The inspiration for this post really came from this news piece from few days back covering an impressive festive sales bump in India in 2021, thanks to a solid consumer spending – highest in 10 years, according to CAIT (Confederation of All India Traders): https://www.business-standard.com/article/companies/diwali-festive-sale-crosses-rs-1-25-trn-breaks-all-records-in-10-yrs-cait-121110500886_1.html. These observations led Outside In to reflect back on the annual editions by Bain & Company on “How India Shops Online” and identify consumer insights emerging in 2021 and how it compares with 2020. This piece is an attempt to articulate the key Insights from these Reports…
News Today
The Business Standard article above mentions that the first week of online festival sales in October, where various e-commerce firms participated, saw 23% year-on-year sales growth in 2021. This means goods worth $4.6 billion (Rs 32,000 crore) were sold online, according to a recent report released by homegrown firm RedSeer Consulting. The overall online shopper base grew by about 20 % compared to last year, with Tier 2 contributing to about 61 per cent of all shoppers. Also, the "gross merchandise value (GMV) per shopper has grown by 1.04X — indicating an inherent aspiration in the shopper
E-commerce firms Amazon and Flipkart recently said the early trends of their festival sales event reflected increased participation from tier 2 and 3 cities. Amazon said that it saw participation from 99.7% of all pincodes. As Bharat gets ready for 5G, more than 84 per cent of mid-range segment of smartphones bought on Amazon were 5G-ready. More than one million customers purchased a smartphone on Amazon for the first time. About 1 in 6 smartphones and 1 out of 4 TVs sold during this time had Alexa Built in or worked with Alexa. Over 120 audio products were purchased every minute. Amazon’s voice assistant Alexa answered over 36 million requests during the event
With the country’s online market projected to soar to $1 trillion by 2025, players such as Amazon, Walmart-owned Flipkart, Reliance’s JioMart and Tata Group are in fierce competition with each other to grab a pie of the market
With this backdrop, Outside In thought it was important to get a sense of How India Shops Online… And what has changed in 2021 from 2020…
A) India Online Market in Numbers
B) Key Insights into Online Shopping Journeys
1) Engagement Window:
2021: Less than 10 Minutes – An e-retail visitor spends fewer than 10 minutes per visit on a platform. Shoppers browse 10 product pages, on average, in electronics, and more than 15 in mobiles before adding any to their cart. Images are important—1 in 2 visitors browse image galleries, whereas only 1 in 22 read product descriptions
2020: 9 Minutes – Consumer engagement with online platforms has increased but a visitor spends less than nine minutes per visit on an e-retail platform. One in two visitors browse the image gallery and only 1 in 15 click the detailed product description
Insight: Fewer people are reading Detailed Product Descriptions while users browsing Images remains constant – which may mean that Platforms and Brands may need to focus more on Visuals rather than Text in their Key Communications
2) Search Patterns:
2021: Category-Nuances – Search patterns and habits vary by product. Shoppers primarily search by brand names when buying mobiles and televisions; however, they search by product categories for items like laptops and large appliances (air conditioners, refrigerators, washing machines)
2020: Product Discovery – Consumers are increasingly opting for e-retail platforms for product searches—nearly one in three in India
3) Voice & Vernacular:
2021: Becoming Mainstream – 1 in 10 platform users adopt voice search, and 1 in 3 new e-retail users visit through a vernacular platform interface. Voice and vernacular searches will increasingly become mainstream
2020: Growing in Popularity – Vernacular searches – like ‘parda’ for curtains were becoming popular
Insight: Not only is there a latent requirement for multi-lingual/vernacular interfaces, but there’s even a need to use/embed popular product names/descriptions in local search – to optimize results for a consumer’s search & discovery process
4) Future of Online Shopping – Vernacular:
2021: Voice and vernacular mediums are core to attracting the next generation of consumers. Use of voice-assistant apps doubled to approximately 5–6 million monthly users in 2021 (average until May). Web pages were translated to vernacular languages approximately 50% more in 2020 compared with 2019. Use of vernacular-language apps such as ShareChat and Daily Hunt continued to accelerate through the pandemic
2020: The Indian vernacular-language internet user base, which is expected to reach more than 500 million users by 2021 (vs. 200 million English-speaking internet user base in India), increasingly prefers voice search and vernacular-based User Interfaces (UIs). Several vernacular apps like ShareChat, TikTok and Helo have garnered upwards of 50 million users each
5) Future of Online Shopping – Video Commerce
2021: The video-watching user base expanded greatly during the pandemic and grew by 25% in India in the past year alone, increasing to 350–400 million users. Hundreds of thousands of creators will help propel livestreaming and video-enabled commerce significantly in the coming years. Multiple livestreaming commerce start-ups have already emerged in India and are growing rapidly
2020: Video content consumption in smaller towns in India grew more than four times just in the last year. Visual search tools, live-streaming sessions, influencer videos, etc. are gaining significant traction
6) Future of Online Shopping – Social Commerce
2021: Peer and community influence will play a much more significant role for the next wave of online shoppers. Social commerce GMV (approximately $1.5–2 billion in FY20) could grow at a 55%–60% compound annual growth rate (CAGR) over FY20–25, with the potential to empower 40 million small businesses and turbo-charge women entrepreneurs. This will further democratize e-retail, with three in five social shoppers coming from tier-2/smaller towns
2020: For the next wave of online customers, peers and community play a much larger role in influencing purchase decisions than for the current online shopping base. In the last five years, we have seen more than 50 PE and VC deals in India focused on social commerce
C) Key Insights into Growth Scenarios
2021:
2020:
D) India Pincode Penetration Behavior by Category
2021:
2020:
E) ASP Comparison: Small Towns ASP Gets Closer to Tier-1 ASP for Popular Categories
2021:
2020:
F) First Category of Purchases – 2021 vs. 2018
G) People Search Behavior in Electronics Category
2021: Pan-Category Search –
2020: Primarily Search for Mobiles –
H) India Digital Funnel Evolution – Rise in the Number of Product Transactors
2021:
2020:
In Conclusion
E-Retail continues to democratize Shopping across India. ‘Democratize’. This is a word that you will come across many times through these reports. I decided to gauge the meaning behind the word. A simple Google search shows this meaning of the word: make (something) accessible to everyone. Outside In observations from the 2021 & 2020 Bain reports on How India Shops Online does truly reflect this phenomenon… Let’s hope it stays the course…
References and Sources:
1. How India Shops Online – Bain Report 2021 (August 2021): https://www.bain.com/insights/how-india-shops-online-2021/
2. How India Shops Online – Bain Report 2020 (June 2020): https://www.bain.com/insights/how-india-shops-online/
3. India 2021 Festive Sales: https://www.business-standard.com/article/companies/diwali-festive-sale-crosses-rs-1-25-trn-breaks-all-records-in-10-yrs-cait-121110500886_1.html
4. *Small-Town Contributions – Amazon Data: https://www.businesstoday.in/latest/corporate/story/more-customers-than-ever-before-79-new-users-from-small-towns-amazon-india-310993-2021-11-01