As we have seen in previous blog articles, the COVID-19 pandemic increased the rate of digitization of many economies around the world, with customers being forced to switch to online shopping. Developed markets saw a continuation of the existing trend with their ecommerce space maturing to almost full potential. In fact, almost everyone was using the internet in the US and Europe in january 2021 according to a report from We are social (90% of the population in the US and 93% in Western Europe).
However, the biggest change to come will be in emerging markets, and India in particular. The internet penetration in India stood at a low 45% in january 2021, accounting for 624 million internet users. Indeed, with a huge and young population, any increase in the internet penetration rate translates into millions of new potential customers. With around 1.39 billion people, India is the second-most populous country after China, equivalent to almost 18% of the total world population. And, here is a comparison of how young the population in India is: In january 2021, the median age was around 28 in India while the world average was 31, and developed nations such as Spain, Germany, Portugal, Italy and Japan exceeded 45.
India's ecommerce market is expected to grow by 84% by 2024
With the global pandemic, ecommerce and home delivery services are also becoming increasingly popular and are showing strong and lasting changes in Indians’ purchasing behavior. India’s ecommerce market is dominated by Walmart-owned Flipkart and Amazon, even if a lot of local initiatives and startups are emerging. The ecommerce space in India is nascent yet vibrant as it only accounts for around 4% of the overall retail market.
At current levels, the growth potential seems huge. According to a new report from Fidelity Information Services, India’s ecommerce market is expected to grow dramatically due to the COVID-19 pandemic, with a forecast of 84% growth by 2024. Such growth would mean that the Indian ecommerce market would reach a colossal $111 billion in just three years. This seems very likely to happen as other estimates declare that the ecommerce market in India will be between $100 billion and $140 billion by 2025. As well, the number of online shoppers in the country is expected to reach 250 million by 2022.
The change in purchasing behavior is likely to be durable. In fact, although local markets, shopping centers and physical shops reopened over the past few months, a recent survey released in march 2021 showed that almost half of all respondents stated that ecommerce websites and apps have become their preferred mode of shopping. Those results show that consumers who used ecommerce services during the past year are continuing to use them.
Mobile shoppers will also be key to the ecommerce market growth in India in the years to come. It is actually estimated that mobile shopping will reach a 21% annual growth rate over the next four years. Payment methods are also evolving in line with this structural change, as digital wallets quickly overtook the historical bank cards as the most popular payment method in 2020. The rise in internet penetration and the adoption of smartphones in the country has led to an unprecedented opportunity for online businesses wanting to expand into the region.
Will you be part of India’s ecommerce boom?
You can rest assured that it is not too late to join the party now. Businesses that are selling digital products with the right digital payments capabilities will be in a strong position to seize the next wave of growth and opportunities in Indian’s ecommerce market.
At Softline Ecommerce, we make it easy for you. Our all-in-one ecommerce solution makes cross-border digital sales locally optimized, easy and safe. It has never been so simple to reach new customers and grow your business in emerging markets. So, if you want to see what we can do together, don’t hesitate to contact us on our website, via Linkedin or email (firstname.lastname@example.org).