While the growth of e-commerce was propelled by the pandemic in 2020, e-commerce penetration saw a further strong increase in 2021 due to the second wave of COVID-19 infections. While the lockdown restrictions were totally eased by the end of 2020, the second wave of infections in 2021 meant that consumers were restricted to their homes once again, which continued their dependency on e-commerce for shopping.
During the mobility restrictions imposed during the first wave of the pandemic in 2020, the majority of brands and store-based retailers struggled due to poor online distribution or poor last-mile connectivity. With the lessons learned from the first wave, brands and store-based retailers expanded their online presence by adopting direct to consumer models, in addition to partnering with third party delivery companies and marketplace models, which meant they were better prepared for the second wave of the virus and associated restrictions.
Traditionally, online demand for products such as electronics, appliances, toys and apparel was high in India. However, the pandemic has also contributed to increasing sales via e-commerce in categories such as groceries and consumer health, within which online sales were niche prior to the pandemic.
While e-commerce saw a significant increase in its sales in the last couple of years, its contribution to overall retailing in India remains low, still in the single digits, highlighting its huge growth potential moving forward. Furthermore, India is witnessing a third wave of COVID-19 infections at the end of 2021 and into 2022, which will continue to increase consumers’ dependency on online shopping.
Last-mile connectivity has remained one of the key factors limiting the expansion of the e-commerce channel in India. With companies looking to expand their reach beyond tier 1 cities, online-offline integration will become key to overcoming last-mile challenges.
Traditionally, e-commerce in India was dominated by marketplace companies. However, with new growth opportunities opening up, a plethora of new brands and retailers are entering the online space.
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Sales of consumer goods to the general public via the Internet. Please note that this includes sales through mobile phones and tablets (i.e. m-commerce). E-commerce includes sales generated through pure e-commerce websites and through sites operated by store-based retailers. Sales data is attributed to the country where the consumer is based, rather than where the retailer is based. The definition of e-commerce is agnostic as to where actual payment takes place; if an order is initiated online, it is considered to be an e-commerce transaction, even if the order is ultimately paid for in-store (or elsewhere). As a result, all ‘click-and-collect’ and ‘collect-at-store’ transactions are counted as e-commerce sales. E-commerce excludes sales of: (a) Consumer-to-consumer (C2C) and business-to-business (B2B) sales, although please note that sales between businesses and consumers (i.e. B2C sales) on sites such as eBay are included; (b) Sales of motor vehicles, motorcycles and vehicle parts; (c) Tickets for events (sports, music concerts, etc.) and travel; (d) Sales of travel and holiday packages; (e) Revenue generated by online gambling sites; (f) Returned products/unpaid invoices; and (h) Internet sales from direct selling companies, as these are tracked in Direct Selling market size/shares. Example e-commerce brands include Amazon.com, Zappos.com, Apple.com, iTunes, Rakuten, Tesco.com, Dell.com, Coles Online, etc. 3rd Party Merchant sales through online marketplaces, such as Amazon.com, eBay.com and Walmart.com, are included and split out in shares. 3rd party merchants are the summation of sales that come from businesses that are present on an online marketplace (e.g. Amazon, Alibaba). Marketplaces are websites that allow multiple merchants to sell on the marketplace website, with the marketplace operator processing the transactions, but many marketplaces provide offer other services as to help with shipping, handling, payment, and product storage. The marketplace is not the merchant of record legally, but for the sake of shares, sales from 3rd part merchants are attributed to the marketplace brand operator.See All of Our Definitions
This report originates from Passport, our E-Commerce (Goods) research and analysis database.
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