Post the COVID-19 pandemic, the e-commerce sector in India has witnessed an order-volume growth of 17% as of June 2020. Further, in the last one year, there has been a considerable growth of 65% for brands developing their own website, which led to an increase in self-shipped orders.
This was revealed in an impact report on the e-commerce industry, released on Thursday by Unicommerce, an e-commerce focused SaaS platform. The report titled - ‘E-commerce Trends Report 2020’ focuses on the growth of e-commerce in India along with detailing changing consumer behaviour and the industry response to address the newly emerging e-commerce trends.
The consumer buying patterns and preferences have changed significantly with categories like health & pharma and FMCG & agriculture seeing a surge and exponential growth, with a rise in the number of first-time online shoppers. Beauty & wellness is one sector that has witnessed an unprecedented order volume growth of around 130% followed by FMCG & agriculture and health & pharma with a growth of 55% and 38% respectively. These are emerging sectors with potential to accelerate e-commerce growth in India, the report notes.
The number of consumers shopping directly from the brand’s website is increasing at a much faster pace than marketplaces. Brand websites have witnessed 88% order volume growth as compared to 32% order volume growth on marketplaces.
The top 3 segments that have seen an increasing penetration of D2C (direct to consumer) brands are beauty & wellness, fashion & accessories and FMCG & agricultural sectors.
During this year, the e-commerce order volume saw a growth of around 20% while the GMV (gross merchandising value) witnessed a surge of nearly 23% with an average order size of ~Rs1100.
All leading e-commerce companies are focusing on cities beyond the metropolitan cities. Currently, Tier II and beyond cities contribute around 66% of the total online consumer demand in India and this share is expected to rise in the coming years.
Tier III and beyond cities witnessed 53% growth, making it the fastest-growing region. The top three states, by e-commerce volumes, are Delhi NCR, Maharashtra, and Karnataka, and they constitute 65% of overall consumer demand, the report says.
After e-commerce resumed operations post COVID-19, the return rate has seen a dip of around 10-30% depending on the category. The reduced return can be attributed to the new safety norms, increasing demand for essential products, which are generally non-returnable. However, it will be interesting to see if the trend of lower returns continues in the long term, the report says.
Another interesting trend observed is Tier II and beyond cities have seen a significant reduction of ~23% in overall returns. This change can be attributed to increasing technology adoption, improved last-mile delivery, and customer centric return policies.
E-commerce companies have invested extensively to reduce COD returns as they constitute a large part of overall returns. The return percentage on COD orders has reduced from 27% in 2019 to 20% in 2020 and for prepaid orders, the total return has decreased from 12% in 2019 to 11% in 2020.
Commenting on the report, Kapil Makhija, CEO, Unicommerce said, “As the world is grappling with the effects of COVID-19, the ecommerce industry in India has seen a major boost since the beginning of this year. With this report, we wanted to throw light on the enormous growth opportunity that lies for the ecommerce industry in India. With changing consumer buying patterns and preferences, rise of new first time online users, increased focus on digitisation by retailers, brands opting for D2C model etc, we are confident the ecommerce industry will emerge as the most promising market across the globe with tremendous growth potential in the future. Through this report, we aim to decode the changing consumer patterns, and provide detailed insights on delivery and returns so that it can help the brands and e-tailers plan their e-commerce strategy much more comprehensively.”