To discover one of the fastest growing online markets in the world, today, we’ll analyze the e-commerce market in India.
Indian demographics and economy in a few points
- Population: 1.3Bn people
- GDP: $3Bn (5th)
- GDP/capita: $2,041
- Urbanization: 34%
E-commerce in India
The outstanding pace of India’s e-commerce growth indicates a $150Bn market size by 2022. The main drivers of this growth constitute growing internet penetration (21% growth), the rising number of online shoppers (from 15% of the population to 50% by 2026) and an increase in smartphone usage (627Mn in 2019 to 450Mn by 2021).
Of course, this trend is exciting, but the competition requires a clever strategy. Hopefully, our insights will be helpful.
The Indian government efforts to stimulate an increase in cheaper smartphones and a decrease in data tariffs, along with endeavors to create a digital structure seem to be working.
The number of internet users is expected to hit 635Mn by 2021, and naturally, the market attracts interest from Venture Capital and Private Equity funds. These funds, in turn, further market growth by inducing technological advancements.
Trends in the local market
440Mn of the Indian population is between the ages of 18 and 35. While the millennials are tech-prone and trend-setting, they are also the largest group of wage-earners in the country.
Millennials’ lifestyles generate the demand, and therefore worth examining.
In recent years, health is a major concern of the millennial lifestyle, and organic products are on demand.
While baby boomers pay attention to the quality of a brand, millennials care about the values it carries, according to a Deloitte report. If a brand has a specific cause, it is likely to attract young working-class people.
Net-banking, online cash transfers, mobile wallets, single-touch payments, scanning code payments, and selfie payments are the methods on the rise. Especially, the selfie payment option which operates by a facial recognition mechanism is expected to dominate the industry in the near future.
Many companies pursue the omnichannel strategy with varying models such as Manless stores, click to brick, shop&drop, etc. Former stores are turned into ‘experience centers’, where customers can engage with the products.
Must-know facts about the market
Indian consumers are accustomed to the concept of ‘hyperlocal’, says an EY trendbook. The ‘near me’ option creates small areas called hyperlocal spaces around an address in which a fast delivery is provided.
Automated delivery is another trend in the Indian e-commerce market. Self-driven devices and trucks operated by AI are on trial by the brands. Drones are also tested to be used as delivery devices.
There are 22 local languages included in the Eighth Schedule of the Constitution, and in 2021, 536Mn people on the internet will be using these languages. Providing a shopping experience in all of these languages may seem like a burden, but it is also necessary. In fact, it could be an opportunity for the first companies that establish a multi-lingual service system.
28% of the millennials make purchasing decisions based on social media recommendations. While Facebook has a 300Mn advertising audience, Instagram has 75Mn. The power of social media forces online retailers to lean over social media presence. Since 63% of millennials are informed about the brands through social media, it must be a priority of the companies.
Final Thoughts on E-commerce in India
The Indian e-commerce industry will rise above the U.S. market, and will likely become the second largest after China. Harsh competition pushes companies to do better in technological advancements and the quality of service. Our analysis will help you stay ahead of the competition if you note:
- Millennials dominate the sector and they demand healthy products, brand values, a seamless purchasing process.
- Selfie payment, single-touch payments, etc. are becoming normş.
- Hyperlocal spaces will dominate the sector in a few years and companies already started investing in.
- Automated delivery methods are on trial, and likely to be used in a short timespan.
- Websites that offer the various languages of Indian people will be able to target 536Mn people in 2021.