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Decoding the online shopping landscape in India

Decoding the online shopping landscape in India

Decoding the online shopping landscape in India
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By Megha Vishwanath  Jun 16, 2020 4:03 PM IST (Published)

E-retail in India has the potential to grow in massive scale, thanks to the cheap and ubiquitous mobile data (enabling nearly 1 billion internet users by 2030), growing online spends by ‘Digital Natives’ and supply-side innovations like vernacular-based user interfaces, voice and visual search, according to a Bain & Company- Flipkart joint report.

E-retail in India has the potential to grow in massive scale, thanks to the cheap and ubiquitous mobile data (enabling nearly 1 billion internet users by 2030), growing online spends by ‘Digital Natives’ and supply-side innovations like vernacular-based user interfaces, voice and visual search, according to a Bain & Company- Flipkart joint report.

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Indian e-retail industry has seen an upsurge in the past five years with online retail penetration currently at 3.4 percent, indicating a strong headroom for further growth, it said.
THE NEXT FIVE YEARS
The report estimated the Indian online retail market to grow at 30 percent CAGR over the next five years serving 300 to 350 million—propelling the online Gross Merchandise Value (GMV) to $100 to $120 billion by FY2025. It further goes on to say that e-retail is democratising the shopping landscape, with access to 97 percent of India’s pin-codes, and empowering Bharat’s small sellers while breaking go-to-market barriers for insurgent and incumbent brands.
As of today, online shoppers in tier-2 and smaller towns make up nearly half of all shoppers and contribute to three out of every five orders for leading e-retail platforms. Globally, e-retail has witnessed a predictable growth trajectory, starting with an increase in shopper penetration triggered by a sharp drop in data prices. This was followed by an increase in shopping frequency, which led to a higher spending per customer.
INDIA VS CHINA
Drawing parallel between China, the report highlights that China had similar levels of shopper penetration as India, eight years ago, which grew from 8 percent to 40 percent, triggered by a drop in data prices and improvement in e-retail infrastructure. Fashion categories will play a critical role in acquiring customers online, similar to the mature markets of the US and China.
IMAPCT OF COVID- 19
While Covid-19 has caused an inflection in e-commerce penetration globally, driven by consumers’ need for safety and convenience and even in India, online is gaining salience.
During the lockdown—30 percent consumers who were existing online shoppers increased their online purchases in existing categories, 16 percent consumers who were also existing online shoppers tried new categories online, and about 11 percent consumers tried online purchases for the first time.
HOW SHOPPERS DISCOVER AND DECIDE ON PRODUCTS ONLINE
While consumer engagement with e-retail platforms has been growing over the years, brands and sellers have only 9 minutes to win the online shopper.
That is, a visitor spends less than nine minutes per visit on an e-retail platform.  To increase conversion, sellers must invest in high-quality product images and high-impact summary product descriptions. One in two visitors browse the image gallery and only 1 in 15 click the detailed product description.
Consumers are increasingly opting for e-retail platforms for product searches—nearly one in three product searches in India already starts on an e-retail platform, with vernacular searches on the rise.
In fact, online shoppers browse more than 20 product pages before making a purchase—for some categories like mobiles and women’s ethnic wear, consumers browse about 50–60 product pages before purchasing one. Search attributes and preferences vary significantly across categories and consumers.
FUTURE OF ONLINE SHOPPING
The next wave of shoppers have different needs and will interact differently compared to the current set of online shoppers.  The Indian vernacular-language internet user base, which is expected to reachmore than 500 million users by 2021 vs 200 million English-speaking internet user base in India.
Most Indian are increasingly preferring voice search and vernacular-based user interfaces (UIs)—number of voice searches on Google has almost tripled in the last year. It’s not just voice, but video content consumption in tier-2 and smaller towns in India grew more than four times, just in the last year.
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