Indian e-commerce market estimated to top $100bn by 2024
After a two-month nationwide lockdown saw e-commerce plunge, there now seems to be hope for the sector.
A white paper prepared by Alvarez & Marsal India and the CII Institute of Logistics said the online retail market is expected to top $100 billion by 2024. The report said e-commerce has skyrocketed in the last decade, with the online retail market reaching $30 billion in 2019 from less than $1 billion in 2010. The sector's robust growth is attributed to internet penetration, the availability of cheaper smartphones, and expansion into different areas such as groceries, furniture, toys, cosmetics, pharmaceuticals and others.
As regards specific sectors, the report said that rising demand for online groceries and food deliveries could drive growth five times higher in the next five years. "The e-commerce retail market could be more than a $100 billion opportunity by 2024," the white paper said.
It added that there is significant headroom for the growth of e-commerce, as the offline retail market continues to be fragmented. The total retail market in India is estimated to grow to between $1.1 trillion and $1.3 trillion by 2025, from $0.7 trillion in 2019.
Another report earlier this year by BCG Consultants said that while e-commerce has significantly affected areas like electronics, apparel and footwear, demand for online groceries has yet to take off.
Online orders for grocery and fast-moving consumer goods saw an upsurge during the lockdown, a trend that is expected to continue as people are still wary of going to grocery stores. On the other hand, Flipkart and Amazon are expecting sales to peak during seasonal sales which begin in September.
"Even if [coronavirus] cases go down in the next couple of months, a lot of purchases are going to shift online. So whenever people start spending again, e-commerce will be the first to benefit," Satish Meena, senior forecast analyst at Forrester, told KrASIA in a recent interview. Earlier this month, Doug McMillon, president and CEO of Walmart, which acquired Indian e-commerce major Flipkart in 2018, said the e-tailer's gross merchandise value surpassed that of pre-COIVD levels.
The next phase of growth for e-commerce companies is expected to come from smaller cities. Currently, most online orders are placed from first- and second-tier cities. This is expected to change as an increasing number of people go online for purchases due to COVID-19. "While the bulk of e-commerce comes from top-30 cities, over 60% of volumes are likely to come from second- and third-tier cities in the next five years," said A&M India Managing Director Manish Saigal. "It is imperative for e-commerce businesses to build their seller base and reach smaller towns."