Home Latest News Indian e-comm industry set to grow by 141% through 2025: Report

Indian e-comm industry set to grow by 141% through 2025: Report

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With the COVID-19 pandemic denting the consumer sentiment due to the imposed travel restrictions and lockdowns in India, the retail industry has been at the forefront of the economic disruption. Throughout the period, e-commerce industry emerged as the backbone of the retail industry and small and big players have realised the immense potential that e-commerce holds.

As the business operations ceased completely, consumers increasingly preferred the online mode to purchase goods and services and the trend continues to remain same for a major population even after the lockdown.

A report by leading data and analytics company GlobalData states that the Indian e-commerce (online retailing) industry is expected to grow steadily by 141 per cent from US$46.2bn in 2020 to US$111.4bn in 2025.

Suresh Sunkara, Retail Analyst, GlobalData, comments: “The retail industry is the second largest employer in India. Small and medium-sized firms alone employ about 400-450 million people. However, the heightened inflation rate along with an equally high unemployment rate is weakening the consumer sentiment and affecting their purchasing power.”

“On the other hand, the liquidity in the retail businesses is driven by seasonal sales and collections. However, high fixed expenditures and the absence of seasonal inflow of cash are threatening the existence of retailers,” he added further.

As more brands are investing in e-commerce, and with the rising smartphone penetration rate in the country, mobile e-commerce is expected to see a particularly strong increase, the highest within retailing in the forecast period.  Against this backdrop, the impact of inflation (retail goods) and the COVID-19 pandemic on the trading of retailers in India shows itself in various ways including store closures, rise of independent retailer strength, polarisation of store sizes and targeting of marketing efforts.

The last quarter of 2020 saw e-commerce grow by 36 percent and 30 percent YoY in terms of order volume and gross merchandise value (GMV), respectively, while the average order value declined by five percent in Q4-2020 as compared to the same period last year. The e-commerce industry had reported a 26 percent order volume growth in Q4-2019 vis-a-vis Q4-2018. However, the average order value declined by 5 per cent in Q4 2020 as compared to same period last year.

“To trim expenses, some retailers are resorting to salary cuts. In addition, with customers fearing contracting the airborne virus, retail stores and malls continue to witness a precarious drop in physical footfall. Hence, more retailers are contemplating layoffs and downsizing,” continues Sunkara.

In the post pandemic scenario, Indian retailers across sizes are set to understand the power of omnichannel digital transformation. The most resilient ones surviving this crisis are the omnichannel retailers. As a result, retailers with such approach have better chances of survival due to the convenience and experience that they offer.

“Nevertheless, the long-term outlook for the Indian retail industry looks optimistic, supported by rising income, favorable demographics, the entry of foreign players and increasing urbanization. Meanwhile, Indian retailers should look up to their peers in China, Singapore and South Korea to chart a quick road to recovery,” concludes Sunkara.