Quick, personal, live and immersive – this is how e-commerce will be in 2023

• India’s online shopper base is expected to reach 400-450 million by 2027.
  
• The median age of Indians is 28 years, one of the lowest in the world.
  
• There will be an additional focus on Tier II and Tier III cities, reveal industry experts.
  
• The country’s direct-to-consumer e-commerce market is expected to reach $100 billion by 2025, more than 15 times where it was in 2015.
  

E-commerce has leapfrogged to a new era of high volume during the pandemic and has become the new normal ever since. Yet, there is a lot more evolution that’s to take place in this segment going ahead, say experts.

In 2023, apart from continuing with the growth story in Tier 2 and Tier 3 cities, online shopping will also go deeper – which still has a lot of juice left.

“Growth is expected to be led by new online shoppers - primarily from Tier 2/3 cities - and continued online migration of key categories including fashion and grocery. In fashion, 'social' commerce and direct- to-consumer brands are gaining share,” according to a Bernstein study.

The mix has increased over the past 5-7 years – when e-commerce was largely concentrated in metro/Tier1 cities – to today, when Tier 2+ customers account for over 50% of the online shopper base, reveals Bernstein. The mix might continue to change with a bias towards non-metro shoppers.

Along with robust sales from companies like Meesho that are focussed on shoppers beyond the metros, the overall festive sales this year also had a large share of such shoppers. According to the E-Commerce Festive Season ‘22 report by Redseer, over 64% shoppers came from Tier II cities of India.

“The pandemic changed the way Indians shop, with Shopify research showing more than half (53%) of consumers from non-metros now preferring online shopping, and 80% of Indian consumers preferring to shop from their smartphone. This shift means that often the first time consumers discover or interact with a brand, they’re almost certainly doing it online,” Bharati Balakrishnan, country head and director, India at Shopify said.

India’s online shopper base in general is expected to reach 400-450 million by 2027, according to a Bain and Company report.


Voice searches to go desi

To facilitate growth beyond metros, many e-commerce companies have enabled voice- based shopping, providing language options to make ‘Bharat’ shop online with as much ease as their metro and urban counterparts.

The Indian food delivery unicorn Zomato has already gone desi, making its app available in eight vernacular languages. E-commerce giant Amazon has also made its app available in English, Hindi, Tamil, Telugu, Malayalam, Kannada, Bangla and Marathi. So has e-commerce platform Meesho.

“Video content, voice search and localisation will take precedence in 2023 and beyond. Localisation through the use of vernacular and visual content will be the key to win over customers in Bharat,” Meesho told Business Insider India.

Quick e-commerce and D2C business to fly

In urban areas especially consumers have become a tad more demanding, especially when it comes to the delivery of essentials. “Within grocery, we're already seeing a shift from slow e-Com to 'quick'/ instant delivery,” said the Bernstein study.

That means quick commerce players like Blinkit, Zomato, Swiggy Instamart and Dunzo are expected to see growth in the coming year. The trend of ordering groceries online has survived the pandemic-time need for essentials while stuck inside. In fact, the lightning-fast speed of the service has caught the fancy of users who now call the non-quick versions as slow e-Com.

“The Covid-19 pandemic has impacted purchase decisions, and most users started moving to e-Commerce and quick commerce for their purchases. “Out of stock” - Those three little words have the power to kill e-commerce. In fact, 52% of online shoppers will abandon all items in their carts upon learning that just one item they are attempting to purchase is not in stock,” said Ajoy Thomas, vice president, TeamLease Services.

Thomas expects India's quick commerce sector to grow 10-15 times in the next five years to become a $5 billion market by 2025, quoting industry reports.

Going into 2023, more consumers will look for D2C brands online as e-commerce players distinguish themselves from offline stores by offering products that can only be found online.

The country’s direct-to-consumer (D2C) e-commerce market is expected to reach $100 billion by 2025, more than 15 times where it was in 2015, Balakrishnan said.

Imagining to experiencing via technology

At a median age of 28, Indians are among the youngest and also the most tech savvy. AI and personalisation will, therefore, continue to be pivotal in enabling e-commerce – facilitating personalised discovery. Celebrity fashion designer Manish Malhotra launched his virtual store last year, with a virtual walkthrough of a Delhi store.

“Interactive content will be essential in ensuring that millions of new customers move from imagining to experiencing what a product might be like in real life before making a purchasing decision. While the first 100 million customers came from metros, the vision for 2023 is to further double down on getting the next 500 million customers online,” a Flipkart spokesperson told Business Insider India.

The e-commerce giant launched an augmented reality-powered Flipkart Camera, an AI-driven regional language interface and a virtual shopping platform called Flipverse. Its rival Amazon also started Amazon Live where shoppers can directly interact with experts who can showcase products, unveil top deals and answer customer queries in real time.

Amazon engaged over 150 influencers to generate 600 live streams to help customers make an informed purchase decision.

“India has the world's largest base of GenZ population. Their choices will redefine the future of the fashion retail industry in India, giving brands a great opportunity to create offerings to woo this customer base. They are digital savvy, follow global trends and take inspiration from influencers,” a Myntra spokesperson told Business Insider.

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