Ecommerce in India grew by 25% to $38 billion in the previous financial year (FY21) despite two washout months during the first wave of the pandemic, according to a report by consultancy firm Bain & Co in association with Walmart-owned Flipkart.
While the second Covid-19 wave hit online sales harder, the industry is expected to clock over 30% growth this year as well, Shyam Unnikrishnan, partner at Bain & Co, told ET. This will translate to around $50 billion by the end of FY22.
Since the onset of the pandemic, 30-35 million new customers have come online to shop in the country. Before the pandemic, there were around 100-110 million ecommerce buyers in India. This user base has jumped to 140 million and is on track to surpass the 150-million-mark in the ongoing financial year.
“Pretty much across most countries, you see a peak (in online shoppers) and it settles to be normal that’s higher than the pre-Covid times, and that essentially is being sustained,” Unnikrishnan said. “We expect something similar to happen here as well.”
The report pegs the e-tail sector at $120-$140 billion by FY26.
Unlike in 2020, the revival in online shopping this year has been gradual. Even though the industry has yet to bounce back to pre-second wave levels, Amazon India VP for consumer business, Manish Tiwary, told ET that business was fully back to those levels and non-metro markets were leading the growth recovery for the ecommerce marketplace.
Unnikrishnan also said growth in non-metro markets has been higher than in metros.
Small towns, women and older shoppers have also gained prominence in the online shopper base over the last year, he said, adding that this trend is expected to continue.
Arpan Sheth, senior partner at Bain & Co, said growth across categories in online shopping throughout the pandemic growth has been disparate.
“Mobile phones and other electronics categories witnessed a one-time growth spurt at the outbreak, however they did not see as substantial a jump during the second wave in April–May 2021,” he said.
According to him, frequent use categories such as grocery, household items, and personal care saw continued acceleration.
“Discretionary categories such as fashion and travel products saw relatively slower growth but are expected to rebound to pre-pandemic growth-rates soon,” he said.
ET has reported previously that sellers have also witnessed a similar trend in segments such as grocery, essentials and work-from-home related products as well as kitchen and home care. Fashion continues to be the most depressed category.
Aided by the pandemic, e-tail reach, including grocery, has gone up to around 4.6% in FY21 compared to 3.5% a year ago.
Excluding grocery, ecommerce penetration stands at 19%-20% compared to 11%-12% a year ago.
The difference in average selling prices in metros and non-metros continues to narrow, while rural markets are driving the growth revival.
Even as Covid-19 cases have come down drastically, consumers who moved online to order groceries and other essentials are staying back.
Companies like BigBasket, Grofers, Amazon India and Flipkart continue to see increased demand and are trying to scale up infrastructure to meet the steady growth in demand for essentials.
Earlier this year, ET reported that BigBasket, now owned by the Tata group, became the second vertical ecommerce platform to clock gross sales of over $1 billion. Prior to this, only Flipkart-owned Myntra had surpassed this milestone.
According to the report, online grocery was estimated to see 40% growth before the pandemic but actually grew by 80% in FY21.
Now, practically all ecommerce and grocery platforms are rolling out express delivery options to deliver essentials in an hour or less.
“There is significant headroom (for ecommerce). And we will see a lot of growth going forward and a lot of that growth will be propelled by small town India,” Unnikrishnan said.
The report said there has been a 1.5-2X growth rate in women shoppers compared to men in 2020 and a 20% increase in online shoppers who are over the age of 45.