Even after the Covid-19 outbreak, online commerce has increased.
Indian consumers have continued to buy online – a shopping habit that firmed up during the pandemic – with the share of online purchases in total consumption of smartphones, electronics, daily necessities and groceries increasing in 2022.
Consumers continued to shop online last year despite retail chains and malls reporting complete recovery in sales and higher footfalls than pre-Covid period, latest data from market researchers such as GfK, Counterpoint Research, and IDC India as well as listed fast moving consumer goods (FMCG) companies show.
The sales data belie expectations of marketers who had said offline channel will gain share in 2022 at the cost of ecommerce, led by full-fledged reopening of markets after two years of Covid-19 restrictions
For smartphones – the largest category sold online – Counterpoint Research estimates that ecommerce accounted for 49% of total sales last year, up from 48% in 2021 and 41% in 2019. US-based researcher IDC India estimates that online channels accounted for 53% of smartphone sales in 2022 against 50.2% in the previous year.
In the case of consumer electronics, online accounted for 34% of all televisions sold in 2022, 21% for washing machines, 45% for water purifiers and 81% for vacuum cleaners in terms of number of units sold, as per GfK.
Industry executives said there has been a marginal growth in online contribution to their sales in the last calendar year.
“The shift towards ecommerce is permanent in technology products where decision makers are younger consumers and which are logistically possible to sell easily online,” electronics company Haier India president Satish NS said.
He said ecommerce is helping to grow markets like the Northeast where penetration was low.
Even FMCG companies like Dabur, Marico, Tata Consumer Products and Emami said in their December quarter earnings call that ecommerce is growing at the highest pace, even double of the pace of modern retail, with the contribution now at 8-10% of total sales as compared to 10-12% for modern retail. Sales in general trade continues to decline along with rural markets, they said.
For Emami, ecommerce is now 8% of the business while modern trade is 10.5%. Ecommerce was the standout performer for Dabur last quarter with 40% year-on-year growth, contributing around 9% to total revenues. For Tata Consumer Products, ecommerce revenue went up by 34% year on year last quarter while modern trade sales improved by 17%.
Emami vice chairman Mohan Goenka told analysts recently that going forward direct-to-consumer and ecommerce would play an important role in the future growth strategy of the FMCG business with omnichannel distribution.
Some experts, though, expect offline channels to recover some ground this year.
“We saw that offline contribution increased during the latter part of 2022, and in 2023, we believe that offline share will get better,” said Prachir Singh, senior research analyst at Counterpoint. “The offline channel has caught up with online on pricing, which was the major factor for online purchases.”
He said consumer preferences have been growing online because of hefty discounts, exclusive deals, easy payment, quick delivery, and multiple rounds of discount sales on online platforms. After Covid-19, consumers began to rely more on online shopping, Singh said.