Online sales expected to boom as more customers shop online post pandemic

• The pandemic has changed the way Indians shop with over 78% of consumers preferring to shop online before peeking into neighbourhood stores.
  
• As Indians go vocal for local, 96% of consumers expressed their desire to shop from Indian brands this festive season, driving e-commerce growth.
  
• Huge pent-up demand and high purchasing power of consumers has boosted e-commerce sales in India post pandemic.
  

The pandemic has changed the way Indians shop as 78% of consumers prefer to shop online via electronic commerce platforms before peeking into their neighbourhood stores, according to industry estimates. Indians spent almost five hours daily on their mobiles last year, up nearly 30% from pre-Covid levels. Consumers from Tier 2 and 3 towns have also joined the online shopping bandwagon since the pandemic, further driving up sales for e-commerce platforms.

Cashing in on the trend, online commerce players are expecting sales of $11.8 billion during this festive season — which is a 28% growth over last year, says the latest Shopify Festive Shopping Outlook report. Companies usually hold as many as three sales leading to the festival of Diwali. Huge pent-up demand and high purchasing power of consumers has boosted e-commerce sales in India.

In the first festive week alone, which began on September 22, the e-commerce platforms achieved sales worth $5.7 billion with 75-80 million online shoppers, a Redseer report revealed. Even with inflation worries, over 40% customers are willing to spend more than ₹10,000 on shopping this festive season, Shopify claimed.

According to Bharati Balakrishnan, director at Shopify, India, “85% of consumers plan to spend more than ever before and 8-in-10 consumers shop more online now than before the pandemic. For brands, participating online through their own website is now a given as consumers shift to browsing online before making the trip to the neighbourhood store.”

Over 57% of customers listed browsing on online stores, product comparison sites, and scrolling through social media apps as ways to discover new products. Amongst e-commerce companies, Flipkart led the online retail sales in terms of GMV or gross merchandise value, while Amazon placed second, for festive sales in the week of September 22-30. Flipkart was also a leader in terms of order volumes, Meesho emerged the second largest, capturing 21% of the market.

Fashion leads while home decor, athleisure & dry fruits emerge strong contenders

Over 81% of consumers purchased clothing and accessories, while 68% spent on home electronics and gadgets, reports Shopify India. Over 56,000 mobile phones were sold per hour during the sale period of the first festive week alone.

The spirit of gift giving is also being reflected in the increased sales of dry fruits, sweets and chocolates, according to Shopify estimates. “With people welcoming guests and going out, focus will be on improving/upgrading their lifestyle and home interiors reflecting increased spending on fashion, beauty, and home and living categories,” said Redseer Consultants.

Shift towards healthy living post pandemic has made the sports and athleisure market the fastest growing category in both apparel and footwear. It is expected to grow at a CAGR of 16% between FY20-FY25, according to analysis by B.K Securities. Online sales of footwear alone has risen 10% since the pandemic as India Inc is returning to their offices.

Another emerging trend is the rise in sustainable shopping as over 67% of consumers expressed interest in buying from socially and environmentally-responsible brands, claimed Shopify.

More Indians are choosing local brands and businesses for their shopping needs. Over 96% of consumers expressed their desire to shop from Indian brands this festive season.

“The government’s call for supporting local businesses and consumers’ growing pride for Indian brands may be listed as primary factors contributing to this shift,” said Shopify India.

Tier 2, Tier 3 cities driving India’s retail growth story post pandemic

India’s retail growth story is currently targeting the ever-evolving Tier 2 and 3 cities of India. Consumers residing in rural or remote areas are gradually choosing online shopping over market-hopping, reports Shopify.

This has also been reflected in festive sales of Meesho, an e-commerce platform that currently dominates the Tier 2 and 3 markets in India, making up for a majority of the order volume during the first festive week, according to a Redseer report.

Footwear brands like Bata India, Relaxo Footwear, Metro Brands are identifying Tier 2 and 3 markets as having high retail expansion potential.

“Going forward, Tier II and below cities, which contribute 35% of the overall footwear market, are expected to witness faster growth on the back of low penetration levels and increasing aspirational levels of the people,” claimed B.K Securities.

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