Riding against the winds of economic slowdown, the Indian internet industry grew by 38 per cent to $76 billion in 2019. Consumers, earlier cautious of their overall expenditure, spent nearly $3 billion within the first six days of these sales. Most of this money was spent on items like mobiles, electronics, large appliances and home décor items.
E-commerce fared well in 2019 as e-tailers introduced multiple affordability initiatives such cashbacks, private labels, no-cost EMIs etc. Consumer base of e-shoppers from Tier II grew by 50 per cent as the strong value proposition provided by e-tailers drove most of the non-metro customers to online shopping driven.
Convenience, sales drive online shopping
As online shoppers are mainly driven by convenience, most of their shopping is done between 8 pm and 11 pm, known as the prime time for digital shoppers. Around one third of this shopping also happens through the course of the night which reinforces the consumers’ quest for convenience.
As the Nielsen’s E-Analytics solution reveals, shoppers mostly hold back their spending for the sale period. This is evident from the fact that more than 84 per cent of festive season sale is recorded from September 28 to October 25 as against just 16 per cent during non-sales days. While mobiles contribute around 48 per cent to these online sales, buyers are also increasingly buying fashion online. They mostly spend on apparels, footwear, luggage and accessories. Within this, men’s clothing is the highest contributor with 58 per cent while women’s clothing contributes 36 per cent.
Robust sentiments driving investments
Despite a few blips, investor sentiment continued to be robust in 2019. The government decided not to extend the February 1 deadline to comply with the revised norms relating to FDI in e-commerce. Although the total number of e-commerce firms funded in 2019 dropped to 126 compared to 136 in 2018, the total amount of funding raised by these firms in 2019 increased by 56 per cent to $2.35 billion.
Many new funds were being set up in the start-up and venture capital space which provided sufficient capital to e-commerce firms. After years of being a nuisance, the Angel Tax was comprehensively addressed. CSR funds for incubators and accelerators were raised. These included $16 billion raised by Paytm, $10 billion raised by OYO and other funds raised by Udaan, Freshdesk, Swiggy and Byju’s. In 2020, e-tailing would be dominated by OTAs (online travel agents) who are set to exceed GMV of $40 billion in 2020.