 per cent of their resources to online and are targeting 30-50 per cent sales from online this year.” The company works with 90 large brands, of which 30 were acquired in the last three months alone.
Acer India, which sells on Amazon, Flipkart and its own website, expects demand for its products to increase 35-40 per cent during the festival sale, thanks to demand led by the education segment and casual gamers who are increasingly looking to upgrade to larger screens from smartphones.
“We have a happy problem on our hands this year, a very good one for IT hardware companies. While we expect 35-40 per cent increase in demand, we will have a shortfall of 20-25 per cent due to supply-side constraints, as there is a shortage of hardware components for our products,” said Sudhir Goel, Chief Business Officer, Acer India. The company has launched a sub ₹25,000 notebook to cater to demand from a new student segment from tier 3,4 and 5 markets, and a ₹50,000 model for the gaming community.
With offline still under pressure, seller optimism in online sales is peaking, as evident in the 50-60 per cent increase in seller registrations on Amazon.in. “Everyday, we see that number increase as more and more sellers want to sell online. They are very optimistic and eagerly looking forward to the Diwali sale as offline is not operating,” said Manish Tiwary, VP, Amazon India. He added that there’s a huge jump in demand for pet toys, athletic and open footwear, essential ‘stay at home’ clothes, furniture, gourmet food, TVs, laptops and sports equipment on Amazon.in.
In anticipation of demand and in preparation for its flagship annual Big Billion Days sale, Flipkart has recently onboarded 50,000 kiranas to provide fast, personalised e-commerce experience to customers. “Consumers are now increasingly preferring online shopping because of the safety and convenience attached to it. There has been a significant spike in demand for work-from-home essentials like electronic devices and furniture. Mobiles, power banks, home printers, desktops, laptops, study tables, chairs, laptop tables have seen an uptick in demand. Kitchen appliances and medical equipment are also propelling demand as a large part of India continues to work remotely and stay indoors,” said a Flipkart spokesperson.