Growth Of Online Retail In India vs Abroad

The comfort of online shopping has started to develop among all Indians. This growth, especially, is routed in the COVID-19 pandemic from 2020 to 2022. People of our country have willingly begun to shift from the old, brick-and-mortar retailing format to digital purchasing. India’s online retail market is set to grow at a compounded annual growth rate (CAGR) of 19.8% to reach $85.5 billion by the year 2025.

Online retail starts in India as a replacement for the offline experience and slowly develops into the primary source of buying. The nascent market for retail in India offers several opportunities for Indian companies as well as Foreign giants to develop e-commerce businesses. Newly established stores too, for example, Swiss Time House, have seen a revenue growth of almost 450% within the previous year, due to the rapidly rising Indian online retail market.

Growth Jockey, a business strategist company that is focused on creating growth pathways customized to your company’s needs, brings to you the advantages that online retail in India has over its foreign counterparts.

Manufacturing and Logistical Advantages

In the first quarter of 2022, metro Indian adults made two-thirds of their online purchases from Amazon and Flipkart, while one-quarter of purchases came from PayTM. Over the years, online retail is growing towards two and three-tier cities in India. The biggest online retailers have realized the importance of providing ubiquitous access and greater convenience to customers.

This is why the big players have started to set up warehouses across India and invest in last-mile delivery - they have observed the scope of growth of online retail in India. As per a report by Forrester Analytics, 83% of metro India adults say that their purchase is influenced by the availability of free delivery on the same day, 73% are influenced by paid same-day delivery, and 56% by the ability to pick up their purchase at a store.

Online retail growing high, gives birth to a new class of logistics and distribution. With online retail growing, third-party logistics companies have been brought in to diversify the supply chain and increase the penetration of online retail products through warehousing.

People-focused and How

The biggest online retailers in India have a good understanding of what customers want. For example, in tech, particularly in an Indian setting, the inclination for online retail starts with a considerable price difference between the store and the e-commerce marketplace. Compare this to the fashion marketplace, and Indians will prefer variety over price. The top three Indian e-commerce platforms, namely Big Basket, Reliance Digital, and Ajio, account for 5% of online revenue in India.

This mentality of Indian customers is directly understood by Indian online retailers. International players tend to replicate the international model on a national scale, and it seldom turns out well. The growth of online retail in India can only be undergone with the help of customer-focused working.

Companies may take the help of Indian-origin strategizing companies, like Growth Jockey, to create a customer-focused business model, customized to the company’s goals and targets. It has been predicted that India’s total online buyers are to reach 291.2 million by the year 2025, so right now is the perfect time to venture into customer-focus marketing and sales to settle in the country.

The ‘Cash on Delivery’ Challenge

The rapid penetration of online retail in India has occurred due to the availability of the cash-on-delivery option of payment while making a purchase online. One of the biggest reasons for growth of retail in India is the ability of the customer to pay using hard cash. Almost 80% of shoppers from tier 1 and tier 2 cities in India prefer to pay in cash when their product is delivered.

Cash on Delivery has worked wonders for retailers in India, something that may not have worked in other countries. While CoD has allowed the growth of online retail in India through fast penetration and impulse buying, it is an inconvenient method for e-commerce platforms. It restricts cash flow into the company, influences higher returns for products, and also causes refund issues.

The scope of active e-commerce penetration in India stands at 76.7% today. Thus, online retail platforms, after having established themselves, have started to shift towards digital and card payment. Retailers and policymakers together have been a part of this fight since the beginning. Further growth of online retail in India is heavily dependent on customers and companies going cashless together.

Integration through Omnichannel Retailing

Omnichannel retailing is a relatively new concept that integrates and aligns all consumer experience channels of a company or a retailer. These can be retail stores in India, third-party e-commerce stores, social media, mobile apps, and websites, among others. The biggest Indian e-commerce market, Big Basket, had a revenue of US$ 1.2 billion in 2021.

Omnichannel retailing provides a seamless, smooth experience of shopping for customers, irrespective of the channel of communication they are using. Big retail stores in India, like Shoppers Stop, Future Group, and Croma, have begun investing time, effort, and money into establishing an online presence, although their current business share is less than 5% from online purchases.

This is a reverse of the process adopted by some international companies to establish retail businesses. Amazon, for example, became the biggest online retailer and then ventured into the offline store model. With Indian customers, it is important to note that the shift in habit is from touch-and-feel at offline stores to online platforms.

Baby Steps

Most Indian e-commerce platforms are start-ups that began the establishment of online retail in India in recent years. These smaller firms boast about flexible work cultures and are fueled by innovation and quick decision-making. Compare this to the established international e-commerce platforms, and you will notice a structured, bureaucratic maze of processes with standardized pathways and approach levels for decision-making.

Although this structure may improve the delivery process, it hinders innovation and change. It is difficult for established brands to pivot from their selected niche without drastic, core-level changes in the company. On the other hand, retail stores in India have a small group with home ground advantage. This can also develop into a first-mover advantage when a new market segment opens up.

India is the third largest internet user in the world, right behind China at the first position and the USA at second. Active internet users in India, as of today, are 658 million. Technology-aligned companies, such as Growth Jockey, can help you establish an e-commerce company in India and make use of all the advantages that an Indian company may have on home ground.

Wrapping it up

The online growth of retail in India has been nothing short of monumental in the last few years. However, significant challenges are yet to be dealt with. The reasons for growth of retail in India over the years are the increasing availability of tech (mobiles and laptops) and cheap internet. Funding for the e-commerce sector increased to about US$ 11 billion in the year 2021.

Global e-commerce players with deep pockets have been trying hard to establish themselves in retail in India, but working in an Indian context is difficult unless you have experience in the context. The online market size in India, as of 2022, is US$73 billion.

Growth Jockey is on its way to create the world’s largest Growth Office - a place where businesses can adapt and grow with high-quality strategizing, marketing, product engineering, and sales & operations development. Our customized solutions are unique to each business and can help you identify opportunities for growth and target them with the right execution framework. This way, you can focus on mastering your core product or service, while we help take your business to new heights in the growth of retail movement in India.

Get in touch with us today and scale new heights in your retail operating system !