With the Covid-19 pandemic causing a tectonic shift in purchasing trends across the world and in India, and consumers rapidly moving to online platforms, the next wave of e-retail growth in India is expected to significantly be powered by Bharat, or the other India, away from the major metros. Current trends indicate that the next e-retail wave will be more inclusive, and will in large part be driven by voice and vernacular as tier 2 cities and smaller towns come into the ambit of online shopping.
These trends are visible in a detailed report “How India shops online” put out recently by Bain & Company and e-commerce giant Flipkart which says that while the Indian e-retail market has seen dramatic growth over the past five years, there is significant headroom for further growth in the future. It says that based on the global evolution of e-retail, Indian e-retail is expected to reach a massive scale in the days ahead, spurred by a number of factors, chief among them “cheap, ubiquitous mobile data enabling nearly 1 billion Internet users by 2030.” In addition to this, growing online spends by ‘digital natives’ and supply-side innovations like vernacular-based user interfaces, voice and visual search will further power this growth.
“The Indian e-retail market is primed to reach nearly 300 to 350 million shoppers over the next five years—propelling the online gross merchandise value (GMV) to $100 billion-$120 billion by 2025,” the Bain-Flipkart report points out.
This growth story will also be more inclusive for both buyers and sellers, and will empower both these categories. “For the consumers, it will provide convenient access to a wide assortment of products across all geographies and income segments. For sellers (kiranas, artisans, traders and homemakers) it will provide an unprecedented impetus, by creating an easy access to a large base of customers across the country and keeping their stores running 24x7,” it says.
Already, the scorching growth witnessed in Indian e-retail has successfully democratised the shopping landscape. Currently, e-retail has access to as much as 95% of India’s pin codes and has empowered Bharat’s small sellers. At the same time it has demolished go-to-market barriers for insurgent and incumbent brands. E-retail’s growth is driving major transformation in the $850 billion overall Indian retail market, which is the fourth largest in the world.
A diverse mix
Online shoppers present a diverse mix in India, comprises both city tiers and income ranges, the report points out. Online shoppers from tier 2 and smaller towns comprise nearly half of all shoppers and account for three out of five orders for the leading e-retail platforms. Interestingly, these customers from tier 2 and smaller towns buy similar categories of products from metro cities or tier 1 towns, with only a marginal difference in average selling price. “Over the past few years, India has seen a surge in small enterprises and homemakers scaling their businesses by taking them online. E-retail has enabled the creation of millions of jobs and empowered delivery personnel, mom-and-pop kirana stores and several small sellers,” says the report.
The e-retail revolution in India has not just proved to be a boon for new brands to scale up, even traditional brands have been able to accelerate new product launches thanks to the digital platforms and the access to markets they provide. Digitally born brands have scaled rapidly too and are being built more efficiently, even as large incumbents have been able to successfully launch multiple online-first brands, getting real-time customer feedback and using them effectively for national offline launches.
The process of discovery
The report provides deep insights into the process of how shoppers discover and decide on buying products from online plaforms. One big insight is that, while over the past year, consumer engagement with online plaforms has increased, a visitor spends less than nine minutes per visit on an e-retail platform. Nine minutes, then, is all brands have to engage and attract customers.
One in two visitors browse the image gallery, and only one in 15 clicks the detailed product description. Brands and sellers, then, would need to invest in attractive images and videos and high-impact product highlights. Vernacular searches are gaining popularity, the report points out, adding that “parda” was one of the top three searches in curtains. Consumers browse in detail before making their choices – often more than 20 product pages before making a choice. For some categories like mobiles and women’s ethnic wear, it could go up to as many as 50-60 product pages. Search attributes and preferences vary significantly across categories and consumers, though.
The future of Indian e-retail
The Bain-Flipkart report says online platforms are getting back to the drawing boards to innovate and bring in the next hundreds of millions of shoppers as the e-retail revolution in India hits the “massification” stage. Voice and vernacular is a major driver, as the Indian vernacular language Internet user base is expected to hit 500 million by 2021 (as opposed to 200 million English-speaking user Internet base in India.) This growing number increasingly prefers voice searches and vernacular user interfaces (UI), a trend evidenced by several vernacular apps like TikTok, ShareChat and Helo garnering millions of users each.
Video is another powerful tool for the future, with video content consumption in tier 2 and smaller towns growing over four times in the past year. Social shopping will be another major driver, as for the next wave of online shoppers, peers and the community are expected to play a major role in influencing their purchase decisions. The report illustrates the growing power of social commerce by pointing out that in the past five years, as many as 50 private equity and venture capital deals were transacted in the social commerce sector in India.
E-retail platforms are also moving beyond just the platform and focussing on creating an entire digital ecosystem to attract customers and ensure stickiness, creating multiple touchpoints in the process. Top e-retail companies have begun combining their core e-retail business with sticky customer services like gaming, video streaming, booking and payments and the like in a single platform or app. This is aimed at creating a one-stop shop for customers for all their needs and in turn benefit the e-retail business immensely.
With cheap data powering the entry of the next wave of online shoppers, shopping habits of Bharat, the other India, will hold the key to how brands and online platforms perform in the coming days. Only those who read the signs well will succeed.