Indian online retail opening up $250 bn market for digital-first brands: RedSeer

Indian online retail opening up $250 bn market for digital-first brands: RedSeer

The RedSeer report says this opening up of market opportunity comes on the back of new demand arising from retail channels like social and video commerce.

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Indian online retail has paved the way for digital-first brands, thereby opening up a $250 billion market opportunity, argues a new report by the Bengaluru-based consulting and research firm, RedSeer. This comes on the back of new demand arising from retail channels like social and video commerce which is revolutionising the industry, the report says.

According to the report, online retail has grown sustainably during the pandemic and has proven to be a lifesaver especially for smaller cities. “In fact, India's E-tailing GMV (gross merchandise value) reached $53 billion in CY21, demonstrating post COVID acceleration. Additionally, Indian e-tailing showed impressive quarter-on-quarter growth in 2021 while other global players struggled to maintain the momentum,” it said.
“The current B2C retail landscape is evolving rapidly with the emergence of new consumer behaviors and expectations. The rise of new retail channels, particularly video and social commerce, is further changing the way consumers shop and what they expect from brands,” Mrigank Gutgutia, Associate Partner, RedSeer, said.
As per the report, India will be adding hundreds of millions of new online shoppers in next few years --primarily the segment that is outside of the big cities, have lower incomes and shop in a very limited manner.

To address their needs, social and video commerce is creating a new retail channel for an aspirational new India, this is already supported by >$1 billion funding in 2021.

“Video commerce, powered by multiple models, has massive potential in India. In India, several platforms have already started to disrupt consumer purchase patterns with video commerce,” the report said.
The report adds that there is a $250 billion opportunity for digital first brands to be built on top of these new channels. “

With massive unicorn and soonicorns creation in digital-first brand space plus a surge in IPOs,  2021 clearly was the year for digital-first brands, and the same can be said for this year too, where we will only witness an upward spiral,” the report argued.

Many of these new-age digital first brands are changemakers, as they are offering quality products at affordable price points that are not served well by most traditional brands. Many of them are also offering truly innovative products that are changing how we as consumers interact with brands.

Consumers, too, have been highly receptive to these digital-first brands. “The findings further suggest that consumers opt for these new-age brands for their quality (and not only price) with significantly high repurchase willingness,” RedSeer said.
Multiple $100 million revenue technology-first brands have been created already across the categories in just the past few years, with each having a unique winning playbook and first-of-their-kind business model.

“As a result, digital-first brands are finding it increasingly rewarding to engage with consumers in these channels and offer them a seamless, omni-channel experience. The success of such brands will depend on how effectively they leverage these new retail channels and how they innovate on the digital front to offer a superior omnichannel experience,” Gutgutia said.

Over the 2021-30 period, RedSeer expects many more digital-first brands to scale exponentially, supported and incubated by roll-up platforms that are building the next wave of digital-first brands for India.

This will be enabled by the growing trend of digital-first consumers who are willing to try and adopt new brands at a faster pace than traditional consumers, it said.

“This trend is expected to drive the rapid scale-up of digital-first brands, with some achieving a market capitalization similar to that of major traditional brands in India in just a few years,” the report said.

Published on: Feb 16, 2022, 12:26 PM IST
Posted by: Vivek Dubey, Feb 16, 2022, 12:22 PM IST