Understanding E - Commerce Industry

10th May 2021

India e-commerce will reach US$ 99 billion by 2024, growing at a 27% CAGR over 2019-24, with grocery and fashion/apparel likely to be the key drivers of incremental growth. 

Driven by lower data rates and investments to enhance customer experience, the Indian e-retail witnessed a rapid increase in shopper penetration, as online platforms are innovating to onboard the next billion shoppers. 

Young demography, increasing internet and smartphone penetration, and relatively better economic performance are some key drivers of this sector. Each month, India adds approximately 10 million daily active internet users- the highest rate in the world; the number of smartphones per 100 people has risen from 5.4 in 2014 to 26.2 in 2018. According to 2019 data, it was estimated that one in every three Indians shopped using a smartphone.In August 2020, Mukesh Ambani announced that Jio would roll out 100 Mn low-cost 4G or possibly 5G-enabled smartphones with one of its strategic investors, Google, at a fraction of its current cost. The launch of this entry-level Android phone is expected in the first half of 2021.

E-tailing market by business model

The marketplace model adheres to the standards and directions of a zero-inventory model. Inventory-led models are those shopping websites where buyers choose online from within a range of products owned by the online shopping company or websites. Then website takes care of the whole process end-to-end, starting with a product purchase, warehousing, and ending with product dispatch. 

Shoppers between 25 and 34 years of age have been the most active on E-commerce portals, a surprising number of older people have increasingly started to shop online. However, the age group of 15 -34 years is the major consumer of E-commerce. Indian e-commerce is projected to increase from 4% of the total food and grocery, apparel, and consumer electronics retail trade in 2020 to 8% by 2025.