India’s e-commerce sector to touch $99 bn by 2024

Be it shopping for apparel, medicines, furniture, or grocery, Indian consumers are increasingly developing an appetite for online shopping fuelled by cheaper data and increased mobile penetration across the country. The numbers are telling: The country’s e-commerce sector is expected to reach $99 billion by 2024, growing at a CAGR of 27% over 2019-24, with grocery and fashion/apparel likely to be the key drivers of incremental growth, finds the EY-IVCA India Trend Book 2021 report.

The EY report, released in collaboration with the Indian Private Equity and Venture Capital Association, adds that online penetration of retail is expected to reach 10.7% by 2024, versus 4.7% in 2019, while online shoppers in India are expected to reach 220 million by 2025.

The report further points out that the Covid-19 pandemic has brought forward the e-commerce industry in India by a decade, revolutionising the way brands operate, run, and grow their businesses, as well as how consumers choose to shop and pay. According to Nielsen India’s e-commerce consumer panel, there was a double rapid increase in average spend of online shoppers for various categories, the report, released on Friday, adds.

Commenting on the report, Anup Jain, managing partner at Orios Venture Partners, says, “The EY report indicates that India is leapfrogging many other more developed economies to being a high-tech economy in the next four years, backed by its super-smart entrepreneurs who know how to solve large problems for millions of people using technology at low cost and friction.” He adds that the hot sectors will be agritech, gaming, edtech, electric powered mobility, and health beyond tier 1 cities as the e-commerce 2.0 model.

According to the report, last year, India’s edtech startups raised over $2.2 billion in funding with Bengaluru-based Byju’s alone accounting for $1.4 billion in funds raised. The pandemic has accelerated the growth of the edtech sector in India as the market size is estimated to grow 3.7x in the next five years, from $2.8 billion in 2020 to $10.4 billion by 2025.

In 2020, e-commerce and consumer Internet companies raised over $8 billion in private equity/venture capital funding spread over 400 deals, the report notes, adding that edtech and hyperlocal segments led the investment activity, together accounting for over 40% of 2020 investments.

The growth projected in the sector, certainly augurs well for not only companies but also investors, the report adds, pointing to a new class of angel investors comprising experienced professionals and successful entrepreneurs who are investing alongside institutional investors.