Despite Dwindling GDP, Indian E-Commerce To Touch $100 Billion Mark By 2024

The two month nationwide lockdown due to the Covid-19 pandemic has further dwindled the Indian economy with an unprecedented 23.9% decline in the Gross Domestic Product (GDP) in the June quarter. However, one of the few sectors that have recovered from the plunge is the Indian e-commerce sector. 

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According to a white paper by Alvarez & Marsal India and the CII Institute of Logistics, the e-commerce retail market that stood at $30 billion in 2019 is expected to cross the $100 billion mark by 2024, driven by an increasing set of suppliers selling online and change in buying behaviour of consumers, among others.

The paper further stated that the rise of online fresh grocery sales along with growing numbers of prepared food delivery companies entering this space could drive category growth by five times in the next five years. 

Online shopping of groceries and Fast Moving Consumer Goods (FMCG) saw an upsurge during the lockdown. The trend might continue as people are still wary of visiting the stores due to the risk of infection.

“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.

The factors contributing to the growth of e-commerce that stood at only $1 billion in 2010 to $30 billion in 2019 are internet penetration, smartphone adoption and category expansion.

“While the bulk of e-commerce volumes come from top-30 cities, over 60 percent of e-commerce volumes are likely to come from tier-II and tier-III cities in the next five years. It is imperative for e-commerce businesses to build their seller base and delivery reach in smaller towns,” said A&M India Managing Director Manish Saigal. 

The paper titled ‘Enabling the next wave of e-commerce in India through supply chain innovation’ added that e-commerce penetration in retail in mature markets like the US and China has reached around 15 percent and around 20 percent, respectively, by 2019; while in India, it could reach around 6 percent by 2024. 

The e-commerce models keep evolving due to various factors including customer requirements and changing buying behaviours and the availability of appropriate technology and logistics partners, the paper said. The next wave of anticipated online retail growth drivers for categories such as fast-moving consumer goods (FMCG), groceries and apparel will be through social media, chat engines and artificial intelligence bots, it added.

After Reliance Industries (RIL) entered the e-commerce space in the grocery segment with its JioMart initiative in tie-up with Facebook’s WhatsApp, Goldman Sachs has forecasted a growth of E-commerce — especially grocery to have a market of $112 billion by 2025 (60% of India internet).

In this segment, Amazon, Flipkart now acquired Walmart and RIL are the key players. However, there are reports that the Tata group is also trying to compete in the race with these key players by building an all-in-one e-commerce app for its swathe of consumer products and services.