E-commerce Boom in India: Rapid Evolution and Challenges

Indian e-commerce growth

You can use the applications to get anything you need, including an extra mango, a pint of ice cream, a carton of milk, or a replacement phone cord in case your dog chewed through the first one. People who live in India’s metropolitan centers and, to a lesser extent, in the country’s smaller cities and towns, have access to nearly anything at their fingertips, often in less than ten minutes, and of course the top e-commerce stores in India make it possible for Indians.


E-commerce, or online shopping, is drastically altering how Indians shop, and nowhere is this more evident than with quick commerce—apps that can deliver groceries and other necessities to your door in less time than it takes to hard boil an egg, all for 30p or less per delivery.


E-commerce accounts for just 6% of India’s $900 billion retail market, yet the country’s e-commerce sector is among the fastest-growing globally. Less than a million Indians made an online purchase in the years prior to 2022, compared to 200 million in 2022.


However, businesses and analysts claim that these figures are still simply the tip of the iceberg in a nation of 1.4 billion people and growing, where the economy is expanding faster than practically anywhere else in the globe. In a $170 billion business, it is anticipated that there will be 500 million online shoppers by 2027.


While some believe India might become a global leader in new Internet business models as a result of these advances, others are less optimistic. While some observers argue that the growth of e-commerce has been fueled by the exploitation of India’s expanding gig workforce, others worry that it has allowed big corporations to obtain monopolies over retail at the expense of the dynamic traditional marketplace.

Danger to Local shopping

The rapid growth of e-commerce is especially noteworthy in light of the fact that Indian consumers’ shopping habits have not altered in decades. India’s hyperlocal shopping culture has persisted due to stringent laws, in contrast to the West where large grocery chains hold monopolies.


Most fresh vegetables are purchased from sabzi wallas, vegetable dealers, and local markets. The 11 million kiranas (local stores) throughout the nation are sometimes referred to as the foundation of India’s economy and are where other necessities are frequently purchased. Even while well-known fashion brands are still in demand, most individuals still purchase their clothing from independently owned stores and marketplaces, especially those who don’t live in large cities.


Two companies have dominated the market for the past ten years: US tech giant Amazon and Indian start-up Flipkart, which was eventually purchased by US retail giant Walmart. Together, they not only control about 75% of the internet purchasing sector, but they are also the two largest companies in Indian commerce overall due to the absence of chain monopolies.


However, as India’s economy, which is currently the fifth largest in the world, continues to grow, the e-commerce scene is evolving quickly. Companies that supply anything from restaurant cuisine and fashion labels to electronics, instant groceries, and medications are Swiggy, Zomato, Big Basket, Zepto, Meesho, Blinkit, Nykaa, and Dunzo. These companies have grown commonplace not only in urban areas but also outside of them.


Even though 90% of Indians still make less than £250 per month and people outside of wealthy urban areas are less likely to have disposable income, all of the e-commerce companies that spoke with the Guardian said that a large portion of their growth is in smaller Indian cities, those with 20,000–100,000 people, showing that online shopping is no longer only for the wealthy and well-off.


Almost 600 Indian towns and cities were served by Swiggy, one of the first applications to offer restaurant food delivery which has since expanded into quick grocery delivery. In 2018, Swiggy served roughly a dozen of these locations. The CEO of the company, Rohit Kapoor, attributes some of its success to the “digital equalization” he has seen throughout India, where e-commerce platforms have finally made it possible for individuals to access new items, and social media has exposed people from all social strata to them.


Expanding the availability of affordable internet has enabled a significant portion of the growth. In India, 659 million people own cell phones, and mobile internet data costs are among the lowest globally. One billion Indians are predicted to have internet access by 2025, and 33 percent of them will shop online.


Lockdowns caused individuals to shop for groceries online for the first time, forcing established merchants to become digital in order to survive. The Covid epidemic has also had a big impact. In an attempt to capitalize on the unexpected demand, it also led to a surge of new e-commerce businesses.


The third change has to do with electronic payment methods. Only a few years ago, the majority of people in India relied solely on cash; very few utilized credit or debit cards. A shift to a Unified Payments Interface (UPI), in which millions of Indians have bank accounts connected to applications and smaller things, like a single banana or a cup of chai, may be paid for with a QR code on a mobile device, has, however, surpassed this in the last few years.


The Indian government, which has been aggressively promoting the program, claims that there were 74 billion UPI transactions in India in 2022, totaling 126 trillion rupees, a 91% increase from 2021. Large segments of the populace are now more technologically savvy, and paying for anything purchased online is now considerably simpler.

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