The COVID-19 pandemic not only accelerated the growth of e-commerce brands and platforms, but also changed the way people viewed them. While those who were already in love with the idea of having a variety of things to buy sitting at home, others, who were initially averse to the idea of shopping online, also grew to accept it and adapt to it. E-commerce thus saw a new dawn as more and more shoppers from different age groups began warming up to the idea of purchasing online, be it groceries, apparel or footwear, even services. In fact, a recent report by MAAS titled ‘The Dawn of the New-Age Shopper in the New Normal’, in partnership with Sensor Tower, reveals that accelerated by the pandemic, the Indian e-commerce industry is set to grow by 84 % to $111 billion by 2024. The average daily time spent online by Indian shoppers has also seen a slight uptick from 4.9 hours before the pandemic hit to 5.2 hours a day post the lockdowns. In this, India is still well ahead of its Southeast Asian neighbours Indonesia, Thailand, Malaysia and Vietnam, where online shoppers have been clocking anywhere between 3.2 to 4.3 hours a day post lockdown.
Tracking Giants
While Asia is already considered the world’s largest e-commerce marketplace, the MAAS report digs deeper into India in terms of e-commerce festive behaviour, digital adoption, as well as post-pandemic trends. Viraj Sinh, Co-founder, Managing Partner – International, MAAS, says, “With its unique demographic and fast-changing consumer behaviour trends, paradigm shift towards e-commerce is certain and it continues to happen at a rapid pace. New verticals, niche players continue to spring up across the region that further drive the adoption and penetration of e-commerce, which is still relatively low. The measurement of success has evolved and the approach to user growth has changed. Having the right partner to help one through this journey has become paramount and a crucial first checkpoint and often the difference between success and failure.”
Mobile-first Economy
The pandemic offered a unique opportunity for e-commerce Apps to grow substantially as people took to their mobile phones. Whether it was App downloads or active users, e-commerce Apps went through a significant change in user behaviour. First, as the lockdown hit different regions, the uncertainty around the pandemic forced people to curb unnecessary spending, but key e-commerce verticals such as medical Apps, food & grocery continued to stay afloat. Later, as lockdown rules relaxed, shopping Apps took flight a couple of months into the pandemic and continued to rise, even as the spending behaviours of categories changed.
In India, Daily Active Users’ (DAU) growth in top shopping Apps accelerated in the past three quarters (after Club Factory’s removal from App stores dampened growth in mid-2020). The top 10 Apps averaged more than 7 million Daily Active Users (DAU) apiece in Q2 2021, up 18 % year-on-year. In fact, the average MAU (Monthly Active Users) among the top Apps in India took a notable hit with the removal of Club Factory in Q2 2020. However, active user growth in India started to recover in early 2021.
DAU for Shopping Apps
Note: Data includes top 10 shopping Apps by average DAU in India each quarter across App Store and Google Play Store
The report also notes that shopping App downloads in India were down at the start of the pandemic, including a notable dip in April and May 2020. However, the country showed a strong year-on-year growth in July and August 2020, and remained above the 2019 levels for the rest of the year and into 2021. India’s shopping App installs surged again in July 2021, surpassing 80 million, up more than 15 million month-on-month.
Average Downloads for the Top 5 Shopping Apps by MAU Each Quarter
With an increasing trend of mobile-first, users are looking for instant gratification in their shopping experiences. As consumer attention span constantly reduces, e-commerce advertisers are faced with the challenge of staying relevant in their audience’s memory. Advertisers must thus concentrate their energies on:
- Employing a mobile-first approach that given brands valuable insights on user behaviour to create a personalised App experience.
- Deploying omnichannel marketing to create brand recall and close the online-offline loop.
- Incentivise users with rewards and discounts to increase user engagement with the brand.
- Serve contextual Ads to form a deeper connection with users and improve in-App action.
Festive Period Dominates
According to the findings of the report, seasonality plays a key role in e-commerce activity. Much of the retail activity in the country happens during the festive period of October-December (Q4) when both offline and online retailers offer heavy discounts to attract customers. This year-on-year major contribution from Q4 in the shopping category downloads proves that festive periods dominate the shopping behaviour and trends in India. The purchase frequency (which indicates the number of repeat orders placed in the last three months), however, is lowest in India compared to its Southeast Asian counterparts.
For advertisers, the report says, festive season marketing is all about making most of the excitement that surrounds it while keeping a hawk eye on customer bonding. It suggests that advertisers can:
- Ride brand messaging on viral trends or content format.
- Communicate with users through videos. However, the new-age shopper is also a great consumer of short videos, therefore, the shorter and wittier the Ad, the higher the engagement.
- Experiment with multiple Ad formats to understand what performs. Traditional banner Ads, native Ads, programmatic videos, interstitials and splash screens are a few successful Ad formats for e-commerce players.
- Expand the audience bucket by creating look-alikes is another option to boost UA efforts.
Shopping Apps Quarter-on-Quarter Change During & Before Festive Season
Mobile Penetration beyond Metros
Increased mobile adoption beyond urban locations is perhaps one of the few good outcomes of the pandemic. This is definitely great news for the e-commerce industry. E-commerce Apps, during the pandemic period, diversified offerings across horizontals – from essentials like pharmaceuticals, groceries, work-from-home requirements to non-essentials like fashion, self-care and beauty. This contributed to securing a newer consumer group that otherwise majorly preferred physical stores. This is also one area that advertisers must take note of. In an underserved market, like non-metro towns or rural areas, the challenges and opportunities to harness the market potential are equally exciting. According to the report, advertisers can:
- Establish direct communication with consumers in newer markets to keep engagement levels high or offer incentivised rewards.
- Focus on vernacular content to boost social commerce for non-metro users.
- Focus on omnichannel marketing, last-mile delivery, Buy Online Pay in Store (BOPS), etc., when connecting the offline and online loop for new consumers. Advertisers must bring the physical experience of stores to online to retain brand loyalty and boost sales.
- Find cross-brand promotion channels that can get them in front of relevant audiences. Organic recommendations via recommendation channels can help new Apps grow quickly.
Increasing Dependency on Online Shopping, e-Payments
As people stayed indoors, they spent more time in-App as retention rates peaked and average session lengths stayed above 2020 levels, demonstrating an increasing dependency on online shopping. The average time spent in top shopping Apps increased during the pandemic, peaking in Q4 2020. While it decreased from this peak in the first half of 2021, it remained above Q1 2020 levels.
The increase in time spent was largely driven by more sessions per day, perhaps due to people having more time stuck at home during the pandemic. The average session duration for top Apps in India hovered around two minutes for the past six quarters.
The report also notes that day-1 and day-7 retention for the top shopping Apps in India reached their highest average since 2020 in Q2 2021. Longer-term retention for the top shopping Apps in India peaked in Q3 2020, and while retention decreased in the following quarters, it still showed positive growth year-on-year.
Average Time Spent Among the Top 10 Shopping Apps in India
With an approximate average of over 85 % adoption of cashless payments across India, e-commerce is looking at an interesting partnership with the FinTech space. As the dependency on online shopping increases, it will be quite exciting to note how advertisers leverage this ‘match made in heaven’. The report suggests that e-commerce advertisers should:
- Look at educating users on the different mobile-based payments available while incentivising mobile transactions.
- Choose the right payment partner, which is crucial to the retention rate of any e-commerce App. Payment completion must be smooth, quick and transparent for an overall immersive and satisfying shopping experience.
- Develop a meticulous post-purchase workflow, which is key to reduce churn rates of e-commerce Apps. The average customer checks on their purchase status about 4.6 times per purchase. Transparency in terms of deliveries/returns/refunds, quick resolution of queries preferably through live chats, regular purchase updates are a few easy-to-implement strategies to foster consumer trust.
- Identify the highest converting customers and groom them to become brand advocates. Loyalty programmes, referral programmes, personalised communication about exclusive offers not only help retain users but also contribute to strong word-of-mouth marketing, bringing in new users.
India is far ahead of its Southeast Asian neighbours when it comes to estimated average shopping spends in Q2 2021 on approximately six e-commerce Apps. The country stands at $60.7 million, followed by Indonesia at $18.8 million, Malaysia at $11.9 million, Thailand at $8 million and Vietnam and $7.3 million.
