Indian e-retail market to see 300 mn shoppers by 2025

E-retail market is expected to continue its strong growth - it registered a CAGR of over 35 per cent to reach Rs 1.8 trillion ($ 25.75 billion) in FY20. Over the next five years, the Indian e-retail industry is projected to exceed 300-350 million shoppers, propelling the online Gross Merchandise Value (GMV) to $100-120 billion by 2025.

According to Bain & Company report, India's social commerce gross merchandise value (GMV) stood at $2 billion in 2020. By 2025, it is expected to reach $20 billion, with a potentially monumental jump to $70 billion by 2030, owing to high mobile usage.

The Indian online grocery market is estimated to reach $18.2 billion in 2024 from $1.9 billion in 2019, expanding at a CAGR of 57 per cent. India's e-commerce orders volume increased by 36 per cent in the last quarter of 2020, with the personal care, beauty and wellness (PCB&W) segment being the largest beneficiary.

E-commerce has transformed the way business is done in India. The Indian e-commerce market is expected to grow to $200 billion by 2026 from $38.5 billion as of 2017. Much of the growth for the industry has been triggered by an increase in internet and smartphone penetration. As of September 2020, the number of internet connections in India significantly increased to 776.45 million, driven by the 'Digital India' programme. Out of the total internet connections, 61 per cent connections were in urban areas, of which 97 per cent connections were wireless.

Covid-19's impact on online shopping demand has only added to mounting pressures facing retailers. Lockdown mandates and self-isolation practices are dramatically changing consumption behaviour. According to eMarketer, nearly half of consumers have shifted their spending towards online channels, across all categories ranging from grocery to apparel to electronics. Online orders are seeing two to three times year-on-year growth, with some retailers seeing increases of more than 20 times. Even online grocery, notable for its slow rate of customer adoption, has seen a massive increase in popularity over the past few months, driven by the desire for a contactless shopping experience.

Propelled by rising smartphone penetration, launch of 4G network and increasing consumer wealth, the Indian e-commerce market is expected to grow to $200 billion by 2026 from $38.5 billion in 2017. Online retail sales in India is expected to grow 31 per cent to touch $32.70 billion in 2018, led by Flipkart, Amazon India and Paytm Mall.

While some retailers may be thinking this shift is a short-term storm to weather, our international research, conducted multiple times since the outbreak of Covid-19, shows otherwise. It indicates that up to a third of grocery customers who began online shopping in response to the virus have a desire to continue shopping online even after the pandemic passes. The data also points strongly to a rise in online penetration beyond grocery, as other industries follow suit, such as medical, household goods, and health and wellness. This fundamental shift in consumer preference will only become more pronounced the longer Covid-19-related restrictions stay in place.

In India, smartphone shipments reached 150 million units and 5G smartphone shipments crossed 4 million in 2020, driven by high consumer demand post-lockdown.