E-commerce (electronic commerce) is the activity of electronically buying or selling products through online services or over the internet. E-commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. Furthermore, e-commerce helps businesses gain access to and establish a wider market presence by providing cheaper and more efficient distribution channels for their products and services.
Factors such as widespread availability and affordability of internet access in India are expected to drive the growth of the market. As internet penetration continues to increase, more individuals have access to online shopping platforms, leading to a larger customer base for e-commerce businesses. Moreover, with the growth of international shipping and logistics, Indian consumers access products from around the world. In addition, influencer marketing, where social media influencers promote products and brands, has proven to be an effective strategy to drive e-commerce growth in India by leveraging the trust and influence of popular personalities. However, trust and security concerns, logistics and infrastructure challenges are some of the factors that hamper the India e-commerce market growth. Furthermore, the advancement of technology, especially in terms of mobile devices and internet connectivity, has played a crucial role in the growth of the India e-commerce industry. In addition, the rise in demand for online products and rise of online platforms such as Flipkart and Amazon further contribute to this trend, thus providing lucrative opportunities for market growth during the forecast period.
By Model Type
Business-to-consumer (B2C)segment is projected as one of the most lucrative segments.
Based on offering, the fashion and apparel segment dominated the India e-commerce market in 2022. As online shopping provides convenience and accessibility to a wide range of products, allowing customers to explore different brands, styles, and price ranges from the comfort of their homes. In addition, e-commerce platforms often offer competitive prices, discounts, and deals, attracting cost-conscious shoppers. Furthermore, the fashion and apparel industry has embraced digital marketing and social media platforms to reach and engage with their target audience effectively. However, the luxury goods segment is expected to witness the highest growth in the coming years. The surge in online luxury goods purchases has been fueled by changing consumer preferences, increase in disposable incomes of a growing middle-income group, and rise in inclination to shop online even after the COVID-19 restrictions.
Segment Review
The India e-commerce market is segmented into model type and offering. By model type, the market is differentiated into business-to-consumer (B2C) and business-to-business (B2B). Depending on offering, it is fragmented into beauty and personal care, consumer electronics, fashion and apparel, DIY and hardware store, eyewear, travel and tourism, food and beverages, furniture, household essential, jewelry, luxury goods, online events, media and entertainment, and others.
Top Impacting Factors
Increase in internet penetration in India:
Increase in internet penetration in India serves as a fundamental driver for the e-commerce industry, catalyzing its rapid growth and expansion. As more individuals gain access to the internet, especially in rural and semi-urban areas, the potential customer base for online shopping expands exponentially. With over half a billion internet users and counting, India haswitnessed surge in online consumer activity, driven by factors such as rise in smartphone ownership and affordable data plans. Rise in connectivity empowers consumers with unprecedented access to a wide array of products and services, transcending geographical constraints and traditional retail limitations.
By Offering
Luxury goods segment is projected as one of the most lucrative segments.
Moreover, the proliferation of internet-enabled devices has facilitated seamless browsing, comparison shopping, and secure online transactions, further fueling e-commerce adoption across diverse demographics. Thus, e-commerce players are leveraging this trend by investing in user-friendly interfaces, mobile-responsive platforms, and localized content to cater to the evolving needs and preferences of the digitally savvy Indian consumer base. In addition, the government's initiatives to bridge the digital divide and promote digital literacy are complementing this trend, fostering a conducive ecosystem for e-commerce growth and innovation. Thus, rise in internet penetration in India is not just a technological advancement but a transformative force driving the evolution of the e-commerce landscape, opening new opportunities for Indian businesses to thrive in the digital age.
Rise of social media and influencer marketing:
Platforms such as Instagram, Facebook, and others social media, have become a powerful channel for product discovery, recommendation, and purchase. Influencers, with their large and loyal followings, influence consumer preferences as well as effectively bridge the gap between brands and their target audience. By partnering with influencers to create authentic and engaging content, e-commerce companies amplify their brand visibility, build trust, and drive conversions. This trend is particularly impactful in India, where cultural nuances and regional diversity necessitate targeted marketing strategies. Leveraging the reach and authenticity of social media influencers, e-commerce brands tap into niche markets, foster brand advocacy, and stay ahead in an increasingly competitive landscape.
Competition Analysis
The report analyzes the profiles of key players operating in the India e-commerce market such as Amazon.com, Inc., Flipkart, Inc., Meesho Inc., Nykaa E-Retail Limited, IndiaMART InterMESH Ltd., Bigtree Entertainment Pvt. Ltd., FirstCry.com, OLX, MakeMyTrip Pvt. Ltd., Reliance Retail Limited, Samsung SDS Co Ltd., LG Electronics, Lenskart Solutions Pvt. Ltd., Burberry Group Plc, Raymond, Aditya Birla Fashion and Retail Limited, Fabindia, ITC Limited, Parle Agro, GCMMF (AMUL), Pepperfry Limited, Inter IKEA Systems B.V., Durian Industries Ltd., Unilever, Godrej Consumer Products Ltd., Titan Company Ltd., Wikka, Givaudan, Zee Entertainment Enterprises Ltd., Sun Pharmaceutical Industries Ltd., Cipla Inc., Godfrey Phillips India Ltd., and Funskool. These players have adopted various strategies to increase their market penetration and strengthen their position in the India e-commerce market.
Key Developments in the India E-commerce Industry
- In February 2023: Amazon announced its participation in the Indian government's ONDC (Open Network for Digital Commerce) platform, a government-backed project intended at providing small merchants and Kirana stores across the country with access to processes and technologies generally used by large e-commerce platforms.
- In April 2022: Flipkart acquired ANS Commerce, a full-stack e-commerce enabler that allows businesses to sell products online. With the help of this acquisition, Flipkart intends to work to develop the Indian e-commerce ecosystem by investing in technical skills to respond to the needs of the country's evolving digital retail industry.
- In March 2022: Meesho, Inc. launched an integrated e-commerce mobile app for buyers and sellers as part of efforts to drive the digitization of small businesses in the country. With the latest Android version of the app, Meesho users can now toggle between the buyer and seller interfaces with a single click.
- In February 2021: Amazon acquired Selz, a Shopify competitor that assists small businesses in creating online stores. It gives Amazon a competitive advantage over Shopify and e-commerce software startup BigCommerce by providing more tools for small and medium-sized enterprises to quickly migrate their operations online.
Key Benefits for Stakeholders
- The study provides an in-depth India e-commerce market analysis along with the current trends and future estimations to elucidate the imminent investment pockets.
- Information about key drivers, restrains, and opportunities and their impact analysis on the India e-commerce market size is provided in the report.
- The Porter’s five forces analysis illustrates the potency of buyers and suppliers operating in the India e-commerce industry.
- The quantitative analysis of the global India e-commerce market for the period 2022–2032 is provided to determine the India e-commerce market potential.
India E-Commerce Market Report Highlights
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Analyst Review
India E-commerce or electronic commerce refers to the buying and selling of goods and services over the internet. It involves conducting commercial transactions through online platforms, websites, or mobile applications. In e-commerce, various electronic technologies facilitate the exchange of information, money, and products between businesses, consumers, and other entities. Furthermore, e-commerce has become increasingly popular due to its convenience, accessibility, and global reach. It has transformed the way people shop and conduct business, enabling transactions to occur anytime and anywhere. Moreover, improvement in logistics and transportation infrastructure, including last-mile delivery solutions, support the India e-commerce market growth. For instance, in March 2023, India Post, the India’s leading postal service provider, signed a memorandum of understanding (MoU) with Shiprocket, a leading logistics aggregator company, to enhance its last-mile delivery services for various e-commerce products. This partnership is expected to provide shipping and last-mile delivery services to Shiprocket’s three lakh strong seller base, which includes startups and a large number of small and medium businesses. The MoU marks a significant milestone for taking e-commerce to the last mile and is expected to benefit millions of customers all over the country.
In addition, with the widespread adoption of smartphones, mobile commerce (m-commerce) has emerged as a major growth driver for the India e-commerce market. Mobile devices provide a convenient platform for users to browse, shop, and make payments on the go. Moreover, the COVID-19 outbreak had a positive impact on the India e-commerce market. The pandemic led to an unprecedented surge in online shopping as people turned to e-commerce platforms to fulfill their needs while adhering to social distancing measures and lockdown restrictions. This accelerated the growth of the India e-commerce market as more Indian consumers embraced online shopping. For instance, in October 2023, iThink Logistics announced a partnership with India Post to bring benefits to direct-to-consumer (D2C) startups and small and medium businesses (SMBs) across India. The alliance aims to empower businesses of all sizes to embrace the full potential of e-commerce, transforming the way to extend their reach beyond urban hubs.
Furthermore, major players operating in this market such as Amazon.com, Inc., Flipkart, and others have witnessed significant adoption of strategies that include product launch, business expansion, partnership, and other initiative to reduce supply and demand gap. With increase in awareness and rise in demand for e-commerce across India, major players are collaborating their product portfolio to enhance the market growth. For instance, in December 2022, the E-commerce unicorn, Flipkart partnered with the Web3 platform Polygon to set up a blockchain-e-commerce Centre of Excellence (CoE) that will work on research and development of Web3 and metaverse commerce use-cases in India. Hence, rise in initiatives in India is expected to drive the growth of the e-commerce industry in the coming years.
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