E-commerce Opportunities in India- Market Size & Growth: Report 2023
What is E-Commerce?
Do you think it’s more feasible to purchase online than in a physical store? If so, you are more than just familiar with E-Commerce. “E-commerce or ‘electronic commerce’ refers to commercial transactions done online.” This means that every time you use the Internet to buy or sell something, you are participating in e-commerce.” Because of the substantial increase in the Indian online market, e-commerce opportunities in India are constantly rising. The rapid growth of the e-commerce industry has transformed how businesses and customers engage in the digital age.
In this article, we’ll delve into the background of the e-commerce industry, factors contributing to the growth of e-commerce, trends that will dominate the market, and opportunities and challenges for Indian e-commerce companies.
DID YOU KNOW?
Global retail e-commerce sales were estimated to be at 5.2 trillion dollars in 2021. By 2026, this amount is expected to have increased by 56%, reaching roughly 8.1 trillion dollars.
Why is E-Commerce so Successful in 2023?
E-commerce is rapidly gaining popularity for the following reasons:
- More options than retail stores
- Increased customer reach
- Customer service is available 24 hours a day
- Users receive hassle-free product delivery
- Increased market expansion with minimal investment
Indian Ecommerce Market Size: Report 2023
The scope of E-commerce opportunities in India is constantly growing. Let’s have a look at some of the statistics of market opportunities:
- Indian online grocery industry is expected to reach US$ 26.93 billion in 2027, up from US$ 3.95 billion in FY21, at a 33% CAGR.
- India’s consumer digital economy is predicted to reach US$ 1 trillion by 2030, up from US$ 537.5 billion in 2020, due to the country’s rapid adoption of online services such as e-commerce and edtech.
- B2C E-commerce is expected to increase gradually over the estimated time frame, with a CAGR of 8.68% between 2023 and 2027. According to a recent Redseer analysis, India’s e-B2B market is projected to reach more than US$ 100 billion by 2030.
- Social commerce in India has the potential to grow to US$ 16-20 billion in FY25, with a CAGR of 55-60%.
- In the past three years, India has gained 125 million online shoppers, with another 80 million predicted by 2025.
- The B2C E-commerce opportunities in India are predicted to expand 10.75% annually over year to US$107.3 billion in 2023.
Strong growth of Indian E-Commerce industry
- With an annual revenue of US$ 50 billion in 2020, India surpassed France to become the eighth-largest e-commerce market, one position ahead of Canada.
- The rising popularity of smartphones, the development of 4G networks, and rising consumer income are predicted to drive Indian E-commerce businesses to US$ 200 billion by 2026, up from US$ 38.5 billion in 2017.
- After China and the United States, India has the third-largest online shopper base of 150 million in FY21, with 350 million estimated for FY26.
- Smartphone shipments exceeded 150 million units in 2020, with 5G smartphone shipments exceeding 4 million due to significant consumer demand post the lockdown. According to a report, India’s internet users are expected to reach 900 million by 2025, up from 622 million in 2020, with a CAGR of 45% till 2025.
- Shiprocket X, a cross-border shipping product of Shiprocket, India’s leading e-commerce enablement platform, recently released its survey study, “The State of Cross-Border Trade.” The survey uncovered some interesting global insights, including India’s ranking of ninth in global cross-border growth opportunities.
Investments & Development
- Walmart is planning to spend more than $2 billion in India, doubling down on the opportunities it sees in the country’s e-commerce and payment corporations.
- Magicpin, a hyperlocal e-commerce firm, announced that its daily order volume has increased 100 times in a month after joining the government-sponsored Open Network for Digital Commerce (ONDC) network.
- Amazon India signed an MOU with Manipur Handloom & Handicrafts Development Corporation Limited (MHHDCL), a Government of Manipur Enterprise, in June 2022 to assist the growth of workers and weavers across the state.
Latest trends in E-commerce
The digital revolution and increasing internet penetration have propelled e-commerce opportunities in India to new heights. The world of online shopping while exploring lucrative online business ideas is constantly evolving, and this year has been no exception. Merchants are establishing and increasing their e-commerce companies now more than ever to meet customers where they are.
While it may appear like everything in the e-commerce landscape is changing, we have narrowed it down to the major developments that will have an impact on businesses in the coming months and years.
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AR enhances the reality of E-commerce opportunities in India
E-commerce opportunities in India have increased dramatically in recent years, creating a lucrative environment for companies and individuals to succeed in the online market. Augmented reality (AR) has completely transformed ecommerce. With this technology, shoppers can actually see the item they’re shopping for assisting in their purchasing decisions. AR has a significant impact on the purchasing experience in certain areas, such as fashion and home design, because customers may obtain a better sense of the item without seeing it in person.
Growing volume in voice search
Not only are smart speakers becoming more popular, but consumers are now relying on voice assistants to do daily activities. According to Loop Ventures, by 2025, 75% of US households will own a smart speaker.
As more smart speakers are installed in homes, more customers will use voice search to shop online, order food, and plan their lives. In terms of keywords and content, the rise of voice search presents vast E-commerce opportunities in India.
Thinking about growth? This industry is the India’s Fastest Growing Industry. What to know about it? Take a look at this video as Dev Gadhvi reveals the answers to all your questions.
Ready to kickstart your content creation journey and leverage the top-notch e-commerce market? In this video, we’ll walk you through the essential steps to create compelling content that engages your audience and grows your brand.
AI helps retailers learn about their customers
Customers can have automated, individualized purchasing experiences via artificial intelligence (AI), and machine learning. AI is always collecting data on customers’ shopping behavior when they make purchases, and what they’re looking for in a product or service. It is a piece of technology that cannot be recreated in-store.
On-site personalization makes use of these data to build personalized experiences
Buyers of all types, including B2C and B2B, are looking for tailored, customized online purchasing experiences. The data obtained by AI is what allows a buyer to receive customized product recommendations and detailed customer service.
Implementing tailored experiences on-site or in marketing strategies has been demonstrated to have a significant impact on revenue, with one study revealing that shops adopting advanced personalization capabilities experienced a 25% revenue lift.
Big data helps to create customized experiences
Many consumers have become aware that ecommerce sites collect personal information about them, exposing them to risk. As a result, experts have different opinions on the benefits of big data and how it affects the personalized purchasing experience.
Businesses can use big data to measure and evaluate client behavior across various touchpoints. This data-driven intelligence can be utilized to build personalized experiences by understanding consumer tastes, purchasing history, and general mindset.
Chatbots improve shopping experiences
Chatbots communicate with people in the same way that a sales representative would. Today’s buyer expects to be able to find and buy a product in just a few clicks, and they become frustrated if they can’t. This is where a chatbot can help save the sale.
Experts believe that by 2020, 80% of organizations will be implementing chatbots in their e-commerce ecosystem.
Mobile shopping is still trending
Customers can make purchases from anywhere via mobile shopping, which is essential in today’s environment. However, if your ecommerce site is not mobile or web app responsive, you will be missing out on huge potential customers. Mobile users in India want the added convenience of being able to pay digitally.
According to Statista, 73% of ecommerce sales will take place on a mobile device by the end of 2021.
Subscriptions keep customers coming back
Subscriptions of all kinds are available these days, and their ease makes them attractive to consumers. Subscription services enable businesses to plan for inventory and sales that are already locked in.
According to David Zimmerman, Kensium’s Director of eCommerce Solutions, “more companies will offer subscription services or monthly payment options for larger purchases” in the coming year.
Introducing new payment methods
The Indian e-commerce market is expected to reach new payment mechanisms, such as digital wallets and UPI-based payments. Offering a number of payment options is a good method for increasing mobile conversion rates. Furthermore, if clients can save their payment information on your website, they will be able to check out faster the next time they make a purchase.
Factors that influence E-Commerce growth in India
E-commerce opportunities in India are booming, attracting both domestic and foreign companies seeking to break into this rapidly expanding industry. The pandemic and lockdown era provided many new learnings for all businesses, and e-commerce undoubtedly has been one of the sectors that benefited significantly.
In India, the e-commerce business has grown significantly over the last few years and shows no signs of slowing down. Why should it? Online purchasing has made life so much easier. We can buy almost everything from the comfort of our own homes, from groceries to perfumes and even expensive jewels.
So, let’s see what are the factors that drive the growth of e-commerce opportunities in India.
Rise in e-commerce platforms
According to Easyleads, the current number of eCommerce platforms available in India is projected to be more than 19000. It is still counting, and many more growing native eCommerce platforms are preparing to enter the competition.
Businesses used to be afraid of starting an innovative business, but with a growing understanding of the benefits of E-commerce opportunities in India in the coming future and shoppers’ increased preference for online purchasing, companies finally chose to embark on their online business journey.
Today, regardless of the size of the business, whether small or huge, everyone is looking for the best eCommerce platform on the market for starting to sell online. Business owners are constantly on the search for a platform that meets their needs while remaining within their budget.
“Digital India” is one of the most ambitious and large-scale programs ever planned, with the goal of transforming India into a digitally empowered and knowledgeable economy across India.
The important areas are to construct a digitally equipped infrastructure that serves as a core utility, offers services to the government and the people, and allows citizens to be digitally empowered.
Startup/ Make in India
On January 16, 2016, our honorable Prime Minister, Mr. Narendra Modi, launched this program for the first time. This is in support of all the trending startup business ideas in India. The government’s initiatives like Digital India have further catalyzed e-commerce opportunities in India, making it a favorable environment for businesses.
The main goal of Start-up India is to promote startups, provide job opportunities, and generate the best passive income ideas. This program acts as a single point of contact for all start-up activities that include tax advantages for the first three years.
Rising Internet usage and use of smartphones
To thrive in the competitive e-commerce opportunities in India, businesses must adapt to local preferences, invest in robust logistics, and provide top-notch customer experiences. According to DataReportal, India will have 658.0 million internet users by January 2022.
So we can picture how internet access has made our lives easier and simpler. With a smartphone in hand and decent internet connectivity, one may easily explore things on shopping websites and have their preferred items delivered to the doorstep. E-commerce opportunities in India in terms of online shopping have become more widely available and accessible because of the affordable prices of cell phones and data subscriptions.
Changing mindset and outlook of Consumers in India
Indians are becoming more aware of and accepting of the concept of online purchasing. Consumer purchasing habits and product preferences have changed significantly.
People nowadays prefer to shop online from the comfort of their own homes rather than going out to buy items. The revolutionary changes in consumer purchasing habits have played an important influence on the expanding opportunities in the global e-commerce trade. MSME exports, with over 63.4% million units spread across the geographical expanse of India, would act as a catalyst in rebuilding the strength of the Indian economy.
Curated eCommerce has also played a key role in the growing opportunity in the global e-commerce trade. Window shopping is done online by scanning things and adding them to a cart. As a result, a culture of “select now, share with all, buy later” has emerged.
The widespread use of social media platforms by consumers to share products with one another has strengthened this concept even further, giving rise to influential buying. The availability of a wide variety of products has also contributed to the popularity of e-commerce.
Secure Payment Options
Consumers now have a range of payment options due to the emergence of digital wallets and UPIs. Previously, due to a lack of trust or the requirement for product transactions, eCommerce transactions were more based on cash on delivery.
As a result of the demonetization, an increasing number of Indians have begun to use electronic payments. With many eCommerce companies investing extensively in improving online payment security, an increasing number of consumers are shopping online.
Pricing and Discounts
Indians are extremely price-conscious and have a strong desire to negotiate. They are naturally looking for intriguing deals and offers. Ecommerce enterprises employ this to entice customers and eventually seal a deal in the form of a product purchase.
Running discounts with promo codes encourages buyers to try out the product for the first time because the cost risk element is low, and existing customers are also tempted to take advantage of the discount offer for their own benefit.
DID YOU KNOW?
Research projects a 9% CAGR from 2022 to 2026, with global e-commerce transaction value increasing from around $6 trillion in 2022 to over $8.5 trillion in 2026.
Opportunities In Indian E-Commerce Market
E-commerce opportunities in India have been on an upward growth trajectory. By FY 2025, India’s social E-commerce market in India is expected to grow by US$ 16-20 billion. It is expanding at an annual growth rate of 55-60%.
Lots of Opportunities
The potential to reach a worldwide audience is one of the major opportunities. Businesses may sell to clients all around the world using ecommerce, which opens up new markets and revenue sources. Another opportunity in e-commerce in India in 2023 is to leverage data and analytics to support growth.
The government is supporting technologies such as UPI, RuPay, DigiLocker, and eKYC to encourage digital transactions, grow acceptance in smaller cities, and promote e-commerce and innovation in this field. According to the Budget 2023-24, digital payments increased by 76% in transactions and 91% in value in 2022.
The government of India has also approved 100% FDI in B2B e-commerce under the automated approach. This suggests that the Indian government is encouraging investment in the Indian e-commerce market. This is an excellent opportunity for international investors interested in investing in India’s E-commerce Market.
DID YOU KNOW?
Simplifying cross-border trade has been a top priority for the Indian government because it accounts for 20% of global e-commerce and is a key predictor of the country’s EoDB (ease of doing business).
Increasing Investments and Low Risk
Investment in e-commerce has expanded as people’s digital literacy has increased. People are aware of market prospects, and these investments are leveling the market allowing new players to establish their bases by breaking the industry’s existing pattern. E-commerce also provides low-investment business ideas that allow entrepreneurs to enter the digital marketplace with little financial risk, making it an appealing alternative for people wishing to establish their own businesses.
Key Takeaways for Entrepreneurship and its Importance
- Entrepreneurship is risky, but it can also be extremely rewarding because it generates economic wealth, growth, and innovation.
- Successful entrepreneurs have the potential to make substantial profits.
- Entrepreneurship and its importance in wealth creation can benefit both individuals and society.
FACTS ON GLOBAL LOGISTICS MARKET OUTLOOK
The ecommerce industry is primarily driven by the significant growth in recent years of the global online retail sector and other service providers. (Market Research Expert)
Challenges In Indian E-Commerce Market
Inventory management is a primary reason for e-commerce failure. E-commerce involves more than just viewing a product on a mobile app and ordering it. There is a lengthy back-end process that involves inventory management. Every E-commerce platform must keep a warehouse stock of products. If there is too much inventory, it restricts capital, and if there is inadequate inventory, it reduces sales. Inventory management is critical to the success of an e-commerce business.
Supply Chain Management
The introduction of inefficient methods and processes has had a significant impact on the supply chain in India. A good supply chain improves sourcing, purchasing, and stock management, minimizes procurement costs, reduces processing time, and ensures better delivery. This results in a better customer experience, higher sales, and higher profits.
The E-Commerce sector is expected to grow rapidly during the next five years. As digitization has resulted in millions of additional consumers accessing online sales channels to make everyday purchases, competition among firms for client acquisition and market share has increased.
Standing out in a competitive market is a challenging journey that requires hard work, dedication, and persistence. This requires innovative business startup ideas and a strategic approach in order to meet market demands, improve efficiency, and boost profit margins.
Data Protection and Security
One of the primary reasons why Indians are hesitant to make online payments is data security. Privacy and security represent important aspects of the e-commerce marketplace, and cyber regulations in India are still in the earliest phases of development. They are still incapable of dealing with a variety of situations.
Payment security on the Internet and mobile phones remains a major barrier to e-commerce opportunities in India, and that needs the attention of ecommerce companies.
Preference to COD
The Indian ecosystem has not yet adopted digital payment methods. Cash is still the most common method of payment for online purchases. With the freedom of COD comes the expense of refusing to accept deliveries at the door. This may result in the e-commerce platform’s overall downfall.
Digital illiteracy is a serious issue for Indian e-commerce platforms. Aside from that, Indian buyers prefer to purchase things from stores near their homes. They are not willing to go far away or wait for their orders for days. As a result, people do not browse the e-commerce platform knowing about the struggles of connectivity, payment, and so on.
Indian Ecommerce sector is currently the biggest thing in the industry. Everyone wants to participate in online purchasing and selling. Following the latest e-commerce opportunities in India does not mean copying someone else’s business strategy or hurrying to implement new eCommerce technology. Understanding e-commerce and implementing successful wealth generation strategies online is critical for individuals and businesses to prosper in today’s continuously changing economy.
Rather, it should be about staying current and meeting changing client expectations. This allows you to deliver a more comprehensive shopping experience for your clients while still running a profitable business.
Is Ecommerce growing?
Yes, ecommerce is growing. Consumers of all types expect to be able to shop and buy online. As a result, numerous firms are going online and opening stores to compete for customers.
How Is eCommerce Changing in 2023?
AI will play an important part in customer service and marketing automation. Furthermore, an omnichannel approach is being implemented by an increasing number of eCommerce companies. Flexibility is also essential for providing an outstanding client experience. Furthermore, gathering zero-party data allows for a more tailored experience while maintaining trust among consumers.