NEW DELHI: It was more than a decade-and-half long journey for the e-commerce industry in India to grow from a ticket booking platform to an offeror of everything - from a needle to a car - online. The initial hurdles of low internet accessibility, pricey data charges, and lack of trust were vaporised by Reliance Jio in 2014, giving a major boost to the industry. And then came 2020 and the much spoken about coronavirus, that made e-shopping more of a necessity than an option for almost all on planet earth. It has been said by many and trusted by all that what 2020 did for the digital and e-commerce industry, wouldn’t have been possible to happen in the next five years or so. Here’s an overview of what all went down in 2020 that made e-commerce a stronger and stiffer chap, giving a tough competition to the offline retail stores that remained the predominant choice of buying and selling for most, up until 10 months ago.
2020 growth story
The Indian e-commerce industry was struggling, climbing a steep incline for the past many years, given the strong intent of policymakers to support a digitally-enabled India. From increasing FDI in e-commerce ventures to signing MoUs with banks to rolling out 5G fibre networks, the past few years have seen great strides being made in that direction. However, the 2020 growth story was more the gift of an unexpected catastrophe than organised attempts in the direction. Yes, the sector faced some hiccups in the beginning, because of the uncertain situations and market slowdown, It, however set a new peak in terms of growth this year.
Starcom CCO Rajiv Gopinath notes, “The e-commerce industry has seen a massive boost in 2020 all over the world due to the pandemic. Global retail e-commerce will hit a staggering 3.9 trillion dollars in 2020– the equivalent of 17 per cent of all retail sales. Meanwhile in India, the industry saw a momentary fall in March and April due to the pandemic and the resultant logistics constraints and curbs on sales of non-essentials. However, after April, there has been a steady rise in the number of orders placed.”
Overall, it grew about 35-40 per cent and achieved a GMV of around 38 billion dollars, as per IBEF and Redseer Consulting estimates. A report by Kantar and Amazon Advertising indicates that 42 per cent of Indian urban active internet users were shopping online during COVID times.
Hustlers of the e-comm town
The e-commerce industry hogged most of the spotlight this year, given the situation the consumers found themselves in with the Covid-2019 imposed lockdown. However, according to data from Venture Intelligence -- a firm that tracks private companies’ investments, financials and valuations, private equity and venture capital (PE-VC) investments in e-commerce companies in India from January to September dropped by 55 per cent as compared to the same period last year. It stood at $1223.12 million in 2020. Additionally, only 66 firms raised funding in 2020 against 107 in 2019. The reasons behind this could possibly be attributed to anti-China sentiments and consolidations within the industry.
Yet, majors like Amazon, Flipkart, and the biggest star Reliance managed to keep the mills running with a great infusion of dollars.
Amazon invested $95.51 million in its Indian payments unit AmazonPay, in October. It was the second round of investment into the platform after the company pumped in Rs 1,355 crore in January. Additionally, as the e-grocery industry heated up, Amazon announced the expansion of its ‘Amazon Pantry’ to over 300 new cities in India, delivering to 10,000 pin codes across the country.
Amazon also forayed in the food-delivery business, an alcohol-delivery service, and an online prescription medicine delivery service, making the most of the year.
Its closest competitor, the Walmart-backed Flipkart found its base strengthening further as Tencent, the second-biggest shareholder in the e-commerce marketplace, put in $62.8 million in it.
Additionally, Flipkart tied up with e-pharma company 1MG, foraying into the e-med space. It rolled out ‘dark stores’ to service customers in nearby localities, and unveiled its plans in the wholesale market with the unveiling of its exclusive B2B marketplace – Flipkart Wholesale. Flipkart also acquired the wholesale business of its parent company Walmart in India.
And of course, most of the headlines space was reserved for Reliance this year as well. Its stock values went through a crushing journey early in the year, dropping to Rs 880 by the end of March from the peak of Rs 1,610 in December 2019, due to the pandemic. However, it was quick to get back on its feet as RIL sold about 10 per cent of Jio Platforms to Facebook in April. A series of marquee investors followed the suite, including Google, and Jio Platforms secured investments of $20.6 billion.
Reliance Retail Ventures also secured investments worth over $5.1 billion through various investments from leading global investors including two tranches from Silver Lake (1 and 2), KKR, General Atlantic, Mubadala, GIC, TPG, ADIA and PIF.
The launch of Jio Mart was one of the biggest events in the Indian e-commerce space this year. The megacorp also announced important acquisitions including digital pharma marketplace Netmeds, a chunk of the Future Group’s businesses, and Urban Ladder.
It created an omni-channel retail strategy which smartly included its brick and mortar presence with its ecommerce wings also spurred the next phase of its growth, which we will see giving fruit in the future as well. Some of the smartest moves in this direction were partnering with SBI in Jio Payments Bank and collaborating with Facebook-controlled WhatsApp that has launched its UPI-based payment platform.
Enough space for everyone
What essentially started as a space for fashion hauls and ticket bookings, the e-commerce industry really got its due in 2020 with purchases, across all the categories being driven online. According to Google Trends, the interest in the category went up by around 50 per cent since this time last year.
Logicserve Digital founder & CEO Prasad Shejale shares: “The number of e-commerce shoppers has at least doubled during Covid. Talking about the wide reach of the online shopping phenomena, a recent report by Bain & Co. suggests that 97 per cent postal codes in India ordered at least 1 item online in the last year, which is great. The report also mentions that for many businesses, including the small sellers, 60-70 per cent of the sales happen through e-retail.”
Gopinath notes: “Online marketplaces have witnessed a total growth of 30-40 per cent of new users. E-commerce leader in India, Flipkart recorded a new user growth of close to 50 per cent right after the lockdown, with tier 3+ regions registering the highest growth of 65 per cent during the "unlock" July - September phase. Consumers from tier 2 and tier 3+ regions also spent the most time on the platform, signalling a continuing rise in user engagement and a shift in shopping preferences. From the supply side, it saw close to a 35 per cent increase in sellers on board in 2020, in comparison to the same period last year.”
22Feet Tribal Worldwide Preetham Venkky adds, “Brands have significantly upped their investment on both owned channels as well as a marketplace (Flipkart, Amazon, Nykaa etc.). While investments in the marketplace have borne fruit immediately, in mid and high involvement categories, brands have shown interest in growing their branded e-commerce platforms. For instance, we’ve seen a growth of over 40 per cent on e-commerce in the home appliances space.”
Gopinath elaborates: “The top-selling category in e-commerce has long been electronics, especially mobile phones, followed by apparel. Rather, in January-March, the most searched categories included personal care, men's clothing, footwear and women's clothing. Though these still remain the dominant categories, a “work from home” category is emerging primarily due to Covid-2019, consisting of products related to office activity like laptops, chargers, small furniture, etc.
“However, during the lockdown, food and nutrition, household, toys and audio products witnessed the highest demand among consumers. Grocery and FMCG goods were one of the biggest beneficiaries during the pandemic even though fulfilled orders were only a fraction of the total in-demand orders (due to a steep hike in demand). However, even after the lockdown ended, e-grocery orders have been seeing an upward trend.”
According to a study by RazorPay, categories like beauty and personal care and home furnishings also witnessed massive growth, especially after May. While the former saw an increase of almost 295 per cent in the number of transactions, the latter saw a spike in orders in May and June given lifestyle changes and the need to work from home.
dentsu Asia Pacific (APAC) Chief Data & Product Officer and dentsu Programmatic - South Asia CEO Gautam Mehra adds, “Sectors that benefitted the most were electronics, pharma and education. Even fintech to a large extent benefitted, with more and more demat accounts, digital-only savings accounts being opened and UPI usage increasing.”
The Indian retail market also saw a new wave of direct-to-consumer brands such as Lenskart, Licious, Zivame, Epigamia, BoAt, Wow Skin Science, Healthkart, Mamaearth, MyGlamm, SUGAR Cosmetics, IncNut, Country Delight, among others, establishing a strong market presence. Relying on technology and smart interactive solutions, these brands have made big within the industry.
Growing in potential
The industry not just grew in numbers but also made great investments in improving the overall customer experience. They relied heavily on smart-tech interventions and UI/UX development to make the consumer journey more smooth sailing.
More and more brands were forced to step into the online world and create their own shopping platforms. According to the report titled ‘E-commerce Trends Report 2020’ by Unicommerce, there has been a 65 per cent increase in brands developing their own website in India. Bisleri, Cornitos, Nivea, Kiehl’s and Amaris Jewels were some of the brands that launched their own shopping platforms in India this year. Apple, which used to get 30 per cent of its annual sales in India from e-commerce sites here, also launched its own online store for India.
At the same time, brand websites have witnessed 88 per cent order volume growth compared to 32 per cent for ecommerce marketplaces.
Carwale SVP (used cars) Abhishek Patodia mentioned in an Indiantelevision.com virtual roundtable that the platform included video upload option for car-sellers, which eventually driven up the number of consumers on their platform.
Baggit head of marketing Atul Rohan Garg added that they are working on incorporating options like video-calling and on-call assistance for its shoppers to make the experience more transparent and wholesome. The same plans are in place for a number of lifestyle, fashion, and jewellery brands.
Many restaurants, QSRs, and salons adopted options like e-menus, pre-bookings, on-app valet services to fit into the new normal and make physical stores more comfortable and safe.
Venkky quips: “The growth of e-commerce will be on the back of four services: technology, user experience design, dynamic creative optimisation and performance marketing. This creates the need and demand for fully integrated digital agencies, which will benefit the maximum.
Driven by Technology
Mehra notes: “Digital commerce is almost entirely tech-driven. From better warehousing to better personalisation to customers, every part of the commerce journey has an opportunity to be disrupted or innovated on. Ad-tech / mar-tech will play an important role in the acquisition and driving lifetime value, whereas traditional operations where SAP/ERP used to be deployed are now being disrupted by startups like Khatabook and several others.”
According to Shejale, personalised SaaS-based platforms that are powered by AI also gained great preference from the e-commerce players as they work on systems that ensure that a seamless omnichannel approach is followed.
The year, therefore saw, ecommerce software platforms making a big mark in India Brands and e-commerce platforms partnered with payment gateways, cloud computing and analytic service providers. Ready-to-use ecommerce software from Shopify, Magento, Ecwid, BigCommerce, Volusion, Wix and others eased out the pain of setting up online stores, making D2C bigger than ever in the country. Use of inbuilt RFID, GPS, and IoT, and telematics played a crucial role in evolving the ecomm world.
Additionally, brands are also experimenting a lot in closing the gap between the online look and feel of the product and how it physically is. This has attracted great strides in involving technologies that can create realistic 3D imageries, refine digital texture and colour palette and at the same time keep the site design simple and light. Jewellery brands invested in technologies that can help the retailers and e-platforms to customise designs, do online virtual trials on a real-time basis.
Another simple platform that greatly assisted e-commerce players this year was Whatsapp. Reliance Industries started limited use of WhatsApp to connect customers to grocery stores. JioMart successfully interacted with its customers on orders using WhatsApp, simplifying the whole process. Jewellery brands like Mellora are also relying on the Facebook-owned platform to reach consumers.
In the papers and on the screens
Keeping up with the buoyancy in online shopping, e-commerce and digital-first players greatly supported the Indian advertising industry too. Online gaming platforms like Dream 11, also the sponsor of IPL, MPL, Poker Stars, e-learning platforms like Vedantu, WhiteHat Jr, and BYJUS, and e-shopping platforms like Flipkart, Myntra, and Amazon were some of the top advertisers this year, keeping the industry afloat.
Not just that, the marquee sales events like Myntra End of Reason Sale, Amazon Great Indian Sale, Pepperfry Shubh Aarambh Sale, Paytm Maha Cashback Sale, etc. got the bucks moving in the brand’s direction as the sales and supply chains remained largely impacted through the year.
Has the inflection point been reached. Observers are betting their hats that there’s no going back from here; only forward.