Consumer Discretionary

<p style="text-align: justify;">"As the World grappled with the effects and after-effects of Covid-19, reports suggested that the E-commerce industry in India has seen an unprecedented boost in the last two years."</p><h2 style="text-align: justify;"><span style="font-size: 14pt;">Current E-commerce Market Trends&nbsp;</span></h2><p style="text-align: justify;">India is today's eighth-largest market for e-commerce, trailing France and ahead of Canada, after China and the US. India had the third-largest online shopper base of 15 Crores in FY2 and is expected to be 35 Crores by FY26.</p><p style="text-align: justify;">India's consumer digital economy is expected to become Rs 80 Lac crores in the next decade market by FY32, growing from Rs 4.5 Lac crores in 2020, driven by the strong adoption of Online services such as e-Commerce and Ed-Tech in the country- (Grant Thornton- IBEF).</p><p style="text-align: justify;">The Indian domestic grocery and personal e-commerce market are estimated to Cross Rs 2O Lac Crores by FY27 from Rs 3 Lac crores in FY17, expanding at a CAGR of 33%.&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 14pt;">Actions Taken by Leading E-commerce Companies&nbsp;</span></h2><p style="text-align: justify;">With changing consumer buying patterns and preferences, the rise of new first-time online users, and increased focus on digitisation by retailers and Brands Opting for the D2C (Direct to Consumer) model, today, the e-commerce industry has emerged as the most promising market across the globe and so in India with tremendous growth potential in the future.</p><p style="text-align: justify;"><strong>E-commerce Volumes&nbsp;</strong></p><p style="text-align: justify;">The Leading e-commerce companies in India focus on cities beyond the Metropolitan cities. Currently, tier II and beyond cities contribute &lt;65&gt; % of the total online consumer demand in India. This share is expected to rise in the coming years.&nbsp;</p><p style="text-align: justify;">Tier III and beyond cities like Lucknow, Patna, Vizag etc., witnessed &lt;55&gt; % growth, making them the fastest-growing places. It has also been observed that the Top 5 Tier III cities contribute only &lt;25&gt; % of the overall tier III order volume.&nbsp;</p><p style="text-align: justify;">However, in metros, the Top 5 cities constitute 90 of the overall order volume. The Top 3 States by e-commerce volumes are Delhi NCR, Maharashtra, and Karnataka, and they constitute &lt;65&gt; % of overall consumer demand.</p><p style="text-align: justify;"><strong>Strengthening Online Capabilities&nbsp;</strong></p><p style="text-align: justify;">Retail brands are now strengthening their online capabilities and opting for different approaches to connect with consumers. There is also an increasing trend of consumers buying directly from Brand websites. There has been a considerable growth of more than 50% for brands developing their websites, which led to an increase in self-shipped orders. However, the percentage of self-shipped orders is declining, which can be attributed to brands trusting marketplace logistics due to better service levels and lower unpredictability during current uncertain times.&nbsp;</p><p style="text-align: justify;">But the number of consumers shopping directly from the brand websites is increasing much faster than marketplaces. Brand websites have witnessed &lt;88&gt;% order volume growth compared to &lt;32&gt; % order volume growth on marketplaces. The top three segments that have seen an increasing penetration of D2C brands are Beauty and Wellness, Fashion and Accessories, FMCG, and agricultural sectors.</p><p style="text-align: justify;"><strong>Emerging Sectors in E-commerce&nbsp;</strong></p><p style="text-align: justify;">India's e-commerce sector has seen constant growth on an annual basis. The e-commerce order volume saw an increase of about 20 % while the GMV (Gross Merchandise Value) witnessed a surge of &lt;23&gt; % with an average order size of Rs &lt;1500&gt;. Beauty and Wellness is one sector that has seen an unprecedented order volume growth of &lt;130&gt;%. This is followed by FMCG and Agriculture and Health and Pharma, with an increase of &lt;55&gt;% and &lt;38&gt;%, respectively. These are emerging sectors with the potential to accelerate e-commerce growth in India.<br />&nbsp;<br /><strong>COD Returns&nbsp;</strong></p><p style="text-align: justify;">Managing return is an integral part of running an e-commerce business. E-commerce companies have invested extensively to reduce COD (cash on delivery) returns as they constitute a large part of overall returns. The return% on COD has considerably reduced now. This change can be attributed to increasing technology adoption, improved last-mile delivery and customer-centric return policies. However, even after such a remarkable reduction in COD returns, it's still almost 2X returns on prepaid orders.&nbsp;</p><p style="text-align: justify;">&nbsp;</p><p style="text-align: justify;"><span style="font-size: 10pt;"><em>This article was contributed by our expert <a href="https://www.linkedin.com/in/rajeshwar-dhar-80451a16/">Rajeshwar Dhar</a>&nbsp;</em></span></p><p style="text-align: justify;">&nbsp;</p><h3 style="text-align: justify;"><span style="font-size: 18pt;">Frequently Asked Questions Answered by Rajeshwar Dhar</span></h3><h2 style="text-align: justify;"><span style="font-size: 12pt;">1. What is the future of eCommerce in India?</span></h2><p style="text-align: justify;">The Indian e-commerce market is expected to cross 12 Lac crores by FY26 from 4.5 Lac crores in FY21, according to a new report released by Industry Body FICCI and Consultancy Anarock in 2022;</p><p style="text-align: justify;">Also, they are optimistic that marker size will outgrow 100 lL/ac crores by 2030 itself, and it is expected that by that time, India will have far exceeded 1 billion users of Internet facilities.</p><p style="text-align: justify;">Under such a scenario, this exponential rise in e-Commerce businesses will fuel economic growth too, especially Warehousing and Logistics Sector at a Phenomenal Pace - Big Infra Boost for India.</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">2. Who is the market leader in e-commerce?</span></h2><ul><li style="list-style-type: none;"><ul style="text-align: justify;"><li>If in India - it is Amazon India and Flipkart, each having more than 30% of the market share in India. However, Amazon was better in GMV for 2022.</li><li>If in the world - it is Amazon.</li><li>If it is the World Market- then it is China (more than 50% of the world);</li><li>If by Revenues - China again far ahead than (USA+ Europe) Combined.</li></ul></li></ul><p>&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">3. Why is online selling a trend?</span></h2><p style="text-align: justify;">Why shouldn&rsquo;t it be?</p><p style="text-align: justify;">Brick &amp; Mortar Markets are being replaced by Click &amp; Order Market.It used to be One Stop Shop Offline for most of our convenience, periodic goods, and services, and now it is click and order one stop shop online for most of our said Goods and Services.</p><p style="text-align: justify;">IoTs have made Online Shopping convenient and fast with the availability of the internet and smartphone rising exponentially.</p><p style="text-align: justify;">Ever-gaining preferences, tastes, and confidence in brands, quality, and reputation of hypermarkets, supermarkets, and departmental stores have made fast roadways into the online trend with better hygiene and assortments prevailing in such stores/markets.</p><p style="text-align: justify;">One does not have to spend time in physical visits for such purchases for which one feels short of time while in one&rsquo;s own Busyness and hence can use that time for alternate quality purposes.</p><p style="text-align: justify;">Added to this are the Big Days Sales, Big Billion Days Sales, Great India Festivals Sales, and various other sops these stores provide as they break bulk wholesale purchases into small units of retail visual merchandise, which boosts online marketing consumer conversions.<br />&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">4. What are some of the innovations in e-commerce?</span></h2><p style="text-align: justify;">Use technology for a better customer experience like Digitisation, Chat Bots, Voice Searches, Omni-Channel presence, headless e-Commerce, and of course, social media like Facebook, Instagram, etc.</p><p style="text-align: justify;">Outreach from semi-urban and rural areas, which we call from Tier I to Tier II and Tier III cities.</p><p style="text-align: justify;">The use of VR and AR (3D Modes) for consumer durable products like automobiles, home d&eacute;cor, gems and jewellery, furnishings, dress wears, etc., has proved wonders in e-commerce.</p><p style="text-align: justify;">The Use of Hi-Logistics for delivery to customers and the ease with which customers can track orders from ordering to shipping to timely delivery.</p><p style="text-align: justify;">&nbsp;</p>